National Capital Goods Policy, 2016

         

On February 15, 2016, Union Ministry of Heavy Industries of Government of India has unveiled the National Capital Goods Policy, 2016 with a theme of Building India of Tomorrow. The idea of a ‘National Capital Goods Policy’ was first presented by the Deptt. of Heavy Industry to the Prime Minister in the ‘Make in India’ workshop held in December, 2014. The policy has been finalized after extensive stakeholder consultations with industry, academia, different ministries etc.

Its aim is to achieve the vision of Make in India initiative and establish India as a Global manufacturing hub for capital goods sector. Union Minister Anant Ganga Ram Geete also added that this policy have a clear objective of increasing production of capital goods from ~Rs. 230,000 Cr in 2014-15 to Rs. 750,000 Cr in 2025 and raising direct and indirect employment from the current 8.4 million to ~30 million.

Highlights:-

• This policy has aim to increase share of capital goods contribution from 12% to 20% of total manufacturing activity by the year 2025.
• The policy envisages increasing exports from the current 27% to 40% of production while increasing share of domestic production in India's demand from 60% to 80%.
• Increasing research intensity in India from 0.9% to at least 2.8% of GDP.
• It also proposed a new scheme Heavy Industry Export & Market Development Assistance Scheme, HIEMDA on pilot basis, Technology Development Fund under PPP model and Start-Up centre for capital goods sector.
• The Department of Heavy Industry had set up a Joint Taskforce with Confederation of Indian industry (CII) as an attempt to ensure that the formulation of the Capital Goods Policy is done in the most democratic manner and the recommendations would carve out a roadmap for Capital Goods sector to become  a part of global value chains apart from mere supply chains.
• There is a provision of Reviewing and Revising of policy every 5 year to take account of progress in Implementation and emerging trends in the National and International environment.
• It also advocates adoption of a uniform Goods and Services Tax (GST) regime ensuring effective GST rate across all capital goods sub-sectors competitive with import duty after set-off with a view to ensure a level-playing field.
• This policy recommend 9 new initiatives and actions...
1. Long term, stable and rationalized tax and duty structure to ensure cost competitiveness of the sector.
2. A comprehensive public procurement policy which has special provisions in contracts for domestic value addition.
3. Promoting development of new technology through indigenous sources.
4. Provide technology upgrade fund support across all capital goods sub-sector.
5. Creating a level playing field by restricting second hand machinery and mitigating duty disadvantages.
6. Supporting availability of long and short term financing at competitive rates.
7. Enabling skill development by setting up sub sector specific skill councils.
8. Enabling higher participation of India in standard creation and developing support system to improve compliance.
9. Developing manufacturing clusters with shared facilities espacially for SMEs.

Remark:-

• Capital Goods consists of plant machinery, equipment and accessories required, either directly or indirectly, to manufacture or for production of Goods or for rendering Services including those required for replacement, modernization, technological up-gradation and expansion of manufacturing facilities.

References:-

• http://www.thehindu.com/business/Economy/govt-approves-capital-goods-policy/article8645559.ece
• http://pib.nic.in/newsite/PrintRelease.aspx?relid=136430
• http://economictimes.indiatimes.com/news/economy/policy/government-approves-capital-goods-policy-aims-21-million-new-jobs/articleshow/52433592.cms
• http://pib.nic.in/newsite/PrintRelease.aspx?relid=145622