Govt seeks views to frame policy on capital goods industry

Government has sought suggestions on a draft paper to frame policy on the capital goods industry, envisioning an increase in its contribution from 12 per cent at present to 20 per cent of the total manufacturing activity in the country by 2025.
Sharing the key concerns being faced by the capital goods industry, the paper prepared by the Department of Heavy Industry points out that imports continue to address 35 to 40 per cent of domestic demand with the proportion being significantly higher in "critical components" segment for each subsector.
Moreover, it said, Indian share in global exports in the capital goods sector is still low, ranging between 0.1 and 0.6 per cent, across various sub-sectors. In contrast, share of global exports for China ranges between 7.7 and 16.3 per cent depending on the sub sector.

The paper also sheds light on the large blocks of underutilized capacity, waiting to capitalize on the latent demand in the market.
Plus, beyond 4-5 large players, the market is fragmented with the majority of operative units in the SME sector.
The paper highlights the fact that support facilities, technology development institutions and skilled man-power continue to lag behind global standards, even as cost disabilities such as higher cost of power, finance and infrastructure lead to higher operating cost.
The capital goods sector contributes significantly to exports with over Rs 52,000 crore in 2013-14 which have grown at approx 20 per cent per annum over the last decade.

The sector also imports to the extent of Rs 1,14,500 crore, which is 37 per cent of the total demand of capital goods.