New Delhi: Union Cabinet on Wednesday approved the first-ever policy for the country's capital goods sector envisaging creation of over 21 million new jobs by 2025.
The objectives of the National Capital Goods Policy are to create an ecosystem for a globally competitive capital goods sector to achieve total production in excess of Rs 7.5 lakh crore by 2025 from the current Rs 2.3 lakh crore, according to a government spokesperson.
"Cabinet has given its approval for National Capital Goods Policy. Production to go up from Rs 2,30,000 crore in 2014-15 to Rs 7,50,000 crore in 2025, jobs from 8.4 million to 30 million," the spokesperson said in a tweet.
The policy aims to increase direct domestic employment from the current 1.4 million to at least 5 million and indirect employment from the current 7 million to 25 million by 2025, thus providing additional employment to over 21 million people.
It also envisages increasing the share of domestic production in India's capital goods demand from 60 percent to 80 percent by 2025 and in the process improve domestic capacity utilisation to 80-90 per cent.
"To increase exports from current 27 percent to 40 percent of production, share of domestic production in India's demand from 60 percent to 80 percent," he added.
The policy envisions increasing the share of capital goods in total manufacturing activity from 12 percent at present to 20 percent by 2025.
"Capital goods manufacturing if it happens in India along with the manufacturing that is going to happen downstream, the entire economy gets fillip," Union Railways Minister Suresh Prabhu said.
The policy is envisaged to unlock the potential of this promising sector and establish India as a global manufacturing powerhouse, said the document unveiled earlier this year.
To create an ecosystem for globally competitive capital goods sector, the policy recommends devising a long-term, stable and rationalised tax and duty structure.
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.
The policy calls for ensuring parity of import duty structure with domestic duties, for example, equalise Countervailing Duty (CVD) and Excise duty; and Special Additional Duty (SAD) with Sales tax/ VAT or GST.
It recommends correcting the existing inverted duty structure anomalies and considering a uniform customs duty on imports of all capital goods-related products.
Key policy recommendations include strengthening the existing scheme of the Department of Heavy Industry on enhancement of competitiveness of the capital goods sector by increasing budgetary allocation and increasing its scope to further boost global competitiveness.
It entails stepping up exports of India-made capital goods through a 'Heavy Industry Export & Market Development Assistance Scheme (HIEMDA)', launch of Technology Development Fund, setting up new testing and certification facility and upgrading existing ones, making standards mandatory in order to reduce sub-standard machine imports, among others.