National Capital Goods Policy 2016 - Business -

National Capital Goods Policy 2016 – Business

   National Capital Goods Policy 2016


A boost to manufacturing sector is envisaged through this National Capital

Goods Policy by providing for an enabling ecosystem for capital goods growth

and ensuring sustained incentive for domestic manufacturers to service

domestic as well as export market demand. The policy envisages 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. It 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%, thus making India a net exporter of capital goods. The policy

also aims to facilitate improvement in 

technology depth across sub-sectors, 

increase skill availability, ensure 

mandatory standards and promote growth and capacity building of MSMEs.

The policy proposes a comprehensive policy agenda to achieve these goals:

● Make in India initiative

● To create an enabling scheme as a pilot for ‘Heavy Industry Export &

Market Development Assistance scheme HIEMDA).

● Strengthen existing capital goods scheme

● Increasing scope of ‘Scheme on Enhancement of Competitiveness of

Capital Goods’

● To launch a Technology Development Fund

● To create a ‘Start-up Centre for Capital Goods Sector’

● Mandatory Standardization

● To upgrade development, testing and certification infrastructure

● Skill development

● Cluster approach

● To modernize the existing CG manufacturing units, especially SMEs

● Support services


The National Capital Goods Policy is formulated with the vision to increase the

share of capital 24goods contribution from present 12% to 20% of total

manufacturing activity by 2025.


The policy is envisaged to achieve the following missions

● To become one of the top capital goods producing nations of the world

by raising the total production to over twice the current level.

● To raise exports to a significant level of at least 40% of total production

and become a net exporter of capital goods.

● To improve technology depth in Indian capital goods from the current

basic and intermediate levels to advanced levels.

● To build local champions or large scale Indian corporations.


The objectives of the National Capital Goods Policy are to

● Increase total production

● Increase employment

● Increase exports

● Improve skill availability

● Increase domestic market share

● Improve technology depth

● Promote standards

● Promote SMEs

Scope of national capital goods policy

include 10 sub sector

● Machine Tools

● Textile machinery

● Earthmoving and mining machinery

● Heavy electrical equipment

● Plastics processing machinery

● Process plant equipment

● Dies, moulds and press tools

● Printing machinery

● Metallurgical machinery

● Food processing machinery


● The Capital Goods sector is a very large and important sector and a key

contributor to manufacturing activity in India. The growth of the sector

has been lagging in recent years and the sector is facing a variety of

issues and challenges. The National Capital Goods Policy is envisaged to

immediately address the needs of the sector and proactively facilitate

growth and development of the sector. The policy has laid out a vision

and mission for the sector for the coming decade and proposed a

comprehensive set of policy actions which would enable the

achievement of the objectives for the sector.

● The existing scheme and institutional frameworks serving the capital

goods have been studied and mechanisms to leverage and further

strengthen them have been proposed. A set of new initiatives and policy

actions common to all sub-sectors as well as sub-sector specific policy

actions have also been proposed.

● The smooth implementation and effectiveness of the policy will require

alignment and joint action of several ministries and departments and

have implications on multiple stakeholders and user industries. To this

end, a governance mechanism has been proposed in the form of

interministerial and inter-departmental committees at the highest level

to ensure due consideration of the interests of all stakeholders. The

committees will be tasked with driving coordinated action and

monitoring the progress and effectiveness of policy on an annual basis.

● The capital goods sector operates in a dynamic local and global

environment and it is imperative for the policy to undergo a periodic

review and revision to maintain its relevance. The National Capital

Goods Policy will be reviewed every five years and revised appropriately

to take account of progress in implementation and emerging trends in

the national and international environment.

● The National Capital Goods Policy is a major step to unleash the

potential of this promising sector and is envisaged to contribute

significantly to achieving the overall vision for manufacturing and “Make

in India” as laid out by the Government of India.

Leave a comment