India's Capital Goods Policy on the anvil

The first-ever policy for India's capital goods sector will be placed before the Cabinet for approval by November-end, a government official said today. "We will take it (the policy for the capital goods sector) to the Cabinet by November-end," Secretary in the Heavy Industries Ministry, Rajan Katoch said at a press conference here. The Ministry had set up a task force to make a road map for the country's capital goods sector and sought suggestions on a draft paper to frame a policy on the industry.

The draft paper prepared by the Department of Heavy Industry pointed 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 sub sector. Moreover, it said, Indian share in global exports in the capital goods sector is still low -- between 0.1 and 0.6 per cent -- across various sub sectors. In contrast, share of global exports for China is between 7.7 and 16.3 per cent depending on the sub sector.

The capital goods sector contributes significantly to exports with over Rs 52,000 crore in 2013-14 which has grown at approximately 20 per cent per annum over the last decade. The imports were to the extent of Rs 1,14,500 crore, which is 37 per cent of the total demand of capital goods. Besides, Katoch said, individual Cabinet notes on closure of four CPSEs, including three units of HMT and Tungabhadra Steel Products, have been circulated while discussions are on with Defence Ministry on Hindustan Cables.

"Four of the Cabinet notes have been circulated including HMT and Tungabhadra Steel. They are under consideration. We are getting the views of various ministries.