Economy

Centre extends ₹580 cr lifeline to capital goods sector

R Yegya Narayanan Coimbatore | Updated on November 27, 2014 Published on November 27, 2014

The Centre has extended a near ₹580 crore life line to the capital goods sector that plays a key role in the manufacturing chain by launching a scheme to make the Indian industry globally competitive.

The proposed `Scheme for Enhancement of Competitiveness of the Capital Goods Sector’ seeks to address the issue of `technological depth creation’ in the capital goods sector apart from formation of common industrial facility centres.

A gazette notification issued by the Ministry of Heavy Industries and Public Enterprises (Department of Heavy Industry), GoI, on Nov 5 pointed out that if the capital goods sector was provided with the necessary support, it would `go global soon’.

Otherwise, the country would turn into a global `dumping ground’ for second hand machines and the country would become the largest importer of machines and components. The prominent seven sub sectors included machine tools, dies and moulds, textile machinery (including jute machinery), heavy electrical, mining and construction, metallurgical and process plant equipments and plastics machinery.

The notification pointed out that the prominent sub sectors have a demand worth ₹2.90 lakh crore. Of this, domestic production was valued ₹1.85 lakh crore and exports ₹46,000 crore. But the imports were valued ₹1.51 lakh crore. The sector employs directly 1.4 million skilled people.

Listing some of the major constraints faced by the sector, the ministry notification pointed out lack of technology upgradation and modernisation, lack of cutting edge technology and R&D support, shortage of skilled manpower and industry disconnect with technical institutions as some of the major constraints faced by the sector. This had made India the largest market for imported capital goods while the `domestic capacity after upgradation can produce the same’.

Highlighting the benefits of the proposed scheme, the ministry said that the scheme would `encourage investment in technology upgradation, skill development and augmentation of modern manufacturing capacities’ for the growth of the sector. It also seeks to mitigate the impact of some of the constraints faced by the sector and improve their competitiveness. It also envisaged action in synchronisation with the 12th five year plan `for rejuvenating growth in manufacturing sector’.

The proposed scheme envisages Government investment of ₹581.22 crore during the current five year plan (12th FYP), much of which would go for creating permanent technical services and common facility centres. The objective of the scheme was to give a boost to the Indian economy by making the Indian capital goods sector globally competitive.

Published on November 27, 2014
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