The Cabinet has approved a capital goods policy, with a vision to reduce reliance on imported machineries and to create millions of jobs.
The policy targets to meet domestic requirements from 60% to 80% and thus to become a net exporter. Production of capital goods will be increased to Rs 7.5 lakh crore by 2025 from the present Rs 2.3 lakh crores.
Cabinet’s initial framework about the policy also targets for the restructuring especially financial restructuring of the major PSES and establishment of new IITs.
India heavily depends on imports to meet it domestic capital goods demand. For many years, capital goods are the second largest import item after crude oil. Most of the capital goods are imported from China. Sectors like telecom, energy and other basic infrastructure are making heavy imports from China.
Development of the capital goods sector is a prerequisite for the industrialization of the country as well. China is leading the front with rapid pace in industrial sector especially in the machinery sector. China’s share in world capital goods exports is around 12%. On the other hand, India’s share is less than 0.5% compared to its export share of 1.7% for the whole goods.