In order to ensure hassle-free growth for the heavy industry, the Central government is set to bring in new national capital goods policy by the end of March 2016.
The new policy will envisage provisions such as uniform Goods and Services Tax (GST), up to 50 per cent Cenvat credit facility to manufacturers with a view to ensure level-playing field.
There will also be provisions for reviving growth in beleaguered industries such as textile, mining and power equipment. The final draft has been prepared and submitted for the Union Cabinet approval.
“The final draft of the new capital goods policy has been prepared and submitted to the government for approval and we expect that by March-end the policy will be approved by the cabinet. In the new policy, emphasis is more on textile, heavy equipment used in mining and power industry, and also we have special provisions for hybrid automobiles to promote clean energy options,” said Anant G Geete, Minister for Heavy Industyries & Public Enterprises (MHI&PE).
The government has already launched ‘Faster Adopting and Manufacturing of Hybrid & Electric Vehicles’ or the FAME Scheme entailing an investment of Rs 14,000 crore. The scheme has witnessed participation of auto majors, including Maruti, Toyota, BMW and the Tatas.
The minister, who was in Mumbai on Friday last week, told this correspondent in an exclusive interaction that in the past two-three years the capital goods sector has gone through a rough time due to fall in domestic demand coupled with duty-free imports.
“For example, textile industry, which has been one of the most prominent contributors for manufacturing industry in past decades, was kept on the back seat. So, we will bring in reforms to revive this sector. Another issue is duty-free import of equipment for mining, electrical and power sector under project imports schemes.”
The ministry has recommended provisions that will promote more public private participation (PPP) under Make in India mission. “We have incorporated enough provisions that will ensure sustainable growth for the sector,” Mr Geete said. However, he declined to share detailed information on such provisions citing it as a matter of cabinet approval.
According to the new policy draft, the share of capital goods contribution will be almost doubled to 20 per cent by 2025 from present 12 per cent of the total manufacturing activity. During the same period, the capital goods production has to be raised over three times to more than Rs 7.5 lakh crore from the current about Rs 2.3 lakh crore.
The draft also includes the provisions for increasing the share of domestic production in India’s capital goods demand from 60 per cent to 80 per cent by 2025.
According to Mr Geete, the new capital goods policy will not only focus on Make in India vision, but also on manufacturing based on clean energy resources.
The writer is a freelance journalist
Policy will envisage provisions such as uniform GST, up to 50% Cenvat credit to manufacturers
