Column : Building manufacturing through capital goods
The capital goods sector has grown rapidly at over 14% CAGR from R1.6 lakh crore in 2005-06 to R3.1 lakh crore in 2010-11. It provides direct employment to 14 lakh persons. Almost all sub-sectors have outperformed the general industrial index growth during this period. The largest sub-sectors of heavy electrical and engineering goods have done well in the last five year plan.
However, the capital goods sector has lagged in recent years following slow growth in the world economy. In fact, the rate of growth in the sector for April-September of this year stands at a negative 13.7%. User sectors, such as infrastructure, construction, and so on, have cut down on capital expenditure and deferred orders. Users have also increasingly moved to importing capital equipment, given embedded technologies. Indian capital goods are subject to relatively high indirect taxes as compared to overseas
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