The country's first-ever policy for the capital goods sector will be placed before the Cabinet for approval this month, a senior official told PTI.
The country’s first-ever policy for the capital goods sector will be placed before the Cabinet for approval this month, a senior official told PTI.
The draft policy envisions increasing the share of capital goods in total manufacturing activity to 20 per cent by 2025 from 12 per cent at present.
It aims to increase domestic employment from the current 15 lakh to at least 50 lakh by 2025 thus providing additional employment to over 35 lakh people in the sector.
“We will place the (capital goods) policy before Cabinet this month,” a senior Heavy Industry Ministry official said.
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 policy on the industry.
The draft policy proposes a long term, stable and rationalised tax and duty structure to promote the capital goods sector, one of the most critical segments for achieving the vision of Make in India.
Stressing on creation of an ecosystem for globally competitive capital goods sector, it proposes uniform customs duty on imports of all capital goods related products.
It also proposes allowing up to 50 per cent CENVAT credit to manufacturers using such products as raw material or intermediates for further processing or using such goods in the manufacturing of finished goods.
It pitches for adoption of uniform Goods and Services Tax regime ensuring effective GST rate across all capital goods sub-sectors competitive with import duty after set-off with a view to ensure level playing field. The draft makes a case for providing incentives for domestic and global mergers and acquisitions.
It also pitches for providing incentives for venture-funding and risk capital to start-up. The policy is aimed at creating an ecosystem for a globally competitive capital goods sector to achieve total production in excess of Rs 5 lakh crore by 2025 from the current Rs 2.2 lakh crore.
On availability of industrial financing, the draft pitches for subvention fund for setting up capital goods units and to allow External Commercial Borrowings under automatic route for all capital goods.