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IAS Current Affairs: National Capital Goods Policy introduced

IAS Current Affairs: February 17, 2016 
 
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TOPIC: National Capital Goods Policy introduced

A National Capital Goods Policy was unveiled by the Government to provide impetus to the capital goods sector and a leg up to the Make in India initiative.
 
This is for the first time that a national policy has been framed for the sector. It envisages creation of additional 21 million jobs in the country by 2025
 
This announcement is part of the government’s commitment to turn the country into a world class hub for capital goods.
 
 
Objective of the policy:
  • To create an ecosystem for globally competitive capital goods sector.
  • To increase production of capital goods from Rs. 2.30 lakh crore in 2014-15 to Rs. 7.50 lakh crore in 2025 and raise direct and indirect employment from the current 8.4 million to 30 million.
  • The policy envisages increasing the share of domestic production in India's capital goods demand from 60 percent to 80 percent by 2025 and in the process improve domestic capacity utilization to 80-90 percent.
  • The National Capital Goods policy looks to increase the share of Capital Goods in the total Manufacturing sector from the current 12% to 20% by 2025.
 
 
Highlights of the policy:
  • The policy envisages making India a net exporter of capital goods and aims at facilitating improvement in technology across sub-sectors, increasing skill availability, ensuring mandatory standards and promoting growth and capacity building of MSMEs
  • Some of the key issues addressed include: availability of finance, raw material, innovation and technology, productivity, quality and environment-friendly manufacturing practices, promoting exports and creating domestic demand.
  • The key policy recommendations include strengthening the existing scheme of the DHI (Department of Heavy Industry) on enhancement of competitiveness of capital goods sector by increasing budgetary allocation and increasing its scope to further boost global competitiveness in various sub sectors and enhancing export of Indian made capital goods through a ‘Heavy Industry Export and Market Development Assistance Scheme (HIEMDA)’.
  • It has also made provision for introducing a Technology Development Fund, upgrading existing and setting up a new testing and certification facility, making standards mandatory in order to reduce sub-standard machine imports and at the same time providing opportunity to local manufacturing units by utilising their installed capacity and unveiling scheme for skill development for capital goods sector.
  • It advocates adoption of a uniform Goods and Services Tax (GST) 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 policy recommends ensuring parity of import duty structure with domestic duties, for example, equalising Countervailing Duty (CVD) and Excise duty; and Special Additional Duty (SAD) with Sales tax/ VAT or GST.
  • To create an ecosystem for globally competitive capital goods sector, the policy recommends devising a long term, stable and rationalized tax and duty structure. It recommends correcting the existing inverted duty structure anomalies and considering a uniform customs duty on imports of all capital goods related products. 
Sources: Firstpost, The Hindu
 

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