New Capital Goods Policy: 2016

New Capital Goods Policy: 2016

It is for the first time that a national policy has been framed for the capital goods sector.

Know about Capital Goods

Capital goods are goods which are used by businesses to produce other goods and services which are used by consumers. They are usually considered as fixed goods, that cannot be easily converted into cash.

The Capital Goods sector is a $ 32 billion industry in India, covers several sub-sectors in the Indian manufacturing space.

Why Capital Goods sector is important for Indian economy

  • Capital Goods sector has multiplier effect on economy
  • It impacts the growth of other industries as it provides critical inputs, i.e., machinery and equipment to the remaining sectors covered under the manufacturing activity
  • The capital goods sector contributes 12% to the total manufacturing activity
  • The capital goods sector offers direct employment to 1.4 million people and employs 7 million people indirectly

Let’s know some imp things about the policy

It is drafted by a joint task force of Confederation of Indian Industries (CII) and Department of Heavy Industries.

Reason: In the last 3 years, the rate of growth of the sector has been 1% due to overall slowdown and is also one of the weak performer in the manufacturing sector. As against the poor performance of the Indian capital goods sector, the global performance has been robust.

Vision: Building India as the world class hub for Capital Goods.

Nodal Agency: Department of Heavy Industries


  • To increase production of capital goods from Rs. 2.30 lakh crore in 2014-15 to Rs. 7.50 lakh crore in 2025
  • To raise direct and indirect employment from the current 8.4 million to 30 million
  • To increase exports from the current 27% to 40% of production
  • To increasing share of domestic production in India’s demand from 60% to 80%, thus making India a net exporter of capital goods

What does the policy offer to Capital Goods Sector?

It aims to facilitate following things for the capital goods sector:

  • Finance
  • Raw Material
  • Increase skill availability
  • Ensure mandatory standards
  • Promote growth and capacity building of MSMEs
  • More budgetary allocation for various schemes
  • Technology Development Fund is created to improve technology depth across sub-sectors


This is the most critical sector for achieving the vision of “Make in India” as the sector has multiplier effect on other sectors of economy. The policy is envisaged to unlock the potential for this promising sector and establish India as a global manufacturing powerhouse.


Published with inputs from Pushpendra
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