Capital Goods

India’s capital goods industry plays a key role in the growth of the economy as it contributes around 12% to the manufacturing output of the country and provides essential machinery and equipment to various sectors. Capital goods industry supplies modern machineries to manufacturing companies and thereby improves their productivity and competitiveness in the global marketplace.

Some of the products manufactured and supplied by the capital goods industry are textile machinery, earthmoving and mining machinery, machine tools, heavy electrical equipment, printing machinery, food processing machinery and so on. The sector also offers machineries for automobile, defence, aerospace and other industries. India’s capital goods sector employs around 1.4 million people directly and around 7 million people indirectly.

India is a major importer of heavy electrical equipments, process plant equipments, earthmoving and mining equipments, textile machineries and other capital goods.

Government of India released the National Capital Goods Policy 2016 with an aim to increase production of capital goods from Rs 230,000 crore in 2014-15 to Rs 750,000 crore in 2025. The policy also set a target of raising direct and indirect employment in the sector from the current 8.4 million to 30 million by 2025. Another objective of the policy is to reduce the reliance on import of capital goods and also to become net exporter thereof.

Presently, India imports around 40% of the capital goods used in the country. The policy aims to enhance the share of exports in domestic production from the current 27% to 40% and reduce dependence of import to 20% from the present 40%.

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