Department of Heavy Industry Ministry of Heavy Industries & Public ...

Recommendations for 12 th Five Year Plan for Capital Goods & Engineering Sector 5
development support and support for acquisition of technology firms abroad.
Some of the PSUs are proposed to be elevated as national/global champions.
f.e.Technology and design development support is proposed to be provided to the
capital goods sectors for producing energy efficient machines.
4. Capital goods & engineering sector as a strategic sector for Indian economy:
"Capital Goods” sector comprises of plant and machinery, equipment /
accessories required for manufacture / production, either directly or indirectly,
of goods or for rendering services, including those required for replacement,
modernization, technological upgradation and expansion. It also includes
packaging machinery and equipment, refrigeration equipment, power
generating sets, equipment and instruments for testing, research and
development, quality and pollution control.
In the context of Working Group of Capital Goods and Engineering Sector,
sub-sectors such as machine tools, plastic machinery, dies/ moulds & tools,
earthmoving & mining equipment, heavy electrical & power plant equipment,
metallurgical machinery, textile machinery, process plant machinery and light
engineering goods have been included.
Capital goods sector is extremely crucial for the development of the country’s
economy for the following two important reasons:
– Capital Goods is considered as a strategic sector and development of
domestic capabilities is essential from a national self-reliance and
security perspective
– Capital Goods sector has multiplier effect and has bearing on the growth
of the user industries as it provides critical input, i.e., machinery and
equipment to the remaining sectors covered under the manufacturing
activity.
The capital goods industry contributes 12% to the total manufacturing activity
(which is about 15% of the GDP).
With a view to achieve 9% growth in GDP during the 12th Five Year Plan, the
manufacturing industry should grow at least by 11% to 13% per annum. This
would mean that the Capital Goods sector, which is considered to be the
core of manufacturing, should grow at around 17% to 19%.
Policy environment in respect of capital goods & engineering sector
No industrial license is required for the sector.
FDI up to 100% permitted on automatic route (through RBI)
Quantum of payment for technology transfer, design & drawing, royalty etc.
to the foreign collaborator has no limit
Imports and exports are allowed freely.
CAPITAL GOODS AND ENGINEERING SECTOR OCTOBER, 2011