Govt plans major capital goods production push

India is proposing to expand the ambit of a key capital goods promotion scheme to include more sectors such as pharmaceuticals and textiles.

The current capital goods promotion scheme focuses heavily on electrical component and automobile manufacturing, and the government is now keen to extend support to others.

Plans are afoot to also bring new-age technologies besides those used for electric vehicles, batteries and automobile manufacturing.


"Proposals to expand the ambit of the scheme are being considered. The aim is to better cover capital goods manufacturing across sectors," a senior official aware of the development told ET.

Work is also underway to better India's Industry 4.0 plans by including more robotics and semiconductor-related applications.

The first phase of the capital goods scheme started in November 2014 with an outlay of ₹995.96 crore. Its second phase began in January 2022 with ₹975 crore budgetary support and industry contribution of ₹232 crore. The scheme is aimed at bridging the skill gap and addressing infrastructure development as well as technology needs of the capital goods sector.

The capital goods sector contributes around 12% of India's GDP and provides 5.5 million jobs, according to official estimates. India's capital goods industry is segmented across electrical equipment, process plant equipment, earth moving, construction & mining machinery, machine tools and textiles machinery.

"There have been several representations from other sectors about inclusion in the capital goods scheme of the ministry of heavy industries," the official said, adding that, at present, sectors such as mining, textiles and pharmaceuticals approach their nodal ministries for support.

According to the National Capital Goods Policy 2016, plastic machinery; process plant equipment; dies, moulds & press tools; printing machinery; metallurgical machinery and food processing machinery also command a significant share in India's capital goods output. The government could also consider tweaking this policy in line with the new scheme.