Govt clears country’s first capital goods policy, ‘to create 21 mn jobs’
The landmark move would help in creating of over 21 million new jobs by 2025. Giving details about the Cabinet decision, Railways Minister Suresh Prabhu on Wednesday said, “Capital goods manufacturing if it happens in India along with the manufacturing that is going to happen downstream, the entire economy gets fillip.”
It’s worth mentioning here that the Capital Goods industry is one of the key contributors to value added manufacturing and is significant for overall economic development of India. The objectives of the National Capital Goods Policy are to create an ecosystem for a globally competitive capital goods sector to achieve total production in excess of Rs 7.5 lakh crore by 2025 from the current Rs 2.3 lakh crore.
“Cabinet has given its approval for National Capital Goods Policy, which will give a big push to production. With the this policy in place, the government is hopeful that the production will go up from Rs 2,30,000 crore in 2014-15 to Rs 7,50,000 crore in 2025 and will create over 21 million employments,” an official said.
According to the official, the policy also aims to increase direct domestic employment from the current 1.4 million to at least 5 million and indirect employment from the current 7 million to 25 million by 2025, thus providing additional employment to over 21 million people.
It also envisages increasing the share of domestic production in India’s capital goods demand from 60 per cent to 80 per cent by 2025 and in the process improve domestic capacity utilisation to 80-90 per cent. “To increase exports from current 27 per cent to 40 per cent of production, share of domestic production in India’s demand from 60 per cent to 80 per cent,” the official added.
The policy envisions increasing the share of capital goods in total manufacturing activity from 12 per cent at present to 20 per cent by 2025. The policy is envisaged to unlock the potential of this promising sector and establish India as a global manufacturing powerhouse, said the document unveiled earlier this year.
“Capital goods sector is a key contributor to manufacturing as it present it is contributing 12 per cent which translates to 2 per cent of GDP. Importantly, the sector has a significant multiplier effect on overall economic growth as it provides the foundational building blocks for a large number of user industries by providing critical inputs, that is, machinery and equipment, necessary for manufacturing,” the official added. Capital Goods sector is also a major employment driver, with 15 million people employed across various sub-sectors. It also indirectly creates employment for a large number of people in a variety of user industries.