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The field of manufacturing and production is the primary contributor to developing a country’s economy. The capital goods sector is the industrial sector based on the production and distribution of goods. This sector is a crucial element in speeding up production activities by supplying critical input such as instruments and machines.
The government launched the capital goods scheme to advance the current machinery and equipment used in the industry. The introduction of modern technology in the conventional manufacturing methods under this scheme boosted the country’s capital goods sector.
The government introduced Phase 1 of the scheme on the enhancement of competitiveness in the capital goods sector in November 2014. They introduced Phase 2 in January 2022 to enhance the effect of phase 1.
Capital Goods Sector
The capital goods sector comprises several industries involved in processing, manufacturing, and production and distribution of goods. The main sub-sectors of the capital goods sector are listed below.
Tools related to machines comprise machines associated with cutting metal and their forming.
Plastic machinery comprises machinery used in the fabrication of plastic. Machinery used in the paper and rubber industry is similar to the plastic industry.
Equipment related to Heavy Electricity finds applications in the production, transaction, and distribution of electricity related to this sector.
Equipment related to Process Plant
Food processing machinery
Machinery of printing
Capital Goods Scheme Phase 1
A capital goods scheme is adjusting the value-added tax (VAT), which is claimed again over the spam of this tax of capital goods.
It was introduced in 2014 to enhance the investment for the advancement of machinery in the manufacturing sector with modern technology. The capital goods scheme also focuses on skill development for industry progress.
The capital goods scheme is applicable for a particular asset over a fixed value in the following ways. The economic outlay of this scheme is around Rs 995.96 Cr. with the additional backup of Rs 631.22 Cr. and contribution from industries of Rs 583.312 Cr.
National Capital Goods Policy, 2016
The national capital goods policy 2016 is the policy of the Indian government for the production sector of India. The main goal of the Indian government in introducing this policy is to reach the value of manufacturing capital goods of Rs 750,000 Cr per year by 2025.
Another critical focus of the government behind the national capital goods policy is to enhance the number of employees in this sector to 30 million people. This policy also plans to build the startup centre in production and skill development in the capital goods sector.
Enhancement of Competitiveness in the Capital Goods Sector
The government created the scheme of enhancement of competitiveness in the capital goods sector to address technical obsolescence and a lack of access to high-quality industrial infrastructure and basic facilities.
The main objective of this scheme is to enhance the development of technology through the cooperation of professional research & development institutes and the Indian Government.
Enhancement of Competitiveness in the Capital Goods Sector, Phase 2
The government announced Phase 2 of this policy in the starting month of 2022, on 25th January. The main goal behind Phase 2 of the enhancement of competitiveness in the capital goods sector scheme is to boost the output generated by Phase 1 of this scheme.
The economic outlay of this scheme is around Rs 1207 Cr., with the additional backup of Rs 975 Cr. and contribution from industries of Rs 232 Cr. The components of Phase 2 of the schemes are listed below.
To obtain the modern technological innovations for the production field front the related portals.
Set up the “Machine Tool Parks” for the production units. These parks should provide a more competitive and economic system for machine equipment manufacturing.
To build the “Advancement Centre of Excellence” for research and development of new technologies with the cooperation of different Indian Institutes of Technology such as Indian Institutes of Technology Madras, Indian Institutes of Technology Kharagpur etc.
To establish certification and testing centres for the mobile machinery to put a full stop to importing obsolete or second-hand equipment.
Conclusion
Capital goods are the fixed or specified assets used in manufacturing goods. The owner of these fixed assets is known as the capital goods owner. Many sectors deal with the manufacturing and production of goods that contribute to the country’s gross development production.
The government of India introduces capital goods schemes for such manufacturing sectors to push domestic production and increase exports by improving technology. Enhancement of competitiveness in the capital goods sector scheme deals with the technical degeneration and fixed accession to the modern manufacturing infrastructure.
