India Inc today welcomed the government’s approval to the country’s first-ever policy for the capital goods sector, terming it is the “need of the hour” and said the thrust on demand creation, technology depth and exports will help address the challenges faced by the sector.

The government gave its nod to India’s first-ever policy on capital goods that intends to make the country a world-class hub and looks to create over 21 million additional jobs by 2025.

The decision was taken at a meeting of the Cabinet chaired by Prime Minister Narendra Modi here.

“The Policy’s thrust on demand creation, technology depth and exports will go a long way to address the challenges and issues that the sector is currently going through.

“Actualization of these key focus areas will surely add speed and vigour in aligning efforts towards development of capital goods sector and hence  contribute to India’s manufacturing growth story,” CII Director General Chandrajit Banerjee said.

“India has the potential to be the net exporter of capital goods as against the net importer currently. National Capital Goods Policy is definitely the need of the hour, which will provide the much needed impetus to the sector and will go a long way in achieving  the objectives of Make in India,” Ficci President Harshvardhan Neotia said.

The policy envisions increasing the share of capital goods in total manufacturing activity to 20 per cent by 2025, from 12 per cent at present.

It also seeks to facilitate improvement in technology depth across sub-sectors, increase skill availability, ensure mandatory standards and promote growth and capacity building of MSMEs.

It aims to increase direct domestic employment to at least 5 million from the current 1.4 million and indirect employment to 25 million from the current 7 million by 2025, potentially providing an additional employment to over 21 million people.

To create an ecosystem for globally-competitive capital goods sector, the policy bats for devising a long-term, stable and rationalised tax and duty structure.

It also advocates adoption of a uniform Goods and Services Tax (GST) regime ensuring effective GST rate across all capital goods sub-sectors with a view to ensuring a level-playing field.