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Policy to curb capital goods import likely

business Updated: Mar 10, 2015 23:41 IST
Timsy Jaipuria
Timsy Jaipuria
Hindustan Times
Import of cheap capital goods


In a bid to curb import of cheap capital goods, especially from China, the government is soon set to roll out a mission plan/policy for the sector.

According to a senior government official, the plan, which will be ready in the next six months, would provide a cushion to the domestic manufacturers to become competitive in the global as well as domestic markets.

The plan will help align the Indian capital goods certification standards to international standards, which will increase the global acceptance of these goods.

Capital goods include heavy equipment such as plant and machinery used in agricultural or industrial processes.

Apart from this, the policy would give tax exemptions, facilitate availability of competitive working capital and export credit. It is also expected to provide competitive terms for short-term export finance to help capital goods exporters complete their production.

"The policy will introduce promotion measures such as creation of specific export promotion council, earmarking funds for technological up-gradation, ensuring adequate and competitive credit flow, and creating export promotion fund," the official added.

Over the last three to four years, the sector has been facing tough times as China, a major player in exporting cheap and competitive capital goods, has been eating into India's domestic as well as international markets.

The plan will be a part of the country's signature 'Make in India' campaign, and help players, big and small, to improve earnings.

"Apart from improving demand, the sector's revival is also about cost- competitiveness, especially with respect to exporting countries such as China," said SV Sukumar, head, strategy & operations practice, KPMG in India.

However, he pointed out, the sector's growth over the medium and long-terms depends on technological innovation, something that India is relatively weaker in.

He said the players would have to invest in R&D to become more cost-competitive in the short term, even if the government gives policy concessions.