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Govt approves Rs 930 cr scheme to boost capital goods sector

New Delhi: Government today approved a Rs 930 crore scheme to bring competitiveness of domestic capital goods sector at par with global standards, which is first inthe series of initiatives under Prime Minister Narendra Modi's vision of 'Make in India'.

"...scheme on enhancement of competitiveness in the Indian capital goods sector to be implemented in the current 12th Plan period (2012-17) and spilling over to the 13th Plan period with an estimated outlay of Rs 930.96 crore," an official release said.

The decision was taken at a meeting of the Cabinet Committee of Economic Affairs here in the capital.

According to the statement, the gross budgetary support from the government for the scheme would be Rs 581.22 crore and the balance Rs 349.74 crore would be contributed by the stakeholder industries.

"This is a pilot project, going ahead we plan to expand the project across the country. The total cost to be incurred for implementation of the entire project is around Rs 20,000 crore in coming years," Heavy Industries Minister Anant Geete told reporters here at a press conference after the CCEA decision.

He further said, "Since last 15 years small scale industry associations were demanding support from the government as they were unable to sustain because of global competition. Today the Narendra Modi led government has met this demand."

The scheme, on implementation, would attempt to make the Indian capital goods sector globally competitive. The Capital Goods value added contributes a fairly constant proportion of 9-12 per cent of the total manufacturing value added.

The sub sectors of Capital Goods covered under the scheme are mainly for Machine Tools, Textile Machinery, Construction and Mining Machinery, and Process Plant Machinery.

The scheme would address the issue of technological depth creation in the capital goods sector, besides creating common industrial facility centres.

The scheme has five components to achieve the desired result in pilot mode.

Firstly,it would create Advanced Centres of Excellence for R&D and Technology Development with National Centres of Excellence in Education and Technology such as Indian Institute of Technology (IIT) Delhi, IIT Bombay, IIT Madras, IIT Kharagpur and Central Manufacturing Technology Institute(CMTI), Bangalore.

The second component relates to establishment of "Integrated Industrial Infrastructure Facilities" popularly known as Machine Tool Parks with a basic objective of making the machine tool sector more competitive by providing an ecosystem for production.

Establishment of Machine Tool Parks will cut down logistic cost substantially and would be a step forward in making the sector cost effective, having enhanced export capability and favourable for attracting more investment.

The park would be established by a Special Purpose Vehicle (SPV) formed by local industries, industry associations, financial institutions, Central / State Governments, R & D Institutions, etc.

Under third component, Common Engineering Facility Centre for Textile Machinery will be set up with active participation of the local industry and the industry associations, which in turn would improve facilitation to the users along with visibility.

The Common Engineering Facilities that can be provided within such set ups are common foundry, common heat treatment, testing laboratories, design center, common prototyping, general and specific machinery, etc.

The Facility would enable textile machinery and other capital goods manufacturers to develop capital goods to meet the large requirements and improve capacity utilization, thereby reducing the variable cost of operation.

This would also be established by a Special Purpose Vehicle (SPV) formed by local industries, industry associations, financial institutions, Central/State Governments, R&D Institutions, etc.

The fourth component relates to testing and certification centre for earth moving machineries in view of the fact that it is soon going to be made a mandatory requirement. At present there is no test facility to test earthmoving machinery like that in the automobile industry.

With the setting up of the test centre, the import of second hand and outdated machinery could be restricted through mandatory testing and certification.

Moreover the centre would facilitate evaluating the performance, statutory and regulatory requirements of construction and mining machinery and equipment.

The setting up of Test and Certification Centre for Earthmoving Machinery will be done by the SPV specifically created by the Department of Heavy Industry with the approval of the Cabinet.

After approval of the scheme, a separate proposal for information of SPV for implementation of this particular scheme component will be sent to the Cabinet for approval.

Under the final component, a "Technology Acquisition Fund" under the Technology 'Acquisition Fund Programme (TAFP) will be created in order to help the Capital Goods Industry to acquire and assimilate specific technologies, for achieving global standards and competitiveness within a short period of time.

The TAFP will provide financial assistance to Indian capital goods industry to facilitate acquisition of strategic and relevant technologies, and also development of technologies through contract route, in-house route or through joint route of contract and in-house.

Fund can extend partial support to industry to enhance their technology level, for achieving superior product quality/ functionality, production capacity, safety and sustainability performance.

This programme would bridge the technology gaps identified in the 12th Plan Working Group Report on "Capital Goods and Engineering Sector".

PTI

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Updated Date: Sep 15, 2014 20:18:10 IST

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