India may soon have a policy for the capital goods sector as the Heavy Industry Ministry is reportedly set to place the draft policy before the Cabinet for approval.
"We will place the (capital goods) policy before Cabinet this month," a senior Heavy Industry Ministry official told Press Trust of India.
A task force set up by the ministry prepared a road map for the capital goods sector and suggested proposals to frame the policy.
In order to achieve the Make in India initiative, the draft policy suggests a long term, rationalised tax structure that could facilitate the capital goods segment in the country. The task force has reportedly recommended imposing customs duty on imports of all capital goods related products.
The draft policy apparently aims to increase domestic employment in the sector to 50 lakh by 2025 from the current 15 lakh. This means creation of an additional 35 lakh employment in the manufacturing sector.
It also recommends increasing the share of capital goods in the manufacturing sector to 20 percent by 2025 from 12 percent at present.
In addition to providing a 50 percent CENVAT credit to manufacturers using raw material products for processing or using similar products in production of finished goods, the draft also suggested incentives for domestic and global mergers acquisitions.