NEW DELHI: The Cabinet has approved a first ever national capital goods policy that seeks to reduce reliance on imported equipment by incentivising domestic production and in the process creating crores of jobs The policy seeks to increase production of capital goods from Rs 2.3 lakh crore in 2014-15 to Rs 7.5 lakh crore in 2025 and also raise direct and indirect employment from the current 84 lakh to three crore.“Capital goods manufacturing, if it happens in India, along with the manufacturing that is going to happen downstream, the entire economy gets fillip,” said Railway Minister Suresh Prabhu after the Cabinet meeting. It also aims to increase exports from the current 27% to 40% of production by providing an enabling environment for the industry which will include a long-term and stable duty structure that will encourage domestic manufacturing.“It will increase the share of domestic production in India’s demand from 60% to 80%, thus ma king India a net exporter of capital goods,” a statement issued by the government said.The Department of Heavy Industry will over time roll out the key elements of the policy by seeking approvals for schemes. “We are happy to see the roadmap for the capital goods sector in India and its recognition as a strategic sector. 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 ho ur, which will provide the much needed impetus to the sector and will go a long way in achieving the objectives of Make in India,” business chamber Ficci said in a statement. The specific areas of intervention identified are: improvement in technology depth across the capital goods sub-sectors, increase skill availability, ensure mandatory standards and promote growth and capacity building of MSMEs.Capital goods production contracted 2.9% in FY16 according to the Index of Industrial Production (IIP) numbers. In the same period, the import of industrial machinery rose 5.2% to $9.7 billion. Electrical machinery and equipment imports were flat at $ 6 billion.The government hopes this policy will boost domestic production. “It will help in realising the vision of building India as the world class hub for capital goods,” the statement observed, adding that the new policy will also play a pivotal role in overall manufacturing as the pillar of strength to the vision of ‘Make in India’.Earlier, the government had sought suggestions on a draft paper to frame policy on the capital goods industry, setting a target of lifting the contribution of capital goods from the present 12% to 20% of the total manufacturing activity in the country by 2025. The draft paper had further noted that India’s share in global exports in the capital goods sector ranges between 0.1% and 0.6%, across various subsectors, while the share of global exports for China ranges between 7.7% and 16.3% depending on the sub sector.