The domestic capital goods industry has recently seen a turn-around in some sectors, according to the Confederation of Indian Industry (CII).
According to the CII, while sectors such as commercial air-conditioning, processed plant equipment, bulk material handling equipment and wagons do not see any short-term improvement, those such as power equipment, mining and road machinery expect a positive change in the first half of the current fiscal.
Sumit Mazumder, chairman, national committee on capital goods and engineering industry, CII, said the growth of the capital goods industry, though, was dependent on continued investment, success of the new accelerated programme in the power sector and orders from the core sector.
More From This Section
A feedback from 18 sectors of the capital goods industry revealed that a series of policy issues had adversely impacted most the segments of the industry, Mazumder said, adding that the key issues were differential duty rates for indigenous equipment as compared to imported equipment, difficulties arising out of the recent notification on the sales tax, the purchase preference issue, skewed pre-qualifications criteria and insufficient demand due to a cut in government orders. Represent-atives from the sector recently met the minister of heavy industries and public enterprises, B Vikhe-Patil, to discuss these issues.
A S Goindi, vice-president, Indian Machine Tools Manufacturers Association, said consumption was constantly declining in the machine tools sector. Over the past four years, there had been a 40 per cent decline in consumption and in the past year alone, the consumption had declined 12 per cent.
The situation in the industry is so bad that some of the oldest firms like Mysore Kirloskar have either shut down or are looking for alternate means of survival. The machine tools industry has devised a strategy to tap the exports market and is jointly working with the CII to address the problems faced by the sector.
S R Srinivasan, CEO of Voltas Limited, said the recent sales tax notification had led to a price differential of 4-12 per cent and some of the major customers such as hospitals and hotels were unable to provide