Finmin to look into capital goods sector slump

The finance ministry is looking at various measures to provide a boost to the capital goods sector, which witnessed a sharp slowdown in growth earlier this year.

Finance Minister P Chidambaram today held a meeting with chief executives of several leading public sector and private companies in the sector including the likes of NPTC, Bhel, BEML and L&T among others.

The meeting, which took place days before the February industrial growth data is scheduled to be released this Friday, took stock of performance and discussed several measures to boost the capital goods sector.

Sources added the participants demanded that the government levy anti-dumping duty on Chinese imports and not allow refunds on the special additional duty paid .

In January this year, the Index of Industrial Production (IIP) numbers showed a significant slowdown in the capital goods sector, with growth in the sector falling sharply from over 16 per cent growth in December 2007, to just 2.1 per cent year-on-year.

"The prospects of growth in the capital goods sector in 2008-09 were discussed. The situation is not disturbing. In fact it is promising. Many of those who attended said that investments in the pipeline will have a positive impact on the sector in coming months," a senior finance ministry official said.

The chairman of one company, who attended the meeting, added that the finance ministry will examine specific proposals to boost growth in the sector. "A specific action plan was discussed to provide an impetus to the sector. Directions are being given to this end," he added.

This had set off alarm bells, although experts said the blip was temporary and likely on account of the peculiar composition of the index. In addition, the order books of various companies in the sector have not seen any sharp decline in the recent past.

Chidambaram also held a meeting today morning with Bhel and NTPC officials on the issue of the bulk order for super critical power generation equipment.