India’s capital goods sector has experienced a robust growth trajectory in FY24, recovering from fluctuations between FY20 and FY23, according to the Economic Survey 2024-25. Despite the positive trend, the sector continues to face technological and infrastructural challenges.
According to the survey, the sector remains heavily reliant on imports, particularly for high-end machinery, due to technology gaps and insufficient domestic manufacturing capabilities . This dependency presents a challenge, as the sector struggles to bridge the divide in terms of technology, skills, and infrastructure.
“Due to technology gaps, this sector imports the high-end machines required for manufacturing. There is an urgent need to address the technology, skill, and infrastructure gaps,” said the report.
The survey also states that the government has acknowledged these challenges and taken steps to address them. One such initiative is the Phase-II launch of the Scheme for Enhancement of Competitiveness of the Capital Goods Sector.
Phase-II aims to expand upon the success of Phase-I by focusing on key areas such as technology identification, the establishment of advanced centres of excellence, and the creation of common engineering facility centres, with the goal of enhancing global competitiveness and reducing dependence on imported machinery.
The scheme has a financial outlay of Rs 1,207 crore, with budgetary support of Rs 975 crore and industry contribution of Rs 232 crore, according to the Ministry of Heavy Industries. A total of 32 projects have been sanctioned so far under Phase-II.
In addition to these efforts, the report stated that the government is also promoting smart manufacturing and Industry 4.0, focusing on equipping industries, particularly small and medium enterprises (SMEs), with the tools needed to adopt advanced technologies. The establishment of Smart Advanced Manufacturing and Rapid Transformation Hub (SAMARTH) Udyog centres across various institutions will provide SMEs with a platform to integrate new technologies and improve their manufacturing processes.
