'SMEs in capital goods sector need govt. support'

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SME Times News Bureau | 03 Apr, 2010
The Federation of Indian Chambers of Commerce and Industry (FICCI) on Friday urged the government to support the country's capital goods sector, especially the small and medium enterprises (SMEs) in the field, with funds worth Rs. 500 crore for technology upgradation and enhancement of R&D activities.

Observing that the primary reason for lower productivity of capital goods sector in India is lack of availability of latest technology in various segments, FICCI viewed, " This could be overcome by Government support to the industry for technology transfer programmes in which assistance could be provided to SMEs to cover their expenses for various aspects of technology transfer like license fees, legal fees associated with technology transfer, training expenses etc."

The industry body also emphasized the need for developing capital goods parks in the country for which an allocation of Rs. 1000 crore would be required. The development of sector specific parks is required to overcome infrastructure deficiencies and ensure timely delivery of components, standardization of processes, quality etc, it said.

Capital good imports in India have increased by over five times in the last six years from $ 6.5 billion in 2003-04 to $ 30 billion in 2008-09.

Adding to its recommendations, the industry body said, "The areas which could be looked into for technology transfer and absorption programmes are special welding techniques like friction stir welding and laser MIG welding, narrow gap welding with auto bead sequencing, hot wire narrow gap TIG welding etc."

FICCI pointed out five distinct areas where the technology upgradation funds are required: productivity enhancement through technology transfer, support to research & development projects, climate change & capital goods sector, common facility centers (CFCS), and market development support.

Commenting on requirement for R&D enhancement in the capital goods sector, the industry lobby viewed that the government can provide support to joint arrangements made by and between the research institutes, industry players/association for innovation and product development through R&D.

"Also, support could be provided for promoting joint development programmes on key equipments for future power plants between plant producers and equipment companies," FICCI added.

Viewing that lack of such facilities like major R&D, testing and other common infrastructure facilities has been adversely affecting the competitiveness of the capital goods industry, the industry body urged for setting up Common Facility Centres in PPP mode which would provide services like common foundry for machine tool industry, common heat treatment facility (for machine tool industry); accredited testing laboratories, and design centre & centers of excellence.

In this regard, FICCI suggested that a one-time capital grant may be provided to the extent of 50% of the cost of CFC, subject to a maximum ceiling per CFC.

For market development, the industry chamber advocated the need for technology benchmarking missions of domestic capital goods industry in select developed countries with proven technology in identified sectors.

"Such technologies can be studied and benchmarked by Indian manufacturers of capital goods," FICCI added.