Comments on Draft Capital Goods Policy by Cdr KS Jassal

Kamaljit Singh Jassal
jassalnavy@hotmail.com

jassalnavy@hotmail.com 2
• Author is former Joint Director of MoD/ HQI DS and responsible
for Perspective Planning. He has managed around 400 to 450 Capital
Acquisitions proposals with varying Technology needs & Production
arrangements. He was part of Executive team that made revised
Offsets Policy. He has also been Country Manager of a US MNC
dealing in Hi Tech Eqpt.
• He was responsible for formulation of Long Terms Plans called
LTIPP 2012-27, 12th Defence Plan, 12th Manufacturing Plan. He was
also Memb Secy of SCPACC.
• Author can be reached on email jassalnavy@hotmail.com
• Author has also written several open papers which are available
on Linkedin Page & Slide Share. Author Blogs on issues of
Perspectives, Inequality, Plans, Essence (of life) & Growth under head
PIPE Growth.
Cdr (Retd) Kamaljit Singh Jassal

Macro Issues
• Table 1.1a classifies Capital Goods under 10
heads
– Why Hydraulic, ocean drills, Tunneling, Boring,
Hi-Tech seam-alloy-welding etc are missing?
• DGFT has definition in Para 9.12 which is
more wide & better
– We could add to it Marine, Aviation & Hi Tech
computer aided-medical machines sector.
• Till we don’t work on this list, NAICS
classification & taxation issues will remain.
– Learn from Military stores list.

Macro Issues
• Very good that Policy has Vision, Mission,
Objectives
– Why not make Chapter 4 as 1.
– Vision should be directional & not time bound, while
Mission could be landmarked with time.
• Objective should have-
– Time period to achieve Objective
– Roadmap (separate operative letters to be issued)
• TCA modeling
• Procedures
• Structures
• Monitoring & Evaluation

Chapter - 2
• Start of Chapter 2 - Summary of Key Issues
& Challenges ???
– How has Summary been arrived from Preamble
& Chapter 1. Are these pre-conceived ideas or
perceptions or list taken out from a separate
research paper not quoted here!!
– ‘capital goods component in industrial production has
lagged in recent years due to slow domestic demand
and following slow growth in the world economy.‘
• Is it inference or assumption

Chapter - 2
• Reasons for Capacity underutilization are not
given – 2.2.1

Chapter - 3
• Kindly bring attention on following acts of
USA:-
– Buy American act [min 50% indigenous content]
– Jones act
– Value Engg Rule or value addition culture
(futuristic idea)

Chapter - 4
• Vision - Very good/ Brave, but dangerous
– Generally Vision is directional & non tangible.
– Risk exists to make it time bound/ tangible!!
• Objective – Mention only output oriented,
inputs will be derived automatically.
– Enablers: Skill, Manpower etc are enablers.
• Kindly focus more on vitalising the Cobb-
Douglas Production function.

Chapter - 6
• Is this required:
– 6.1.2 - To provide incentives for domestic and global
mergers & acquisitions.
– 6.1.3 To provide incentives for venture funding/ risk
capital to start-ups.
• Why not create eco-system for startups?
• 6.1.4&5 can be ‘reform financing setup/ system
for Industry in Capital Products production’.
• 6.1.7 – would you like to consider forming a
Section 25 (old)/ Section 8 company having a
Academia-Industry interface on the lines of
Fraunhoffer

Chapter - 6
• 6.2.1 – Consider adding PMA & 50%
indigenous content.
• 6.2.4.2 – Suggest don’t bring, MoD is in
mess!!!!
• 6.2.5.1 – Start with min 50%.
• 6.2.6 – Very relevant & to be enforced.
• 6.2.7.1 – Critical issues under this are:-
– How do you evaluate Tech & IPRs.
– Who owns Tech & IPR if negotiated by Govt.
– How do you evaluate VA (Val Add), is it by
difference of invoices or Tech/ work added to it.

Chapter - 6
• 6.2.8 – MHIPE shoudn’t be doing this directly.
Instead create a Structure of Academia-
industry Interface (as a Regd Society) and
2 more (mentioned later) to fix endemic
problems.
• 6.2.9 – From where the Tech come. Why do ToT
or TA. Why not Sec 25/ 8 company as start
engine for the production Train.
• 6.2.10 – Allow only for startups or Greenfield
projects or BIFR Cos. Not to be given to
companies in 3 yrs existence and breaking even

Chapter - 6
• 6.2.11 – Strongly concur.
• 6.2.12 – G2G2B is not an appropriate idea. This
kind of interface does communication exchange
but builts in pressure lobby for vested interests.
Instead go for Integrated inborne-Think
Tank approach and interfaced Industry
approach.
– In MoD, we have integrated Think Tanks like IDSA
(civil), CLAWS (army), CAPS (AF) & NMF (Navy).
– IBO/ DPSU interface provides Industry inputs/
challenges.

Chapter - 6
• 6.2.12 – Sub sections relate to Monitoring &
Evaluation. This is strong Admin/ Quasi judicial
function. Create a separate wing or outsource it
to a inborne ‘Society’ staffed by Retd Govt
officers. Head of this should be a serving officer.
• 6.3.1 – Interesting!! Check Business rules!
• 6.3.3 – Instead, CII/ FICCI/ ASSOCHAM
chambers can be linked up and every 3/4
months ITPO activities be done viz which
Products, how to do biz.
• 6.3.4.1 – This is too much. MHIPE cannot be
panacea of all ills!! Sense & feelings behind this
are deeply respected.

Chapter - 6
• 6.3.5 – This role can be & should be discharged
by ITPO. MHIPE may send an officer to ITPO for
Capital Goods.
• 6.3.7 – Financing should be linked or combined
with Taxation policy page. Wholesome review is
called in this with MoF, Commerce Min/ DIPP &
MHIPE.
• 6.4 – HRD effort needs to be re-looked
holistically with emphasis of BPR of it is, CTRIs
and Polytechnic. Too many points. Looks HRD
ministry & NSDC mandate taken over.
• 6.4.3 – Dosnt look HRD effort.

Chapter - 6
• 6.5 – Too much agenda. Looks problems
were known (all Govt oriented). Cannot be
panacea of all problems.
– IITs, PolyTechnic linkage not included.
– Don’t take over the mandate of CSIR/ DST etc.
• 6.6 – Product Standards are must. Also must
is the process of manufacturing products
(ISO certification). Kindly-
– Make Product Specs/ Test standard free on web.
– Make 3rd party certification for manufacturing
process.

Chapter - 6
• 6.7 - Heavy Industry doing the job of
MSME!! instead:-
– Focus on enclave/ cluster mftrg.
– Focus on preferential market access for MSME.

Chapter - 7
• Consider/ Could addresses the needs of:-
– Agro Industry. [not same as 7.10]
• Mass sowing cum reaping/ harvesting machines.
• Bio technology
• Canal makers & Irrigation Drip Tech
• Mass clean water/ recirculation/ treatment machy etc
– Marine/ Oil & Gas Industry:
• Engines mftrg.
• Pollution control tech
– Aviation Industry
– Auto Industry

Chapter - 8
• 8.2.1 – Isnt it a Cab Secy function.
– Suggest move a policy page/ note for CCEA & get it
done. Retain ‘Control’ (not coord) within MHPE.
• 8.2.2 – Don’t do this. Consider following 3:
– Create a Sec 25/ Sec 8 (new) Co or society with
Academia-Industry interface and achieve the
objects set out.
– Also create Think Tank for larger & sub sector
policy formulation/ reviews
– Also create Sec 25/ Sec 8 (new) Co or society,
on the lines of Invest India for Industry interface/
monitor/ review.

Chapter - 9
• 9.2.1 - Devising a long term, stable and
rationalized tax and duty structure to ensure cost
competitiveness of the sector.
– Absolutely required with ease of litigation
– Mandate of Fin Ministry!!
• 9.2.2 Drafting a comprehensive public
procurement policy with amended qualifying
criteria and introducing special provisions in
contracts for domestic value addition.
– Concur. Turnover can be substituted with BG,
production capability enhancement, etc

Chapter - 9
• 9.2.3 Promoting development of new technology
through indigenous sources.
– Isnt it mandate of DST, CSIR etc?
• 9.2.4 Providing Technology Upgrade Fund
Support across all capital goods sub-sectors.
– Isnt it mandate of DST, CSIR etc?
– It is understood that MHIPE wants to do something/
propel Tech front for Capital Industry. Kindly examine
the Sec 25/ 8 Academia-Industry interface.

Chapter - 9
• 9.2.5 Creating a level playing field vis-à-vis
imports by restricting imports of second hand
machinery and mitigating duty disadvantages.
– Yes, a white-paper needs to be presented on this.
• 9.2.6 Supporting availability of short and long
term of financing at competitive rates to capital
goods manufacturers.
– Present a Policy paper on this for discussion
please.

Chapter - 9
• 9.2.7 Enabling skill development by setting up
sub-sector specific Skill Councils.
– This requires a mere note of observations &
recommendation from MHIPE to NSDC.
• 9.2.8 Enabling higher participation of India in
standard creation and developing support
system to improve compliance.
– Very Important but specifics required
• 9.2.9 Developing manufacturing clusters with
shared facilities especially for SMEs.
– This is economics-business point. Well thought out
strategy/ paper needs to be presented to avoid the
lessons learnt of debacles of SEZ & PPP policies

Overall
• Very Interesting that few Officers (few good
men) are doing the rational macros turn
around or atleast shakeup.
• There is strong need to be rational, create:
– structures that aid Governance,
– procedures that give almost automated or pre
fed algorithm type decisions which are
consistent, forward looking, without bias.
• A good step is started, please complete the
loop till implementation/ public advocacy.

• Kamaljit Singh Jassal
– Retd Commander
– Ex Joint Director MoD
– Ex Country Manager of US MNC
– Currently Exec Dir of a Startup brand
‘Punjab Hi-Tech Systems’
• The Officer can be reached out at:
– Email – jassalnavy@hotmail.com
– Mbl: 971 77 555 28
– Tel: 0124- 2213 228

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