Executive Summary:
The Ministry of Heavy Industries (MHI) addresses challenges in the capital goods sector through the Scheme for Enhancement of Competitiveness in the Indian Capital Goods Sector Phase II, with a financial outlay of Rs. 1207 crores. This scheme supports technology development, research, and manufacturing infrastructure. It also guides Bharat Heavy Electricals Limited (BHEL) in diversifying its product portfolio. The effectiveness of budget allocations and schemes is assessed through committee reviews and project monitoring.
Key Points / Main Content:
Scheme for Enhancement of Competitiveness in the Indian Capital Goods Sector Phase II:
Financial Outlay: Rs. 1207 crores (Rs. 975 crore budgetary support, Rs. 232 crore industry contribution).
Approved Projects: 33 projects including 9 Centres of Excellence (CoEs), 5 Common Engineering Facility Centres (CEFCs), 7 Testing and Certification Centres, 9 Industry Accelerators, and 3 projects for Qualification Packs (QPs).
Support to Bharat Heavy Electricals Limited (BHEL):
Diversification Strategy: Reduce reliance on thermal power by expanding into new areas.
Coal Gasification: Partnership with Coal India Limited (CIL) to form Bharat Coal Gasification and Chemicals Limited (BCGCL) for a Coal-to-Ammonium Nitrate Plant, supported by Viability Gap Funding (VGF) of INR 1,350 Crore.
AUSC Technology: Development of indigenous Advanced Ultra Super Critical (AUSC) technology with investment of Rs. 900 crores by MHI.
Testing and Certification Facilities: Establishment and augmentation of facilities, including Test and Calibration Centre at BHEL Bhopal and Test Labs at BHEL Hyderabad.
Diversification Areas: Focus on Transportation (Vande Bharat trainsets), Signaling (Train Collision Avoidance System), and Defence (Upgraded SRGM, Air Defence Gun, Strategic Equipment).
Assessment and Monitoring:
Project Screening: Projects are screened by the Screening Committee and approved by the Apex Committee.
Project Review and Monitoring Committee (PRMC): Each project has a PRMC for periodic review of progress and fund effectiveness.
Impact Analysis:
Ministry of Heavy Industries (MHI):
Impact: Responsible for implementing and overseeing the Scheme for Enhancement of Competitiveness, providing financial support, and guiding BHEL's diversification.
Action Required: Continue implementing the scheme, monitor project progress through PRMC, and provide guidance to BHEL.
Bharat Heavy Electricals Limited (BHEL):
Impact: Receives support for diversification, technology development, and infrastructure augmentation.
Action Required: Implement diversification strategies, leverage financial support for technology development, and participate in project reviews.
Capital Goods Sector:
Impact: Benefits from enhanced competitiveness, technological innovation, and improved manufacturing infrastructure.
Action Required: Participate in relevant projects under the scheme and leverage the resources provided for technology development and innovation.
Coal India Limited (CIL):
Impact: Partners with BHEL in the Bharat Coal Gasification and Chemicals Limited (BCGCL) venture.
Action Required: Collaborate with BHEL in the Coal-to-Ammonium Nitrate Plant project and leverage the Viability Gap Funding (VGF).
Key Entities Referenced
Ministry of Heavy Industries: A ministry of the Government of India responsible for policies related to heavy industries.
Scheme for Enhancement of Competitiveness in the Indian Capital Goods Sector Phase II: A government scheme implemented by the Ministry of Heavy Industries to enhance the competitiveness of the Indian Capital Goods Sector.
Bharat Heavy Electricals Limited: An Indian public sector engineering and manufacturing company.
Coal India Limited: An Indian government-owned coal mining and refining corporation.
Bharat Coal Gasification and Chemicals Limited: A joint venture between Bharat Heavy Electricals Limited and Coal India Limited to develop a Coal-to-Ammonium Nitrate Plant.
Viability Gap Funding: A Government of India scheme to provide financial support to infrastructure projects that are economically viable but face a funding gap.
Advanced Ultra Supercritical Technology: An indigenous technology developed by BHEL in association with IGCAR and NTPC.
BHEL Bhopal, Madhya Pradesh: A manufacturing plant of Bharat Heavy Electricals Limited located in Bhopal, Madhya Pradesh.
GOVERNMENT OF INDIA
MINISTRY OF HEAVY INDUSTRIES
LOK SABHA
UNSTARRED QUESTION NO. 3862
ANSWERED ON 12.08.2025
CHALLENGES FACED BY CAPITAL GOODS SECTOR
3862. SMT. PRATIMA MONDAL:
Will the Minister of HEAVY INDUSTRIES be pleased to state:
(a) the manner in which the Government plan to address the challenges faced by the capital
goods sector in terms of technology obsolescence, low capacity utilization and inadequate R&D
investments;
(b) the support extended to Bharat Heavy Electricals Limited (BHEL) to diversify its product
portfolio and improve its financial performance in a competitive market environment; and
(c) the manner in which the Government assess the effectiveness of budget allocations and
flagship schemes in driving technological innovation, improving global competitiveness and
fostering sustainable growth of heavy industries?
ANSWER
THE MINISTER OF STATE FOR HEAVY INDUSTRIES
(SHRI BHUPATHIRAJU SRINIVASA VARMA)
(a): In order to encourage the technology development, research, innovation and to augment
the manufacturing infrastructure in the Capital Goods sector, Ministry of Heavy Industries
(MHI) is implementing the Scheme for “Enhancement of Competitiveness in the Indian Capital
Goods Sector- Phase II” with a financial outlay of Rs. 1207 crores, budgetary support of Rs.975
crore and industry contribution of Rs.232 crores. Under the Scheme, a total of 33 projects have
been approved. These 33 projects include 9 Centres of Excellence (CoEs), 5 Common
Engineering Facility Centres (CEFCs), 7 Testing and Certification Centres, 9 Industry
Accelerators for Technology development and 3 projects for Creation of Qualification Packs
(QPs) for skill level 6 and above.
(b): Bharat Heavy Electricals Limited (BHEL), under guidance and support from the
Ministry of Heavy Industries (MHI), has strategized itself to reduce its reliance on thermal power
sector by broadening its product offerings in new and emerging areas in the following sectors:
(i) Coal Gasification:
Indigenously developed Pressurized Fluidized Bed Gasification (PFBG) technology
Formed JV with Coal India Limited (CIL) i.e. Bharat Coal Gasification and
Chemicals Limited (BCGCL) to develop a Coal-to-Ammonium Nitrate Plant.
Through strategic policy advocacy of MHI, BCGCL’s Coal to Ammonium Nitrate
Project identified by GoI for Viability Gap Funding (VGF) of INR 1,350 Crore.
(ii) AUSC (Advanced Ultra Supercritical Technology):
BHEL in association with IGCAR & NTPC has developed an indigenous Advance
Ultra Super Critical (AUSC) technology with the substantial investment of ~Rs. 900
crores by Ministry of Heavy Industries.
(iii) Establishment of strategic equipment and Li-ion battery (integration & testing)-2-
(iv) Augmentation of Testing and Certification Facilities, namely “Test and Calibration
Centre at BHEL Bhopal”; “Test Lab for SIL and HIL Testing Centre at BHEL,
Hyderabad” and “Test Lab for pumps at BHEL Hyderabad” under the Scheme for
“Enhancement of Competitiveness in the Indian Capital Goods Sector- Phase II”.
(v) Regular review, monitoring and guidance in identified diversification areas such as
Transportation - Vande Bharat trainsets, Signaling (Train Collision Avoidance
System)
Defence – Upgraded SRGM, Air Defence Gun, Strategic Equipment.
(c): Every project sanctioned under the Scheme for “Enhancement of Competitiveness in the
Indian Capital Goods Sector” is screened by the Screening Committee and approved by the Apex
Committee for its relevance and effectiveness in driving technological innovation and
improving global competitiveness in the Capital Goods Sector. In addition, a Project Review
and Monitoring Committee (PRMC) has also been constituted for each of the project sanctioned
under the Scheme. The meetings of the PRMC are held periodically in order to review the
progress of the project and effectiveness of the funds released by MHI for the project.
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