According to CII the capital goods and consumer durables pushed up the performance of the manufacturing sector in the second half of the year 2010.
When couple of years data is being analysed to find out the import of capital goods which have helped the indian economy to achieve a staggering growth of IIP to the tune of above 15% we get:

·         Import of capital goods increased from Rs 83,424 crore in 2004-05 to Rs 2,61,311 crore in 2008-09, the year whose latter half saw the worst effect of the global meltdown.

·         The steepest hike in import was that of electrical equipment (42% in 2008-09).

·         While domestic demand is the principal driver of expansion in capital goods sector, in a slew of sectors like textiles, chemicals and food processing, export demand is also a major factor that spurs investment.

·         India have raised huge amount of funds to finance imports of capital goods.

·         Through external commercial borrowings (ECBs) last fiscal (2009-10). Companies received approvals to raise $21.67 billion compared with $18.36 billion in 2008-09, an increase of 18%.

·         According to RBI data for March 2010, as many as 73 companies have opted for ECBs.

·         In March 2010, companies raised $4.32 billion, up 300% over $1.11 billion mobilised in March 2009.

·    Among all these who raised capital through  overseas route includes some top players as well as midsized firms too.

·    RIL raised $800 million in two tranches through the automatic route for refinancing debt, National Aviation Company (Nacil) which operates Air India, raised over $855.50 million for ‘‘import of capital goods’’.

·    Telecom players Aircel and Reliance Infratel (R-Comm's tower business) raised $300 million and $250 million, respectively during the month. Aircel Cellular raised another $100 million through the approval route for import of capital goods.

·     Dishnet Wireless and Power Finance Corporation (PFC) raised $350 million and $300 million, respectively in the month.
The below data shows the amount of borrowings being executed by India via ECB in 2008 and 2009 fiscal years respectively.

The flow of ECB and other sources of capital in the capital goods sector reveals that investments for expansion of manufacturing is happening at a robust speed.This also reveals the demand which lies in the womb of future of Indian economy. CMIE's CapEx database reveals that Indian corporates continue to announce fresh projects, even after commissioning huge capacities in the last few years. Projects worth Rs 6.5 lakh crore are scheduled for commissioning in 2010-11. This figure stood at Rs 2.3 lakh crore in 2007-08, Rs 2.9 crore in 2008-09, and Rs 4 crore in 2009-10.The flow of funds will be never ending and the demand is driven domestically despite of global export slowdown from Indian perspective. The chief growth driver is increasing demand, impelled by a sharp rise in corporate wages, salaries of government employees, and income of the farming community.

But now after the debacle of Eurepean nations India needs to adopt a wait and watch policy to decided the future demand.
  • We should be in such a position where India makes an accumulation of huge amount of expansion tools and later on suffer with over capacity due to global conditions. 
  • Any downward trend in this segment reveals that the demand for the industrial growth of India is poised to some uneven threat or an anticipation of major crisis which will slow down the demand globaly. Similar threats were noticed in the first half on 2009-10.
  •  Moreover the demand domestically took an upward surge due to low taxes and fiscal stimulus provided by the Indian goivernment during recession times.
·         But now the senario is changed and we need to take cautious steps.We might not be able to post similar growth numbers in the coming quarters since the stimulus have been rolled back and “Left Out” global conditions are very much turbulent.
·         The coming days the indian capital goods sector might face some hard days since other recession affected economies are coming out of the clouds and are throwing down invisible challenges of export competetion primarly through currency valuations.

The small and medium sized companies are now very much active on the martahon of Indian economic growth dream of 10%. MSMEs (Micro, Small and Medium Enterprises) to import technology and equipment from USA.Even  the Export Import (Exim) Bank of India has signed a Master Guarantee Agreement with the Exim Bank of USA. According to the study by the Federation of Indian Chamber of Commerce and Industry (FICCI), India's exemptions from import duties for various projects have led to over five times increase in capital goods imports from $ 6.5 billion in 2003-04 to $ 30 bn in 2008-09.

The government very recently have been requested by he Federation of Indian Chambers of Commerce and Industry to formulate rules for the import of second hand capital goods and make those accessible to the industry.

The next demand for the capital goods segment depends upon the blessing of Lord Indra.If India meets the target of rainfall and adequately within time then the sector will be able to witherout the dark clouds of global debacle. If this happens Indian economy will be able to achieve the dream figure of double digit GDP growthin 2010-11.