Capital goods originally referred to the means of production. Individuals, organizations and governments use capital goods in the production of other goods or commodities. Capital goods include factories, machinery, tools, equipment, and various buildings which are used to produce other products for consumption. Capital goods, then, are products which are not produced for immediate consumption; rather, they are objects that are used to produce other goods and services. These types of goods are important economic factors because they are key to developing a positive return from manufacturing other products and commodities. •
Manufacturing companies use capital goods to help their company make functional goods to sell individuals valuable services. As a result, capital goods are sometimes referred to as producers’ goods or means of production. Capital goods are distinct from consumer goods, which are products directly purchased by consumers for personal or household use.
The development of a strong and vibrant engineering and capital goods sector has been at the core of the industrial strategy in India since the planning process was initiated in 1951. The emphasis that this sector received was primarily influenced by the erstwhile Soviet Union model, which had made impressive progress by rapid state-led industrialization through the development of the core engineering and capital goods sector. •
The ‘Mahalanobis Model’, which was a ‘supply oriented’ model with a basic emphasis on increasing the rate of capital accumulation and saving, gave the engineering and capital goods sector a central place. Superimposed over this were the other objectives of balanced regional development, prevention of the concentration of economic power and the development of small-scale industries. One of the primary objectives was import substitution, which was pursued as a priority. •
Owing to these historical factors, today India has a strong...
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