Industrial policy

This power point presentation will describe different Industrial Policy Resolutions Of India

1. Industrial Policy
•It covers rules, regulations, principles, policies, &
procedures laid down by government for
regulating & controlling industrial undertakings in
the country.
•It prescribes the respective roles of the public,
private, joint, cooperative, large, medium & small
scale sectors for the development of industries.
•It incorporates fiscal & monetary policies, tariff
policy, labor policy.
•It shows the government attitude especially
toward public & private sectors

2. Main Objectives of Industrial Policies
•To maintain a sustained growth and productivity
•To enhance gainful employment
•To prevent undue concentration of economic power
•To achieve optimal utilization of human resources
•To attain international competitiveness and
•To transform India into a major partner and player in
the global arena

3. Industrial Policies-History
•Industrial Policy Resolution of 1948
•Industrial Policy Resolution of 1956
•Industrial Policy Resolution of 1973
•Industrial Policy Resolution of 1977
•Industrial Policy Resolution of 1980
•The New Industrial Policy of 1991

4. Industrial Policy Resolution 1948
•After Independence in 1947, the national
consensus was in favour of rapid industrialization
of the economy
•Building on the so-called "Bombay Plan" in the
pre-Independence era, the first Industrial Policy
Resolution announced in 1948

5. Features/ Objectives of Policy
•Acceptance of Mixed Economy with exclusive
monopoly of government in selected areas
•Bring Economic stability to create investment
friendly environment
•Establishment of new industrial undertakings
•Importance of foreign capital was identified but new
organizations must be under Indian ownership

6. Industrial Policy Resolution 1956
•The Industrial Policy Resolution 1956 was shaped
by the Mahalanobis Model of growth, which
suggested that emphasis on heavy industries
would lead the economy towards a long term
higher growth path
•The Resolution widened the scope of the public
sector

7. Features/ Objectives of Policy
•The objective was to accelerate economic growth
and boost the process of industrialization as a
means to achieving a socialistic pattern of
society
•Removal of regional disparities through
development of regions with low industrial base

8. •The Industrial Policy Resolution - 1956 classified industries
into three categories:
–The first category comprised 17 industries (included in Schedule A of
the Resolution) exclusively under the domain of the Government.
These included inter alia, railways, air transport, arms and
ammunition, iron and steel and atomic energy.
–The second category comprised 12 industries (included in Schedule B
of the Resolution), which were envisaged to be progressively State
owned but private sector was expected to supplement the efforts of
the State.
–The third category contained all the remaining industries and it was
expected that private sector would initiate development of these
industries but they would remain open for the State as well

9. Industrial Policy Resolution of 1973
•To prevent excessive concentration of industrial
activity in the large industrial houses, this Statement
gave preference to small and medium
entrepreneurs over the large houses and foreign
companies in setting up of new capacity particularly
in the production of mass consumption goods
•New undertakings of up to Rs 10 million by way of
fixed assets were exempted from licensing
requirements for substantial expansion of assets

10. Industrial Policy Resolution of 1977
•Emphasized decentralization of industrial sector with increased
role for small scale and tiny units
•For the first time, within the small scale sector, a tiny unit was
defined as a unit with investment in machinery and equipment up
to Rs.0.1 million and situated in towns or villages with a
population of less than 50,000
•Highest priority was accorded to power generation and
transmission.
•It expanded the list of items reserved for exclusive production in
the small scale sector from 180 to more than 500

11. Industrial Policy Resolution of 1980
•Promotion of competition in the domestic market,
technological up gradatrion and modernization of industries
•Some of the socio-economic objectives spelt out in the
Statement were
–i) optimum utilization of installed capacity,
–ii) higher productivity,
–iii) higher employment levels,
–iv) removal of regional disparities,
–v) strengthening of agricultural base,
–vi) promotion of export oriented industries and
–vi) consumer protection against high prices and poor quality.

12. Industrial Policy 1991
•The Industrial Policy Statement of 1991 stated
that “the Government will continue to pursue
a sound policy framework encompassing
encouragement of entrepreneurship,
development of indigenous technology
through investment in research and
development, bringing in new technology,
dismantling of the regulatory system,
development of the capital markets and
increased competitiveness for the benefit of
common man".

13. •It further added that "the spread of industrialization
to backward areas of the country will be actively
promoted through appropriate incentives,
institutions and infrastructure investments”.

14. Industrial Policy 1991
•Policy focus is on:
–Deregulating Indian industry & increased
competition;
–Allowing the industry freedom and flexibility in
responding to market forces and encouraging
entrepreneurship
–Providing a policy regime that facilitates and
fosters growth of Indian industry especially
backward areas

15. Industrial Policy 1991
•In pursuit of the industrial objectives, Government
decided to take a series of initiatives in respect of
the policies relating to the following areas:
–Public Sector Policy
–MRTP Act
–Industrial Licensing
–Foreign Investment
–Foreign Technology Agreements

16. Public Sector Policy
•List of industries reserved for the public (Schedule A)
reduced from 17 to 8
•List of sector reserved for dominance by public sector
(Schedule B) effectively abolished to get rid of low
productivity, over staffing, lack of technological up gradation
and low rate of return
•Disinvestment in selected public sector enterprise to raise
finance for development, bring in greater accountability &
help create a new culture in their working for improved
efficiency
•To revive and rehabilitate chronically sick PSUs, it was
decided to refer them to the Board for Industrial and
Financial Reconstruction (BIFR)

17. MRTP Act
•Removed the threshold limits of assets in respect of MRTP
companies and dominant undertakings
•The thrust of policy was more on controlling unfair and
restrictive trade practices

•Eliminated the requirement of prior approval of Central
Government for
–Establishment of new undertakings
–Expansion of undertakings
–Merger, Amalgamation and Takeover
–Appointment of Directors under certain circumstances.

18. •The newly empowered MRTP Commission will be
authorized to initiative investigations on complaints
received from individual consumers or classes of
consumers in regard to monopolistic, restrictive and
unfair trade practices.

19. Industrial Licensing Policy
•Industrial Licensing is governed by the Industries
(Development & Regulation) Act, 1951.
•Industrial licensing was abolished for all
industries, except those specified (18 industries
like alcoholic drinks, cigars and cigarettes, drugs
and pharmaceuticals ), irrespective of levels of
investment.

20. Foreign Investment
•Limit on foreign equity holdings raised from 40% to 51%
in a wide range of industries (especially export oriented
units)
• Foreign Equity Proposals need not to be accompanied
by Foreign Technology Transfer Agreement
•Procedure for FDI streamlined by creating a Foreign
Investment Promotion Board to consider individual
application case by case

21. Foreign Technology Agreements
•Foreign technology agreements in high-priority
industries upto Rs. 1 crore were given automatic
permission
•No permission was required for hiring foreign
technicians and foreign testing of indigenously
developed technologies.

22. Pre 1991 policy Current policy(post 1991 policy)
Industrial licensing was the ruleLicensing is an exception
Public sector monopoly/dominate in
basic and heavy industries
All industries are open to private
sector, except two (atomic energy
and railway transport)
MRTP act restrictions on entry and
growth of large companies
No such restrictions
Foreign investment allowed only in
selected industries that with terms
and conditions
Foreign investment allowed in a large
number of industries
Restrictive policy towards foreign
technology
Very liberal policy towards foreign
technology
Reservation of large number of
products for small scale sector
Reservation list is being pruned.