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Recommendations : Proposed improved dept. organization for encouragement & control of industries. To improve technical training & education and also to improve conditions in factories and industrial centers. Reorganization of scientific staff of industrial departments. Provisions for technical and financial aid to industries.

Industry has enjoyed a special position as this is the sector that would lead India into the modern world, reduce its economic dependence on other countries and generate the higher incomes needed to eliminate poverty. Indias trade and industrial regulatory policies have had a pervasive role in shaping the development of the sector since Independence. They have produced a diverse industrial structure and reduced imports. The process of industrial development can be traced by making a assessment of various Industrial Policy Resolutions passed by the Government of India from time to time.

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 shows the government attitude not only towards external assistance but also toward public & private sectors.

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Correct the imbalances in the development of industries. Direct the flow of scarce resources in the most desirable areas of investment in accordance with national priorities. Prevent the wasteful use of scarce resources Empower the government to regulate the establishment and expansion of private industry in accordance with the planned objectives. Demarcate areas among the public, private and joint sectors of the economy, as well as large, medium and small-scale industries. Give guidelines for importing foreign capital and the conditions on which such capital should be permitted to operate.

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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

Industrial activities were divided into these categories: Central govt. arms and ammunition production, control of atomic energy, ownership and control of railways.  State govt. coal,iron,steel,aircraft manufacture,shipbuilding,telephones.  All other items left over to private sector.

Objectives:To accelerate the rate of economic growth and to speed up industrialization. To expand the public sector, develop heavy and machine making industry. To increase employment opportunities and improvement of living standards and working conditions of people.. To achieve participation of workers in management. To build up a large and growing private sector. Maintenance of Industrial peace.

To overcome budgetary and fiscal deficits and balance of payment Crises. Allowing the industry freedom and flexibility in responding to market forces and Providing a policy regime that facilitates and fosters growth of Indian industry. Focus Areas:
Industrial Licensing Foreign Investment Foreign Technology Agreements Public Sector Policy

(i) (ii)

(iii) (iv) (v) (vi)

Encouragement to Indian entrepreneurship, promotion of productivity and employment generation. Development of technology through greater investment in R & D and bringing in new technology to help Indian manufacturing units attain world standards. Removing the regulatory system and other weaknesses. Increasing the competitiveness of industries for the benefit of the common man. Incentives for the industrialization of backward areas. Enhanced support to the small-scale sector.

Industrial Licensing is governed by the Industries (Development & Regulation) Act, 1951. Industrial licensing was abolished for all industries, except those specified (18 industries), irrespective of levels of investment.

Limit on foreign equity holdings raised from 40% to 51% in a wide range of industries Foreign Equity Proposals need not to be accompanied by Foreign Technology Transfer Agreement Procedure for FDI streamlined by creating a Foreign Investment Promotion Board (FIPB) to consider individual application case by case 100% NRI equity holding in export oriented industries

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

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 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

Priority areas for public sector

Essential infrastructure goods and services Exploration and exploitation of oils and minerals Technology development and building of manufacturing capabilities where private sector investment is inadequate Production of items of strategic importance

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Brought under MRTP act Reserved areas arms and ammunitions, warcraft, atomic energy, coal and lignite, mineral oils etc.

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The Monopolistic and Restrictive Trade Practices Act Removed the threshold limits of assets in respect of MRTP companies and dominant undertakings 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. 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.

Liberalization of Location Policy decentralization of industrial activities geographically No industrial approvals from centre required for industries to be set up in areas with population more than 1 mn; otherwise 25km out of periphery of city

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Abolition of Phased Manufacturing Programs not required now Convertibility Clause

debt could be converted into equity if assistance exceeded Rs. 5 Cr. not now

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Export Oriented Unit (EOU) 30 % annual production exported by third year Ancillary Unit not a subsidiary atleast 50% production supplied to other units Single Window Loan Scheme cover projects upto 20 Lakhs Industrial undertakings allowed 24% equity participation in SSI units SIDBI Small Industries Development Bank of India factoring services SIDO Small Industries Development Organization TDC (Technology Development Cell) to provide technology inputs

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Industrial Associations encouraged common testing and quality counseling Design and Development Centers IITs and other colleges. Entrepreneurship Development Programs (EDP) Janata Cloth Scheme modernization of looms, training facilities, better designs, better dyes

Abid Hussain Committee Recommendations

Rationalization of duty draw back system Exemption of cash compensatory support Reformulation of import replenishment (REP) system for export production Essential capital goods to be included under Open General License (OGL) Liberalize import of technology

Export Import (EXIM) Policy, 1985

Easier and quicker access to imported inputs Stability of export import policy Strengthening export production base Upgrading technological base Import Export Pass Book Scheme reduce delays in obtaining licenses under duty exemption scheme

1988 745 new items placed under OGL, REP broadened

1990 OGL now included 1343 items

Import of instruments required for modernization and technological upgradation supplementary licensing as in capital goods/REP / additional licensing. Automatic Licensing 10% of value of previous years license could be imported. Import of items earlier under the purview of public sector, now could be imported by trading houses. NFE Net Foreign Exchange condition to obtain licenses for foreign exporters.

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Micro and Small Enterprises Generate highest employment Micro, Small and Medium Enterprises Development Act, 2006 Policy package for stepping up credit Micro, Small and Medium Enterprises Development Organization facilities and services to MSMEs

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Growth in Forex Reserves PSU could grow faster in a competitive environment Opening of economy Small sector policy displays government concern Investment limit in small scale raised from Rs. 65L to Rs. 3 Cr. benefits grabbed by powerful individuals

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Entry of foreign investment would remove the distinction between high priority and low priority sector should be focused on high priority Sick units transferred to private hands social security measures needed Unemployment Overlooked No Exit Provisions for entrepreneurs Little role of R & D