Policies and Act Influencing

Business in India
ASSIGNMENT OF BUSINESS ENVIRONMENT

Amit Chaudhary
MBA FIRST SEMESTER
REG. NO: 1612031

Industrial Policy:
Industrial policy means rules, regulations, principles, policies and procedures laid down by
government for regulating, developing, and controlling industrial undertakings in the country. It
prescribes the respective roles of the public, private, joint, and co-operative sectors for the
development of industries. It also indicates the role of the large, medium and small scale sector.
It incorporates fiscal and monetary policies, tariff policy, labour policy, and the government
attitude towards foreign capital, and Role to be played by multinational corporations in the
development of the industrial sector.
Industrial policy statements have been announced from 1948 onwards. A number of objectives
have been projected by the Government of India while making industrial policy declarations. Some
of the important objectives can be identified as follows:
1. Achieving a socialistic pattern of society.
2. Preventing undue concentration of economic power.
3. Achieving industrial development.
4. Reducing disparities in regional development.
5. Providing opportunities for gainful employment.
6. Achieving a self-sustained economy.
7. Achieving faster economic growth.
8. Alleviating poverty.
9. Protecting and developing a healthy small- scale sector.
10. Updating technology and modernization of industry.
11. Liberalization and globalization of economy.
Industrial Policy Resolution 1948
In Industrial Policy Resolution of 1948, both public and private sectors were involved towards in
dustrial development. Accordingly, the industries were divided into four broad categories:
The industrial activities were divided into four broad areas:
1. Items under central government control:
Manufacture of arms and ammunition, The production and control of atomic energy,
Ownership and management of railway transport, etc.
2. Items under the state government control:
Coal, Iron and Steel, Aircraft manufacture, Shipbuilding, Manufacture of telephone,
telegraph and wireless apparatus, excluding radio receiving sets, Mineral oils, etc.

3. Items of basic importance (planned & regulated by central government):

Salt, Automobiles and Tractors, Electric Engineering, Other Heavy Machinery, Machine
Tools, Heavy Chemicals, Fertilizers and Pharmaceuticals, Power, Cotton and Woollen
Textiles, Cement, Sugar, Paper and Newsprint, etc.
4. Items for Private Sector:
The rest of the industrial field will be open to private enterprise.
It also emphasised on securing a continuous increase in production and its equitable distribution.
But more Importance was given to small scale and cottage industries.
Industrial Policy Resolution 1956
Industrial Policy Resolution (30 April, 1956) was also regarded as the Economic Constitution of
India. Major Objectives of Industrial Policy Resolution (30 April, 1956) are as follows:
1. Improving living standards and working conditions for the mass of the people.
2. To reduce disparities in income and wealth.
3. To prevent private monopolies and concentration of economic power.
4. Development of transport facilities.
5. The State will progressively assume a predominant and direct responsibility for setting up
new industrial undertakings and for developing transport facilities.
6. Undertake State trading on an increasing scale.
7. Planned and rapid development.
8. Expand public sector.
9. Disparities in levels of development between different regions should be progressively
reduced.
Industrial Policy 1977
Industrial Policy 1977 highlights on producing inputs needed by a large number of smaller units
and making adequate marketing arrangements. To boost the development of small scale industries,
the investment limit in the case of tiny units was enhanced to Rs.2 lakh, of a small scale units to
Rs.20 lakh and of ancillaries to Rs.25 lakh.
Industrial processes and technologies aimed at optimum utilisation of energy or the exploitation
of alternative sources of energy would be given special assistance, including finance on
concessional terms.
Industrial Policy 1980
Industrial Policy Statement of July, 1980 was based on Industrial Policy Resolution (30 April,
1956).

The major objectives are as follows:

1. Optimum utilisation of installed capacity.
2. Maximum production and achieving higher productivity.
3. Higher employment generation.
4. Promotion of export-oriented industries
5. Consumer protection against high prices and bad quality.
6. Correction of regional imbalances.
7. Strengthening of the agricultural base through agro based industries and promotion of
optimum inter-sectoral relationship.
Industrial Policy, July 24, 1991
Indian Government recognizes the need for social and economic justice, to end poverty and
unemployment and to build a modern, democratic, socialist, prosperous and forward-looking India.
So it redevelops its industrial on July 24, 1991.
It gives greater emphasis on building up ability to pay for imports through our own foreign
exchange earnings. This policy also emphasizes on the development and utilization of indigenous
capabilities in technology and manufacturing as well as its up gradation to world standards.
This policy also ensures that 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 increasing competitiveness for the
benefit of the common man.
It gives more priority to the Foreign investment and technology collaboration which will helps to
obtain higher technology, to increase exports and to expand the production base.
This policy promotes the workers participation in management.
It also focuses on maintaining sustained growth in productivity and gainful employment and attain
international competitiveness.

Monetary and Fiscal Policy:

Monetary Policy:
Monetary policy refers to the use of instruments under the control of the central bank to regulate
the availability, cost and use of money and credit.
Objectives of monetary policy:

Maintaining price stability

Ensure adequate flow of credit to the productive sectors of the economy to support
economic growth.
Rapid economic growth
Balance of payment equilibrium
Full employment
Equal income distribution
Factor affecting Monetary policy:
Excess of non-banking financial institutions
Existence of unorganized financial market
Lack of coordination between monetary and fiscal policy
Fiscal Policy
Fiscal policy deals with the taxation and expenditure decisions of the government. These include,
tax policy, expenditure policy, investment or disinvestment strategies and debt or surplus
management. The Two Main instruments of fiscal policy are: Revenue Budget and Expenditure
Budget.
Objectives of Fiscal Policy:

Increase in capital formation.

Degree of Growth.
To achieve desirable price level.
To achieve desirable consumption level.
To achieve desirable employment level.
To achieve desirable income distribution.

There are three possible positions in Fiscal Policy;

A Neutral position applies when the budget outcome has neutral effect on the level of economic
activity where the govt. spending is fully funded by the revenue collected from the tax.
An Expansionary position is when there is a higher budget deficit where the govt. spending is
higher than the revenue collected from the tax.
A Contractionary position is when there is a lower budget deficit where the govt. spending is
lower than the revenue collected from the tax.

Exim Policy
It contains policies in the sphere of Foreign trade i.e. with respect to import & export from the
country and more especially export promotion measures, policies and procedure. Export means
selling abroad and import as bringing into India, any goods and services.
Objective of Exim Policy

Accelerating the countrys transition to a globally oriented vibrant economy with a view to
derive maximum benefits from expanding global market opportunities;

Stimulating sustained economic growth

Enhancing the technological strength and efficiency

Encouraging the attainment of internationally accepted standards of quality

Providing consumers with good quality products and services at reasonable prices.

Competition Act
The Competition Act, 2002 was enacted by the Parliament of India and governs Indian
competition law. It replaced the archaic The Monopolies and Restrictive Trade Practices Act,
1969. Under this legislation, the Competition Commission of India was established to prevent
activities that have an adverse effect on competition in India. This act extends to whole of India
except the State of Jammu and Kashmir.
It is a tool to implement and enforce competition policy and to prevent and punish anti-competitive
business practices by firms and unnecessary Government interference in the market. Competition
laws is equally applicable on written as well as oral agreement, arrangements between the
enterprises or persons.
The Competition Act, 2002 was amended by the Competition (Amendment) Act, 2007 and again
by the Competition (Amendment) Act, 2009.
Objectives of Competition Act:
to prevent practices having adverse effect on competition
to promote and sustain competition in markets
to protect the interests of consumers and
to ensure freedom of trade carried on by other participants in markets, in India, and for
matters connected therewith or incidental thereto.