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At independence in 1947, India was importing even its basic requirements, including food.
Soon after India attained independence in August, 1947, enunciation of principles for
industrial development were made by the Government in its Industrial Policy Resolution in
1948. Hence the Government of India adopted an approach to develop Industrial sector of
India.
Industrial policy is a document that sets the tone in implementing, promoting the regulatory roles
of the government. It was an effort to expand the industrialization and uplift the economy to its
deserved heights. It signified the involvement of the Indian government in the development of the
industrial sector.
With the introduction of new economic policies, the main aim of the government was to free the
Indian industry from the chains of licensing. The regulatory roles of the Indian government refer
to the policies towards industries, their establishments, their functioning, their expansion, their
growth as well as their management.
These policies sought to accelerate the rate of economic growth, develop basic industries and lay
down a sound economic foundation thereby increasing employment opportunities and improving the
standard of living and the working conditions of the masses. The policy also sought to reduce the
disparities in income and prevent the concentration of economic power.
Industrial Policy Prior to 1991
Government revised its first Industrial Policy (i.e, the policy of 1948) through the Industrial
Policy of 1956.It was regarded as the “Economic Constitution of India” or “The Bible of
State Capitalism”.The 1956 Policy emphasised the need to expand the public sector, to build
up a large and growing cooperative sector and to encourage the separation of ownership and
management in private industries and, above all, prevent the rise of private monopolies.
The Policy Resolution of 1956, laid the following objectives for the growth of the Industrial
sector:
The objectives were chosen carefully with the aim of creating employment and reducing
poverty
The 1956 Resolution further divided the Industries into three Categories.
Criticism: The IPR 1956 came in for sharp criticism from the private sector since this
Resolution reduced the scope for the expansion of the private sector significantly.
New Industrial Policy, 1991
As part of the policy, the role of public sector has been redefined. A dedicated reform policy
for the public sector including the disinvestment programme were launched under The NIP
1991.Private sector has given welcome in major industries that were previously reserved for
the public sector. Because of the large scale changes, the Industrial Policy of1991 or the new
Industrial policy represents a major change from the early policy f 1956.
The 1991 policy made ‘Licence, Permit and Quota Raj’ a thing of the past. It
attempted to liberalise the economy by removing bureaucratic hurdles in industrial
growth.
Limited role of Public sector reduced the burden of the Government.
The policy provided easier entry of multinational companies, privatisation,
removal of asset limit on MRTP companies, liberal licensing.
All this resulted in increased competition, that led to lower prices in many goods such
as electronics prices. This brought domestic as well as foreign investment in almost
every sector opened to private sector.
The policy was followed by special efforts to increase exports. Concepts like Export
Oriented Units, Export Processing Zones, Agri-Export Zones, Special Economic Zones
and lately National Investment and Manufacturing Zones emerged. All these have
benefitted the export sector of the country.