INDUSTRIAL DEVELOPMENT

SINCE INDEPENDENCE

DR ANURAG SINGH, UPSC WEEKEND BATCHES,THE UNIQUE ACADEMY,

MOBILE 7038899438
INDUSTRIALISATION - DEFINITION
ØComplex process of the growth of the
secondary and tertiary sector in the
economy of any country

ØInvolves the establishment of the factory

system of production, manufacturing and
related processes
INDUSTRIALISATION AND PLANNING :
• 1. Second FYP
Øa.Establishment of iron & steel, heavy engineering & machine
building industries
Øb.Modernisation and technological progress of other industries
Øc.Increased role of public sector
Ød.Capacity expansion& fuller utilisation of existing industries
Øe.Rourkela steel plant, Bhilai & Durgapur steel plant, Hindustan
machine tools were set up.
• 2. Third FYP
ØHasten the process of industrial & technological change
ØStrengthen industry, transport & power
ØIncreased emphasis over public sector.
• 3. Fourth FYP
ØFocus over enlargement of capacity for export
promotion
ØEmphasis over core sector
• 4. Fifth FYP
ØRapid growth of core sector industries
ØRapid diversification of industries
ØDevelopment of small scale industries
• 5. Sixth FYP
ØFocus over modernisation & self-reliance
ØNew industrial strategy of development of backward
regions
ØExport promotion strategy of engineering goods
• 6. Seventh FYP
ØMaximisation of capacity utilisation of existing industries
ØEvolve a integrated industrial policy for self-reliance
ØTo usher in “sunrise industry” (iron & steel) growth
ØEncouragement of modernisation & technological
upgradation
ØRemoval of infrastructural constraints.
• 7. Eighth FYP
ØFocus over reforms in the fields of industry, trade &
foreign investment
ØIncreased role of private sector and emphasis over
liberalisation of norms in licensing
ØFocus over trade and commerce growth in the field of
industry
RECENT INITIATIVES :

• 8. Recent initiatives
ØFocus over increasing the growth in manufacturing
industries (secondary sector)
ØIncreased emphasis over core sector industries
ØExport oriented performance (SEZ)
ØNational Manufacturing Policy(N.M.P.)
ØMAKE IN India initiative
ØEmphasis over foreign direct investment
ØRenewed focus over infrastructure
INDUSTRIAL POLICY IN INDIA :

• 1.) INDUSTRIAL POLICY RESOLUTION, 1948

Demarcation of four areas
ØManufacturing of defence weapons, atomic energy,
railway – exclusive monopoly of government
ØCoal, iron & steel, aircraft, wireless – new undertakings
only by government.
ØCapital goods – other basic industries, could be
regulated by government.
ØRemaining left open for private sector.
INDUSTRIAL POLICY RESOLUTION, 1956 :
3.) INDUSTRIAL POLICY STATEMENT, 1977 :
3.) INDUSTRIAL POLICY STATEMENT, 1977 :
• a. DIC – nodal centre to look after the establishment &
running of small scale industry by providing technical
advice, expertise & recommending to the government.
• b. Janata’s focus was on the growth of small scale &
cottage industries as against the growth of large scale
industries or private business house.
• c. The decentralized growth of industries would in turn
bring about the growth in employment leading to poverty
alleviation. Also it would decrease the concentration of
economic power.
4.) INDUSTRIAL POLICY RESOLUTION, 1980 :
4.) INDUSTRIAL POLICY STATEMENT, 1991 :
4.) INDUSTRIAL POLICY STATEMENT, 1991 :
4.) INDUSTRIAL POLICY STATEMENT, 1991 :
• Salient features:
• 1. Government monopoly:
a) number of industries reserved for public sector was reduced from 17 (as per
1956 policy) to only 8 industries viz. Arms and Ammunition, Atomic Energy,
Coal, Mineral Oil, Mining of Iron Ore, Manganese Ore, Gold, Silver, Mining of
Copper, Lead, Zinc, Atomic Minerals and Railways.
b)Currently only two categories from the above viz. atomic energy and Railways
are reserved for public sector.
• 2. Industrial licensing policy:
a)This policy abolished the Industrial licensing for all industries except for a short
list of 18 industries.
b)Number reduced to six industries viz. drugs and pharmaceuticals, hazardous
chemicals, explosives such as gun powder and detonating fuses, tobacco
products, alcoholic drinks, and electronic, aerospace and Defence
equipment.
4.) INDUSTRIAL POLICY STATEMENT, 1991 :
• Salient features:
• 3. Foreign investment and capital:
a)This was the first Industrial policy in which foreign companies
were allowed to have majority stake in India.
b)34 Industries were placed under the automatic approval route
for direct foreign investment up to 51 percent foreign equity.
c)NRIs were allowed to 100% equity investments on non-
repatriation basis in all activities except the negative list.
d)The government also established a special empowered board
called Foreign Investment Promotion Board (FIPB) to negotiate
with international firms and approve FDI in selected areas.
e)A promise to carry out some amendments in Foreign Exchange
Regulation Act (1973) was also made. (The act was later
replaced by FEMA in 1999).
4.) INDUSTRIAL POLICY STATEMENT, 1991 :
• Salient features:
• 4. Foreign Technology Agreement:
• a). Automatic permission was given for foreign technology
agreements in high priority industries up to a lump sum payment of
Rs. 1 crore, 5% royalty for domestic sales and 8% for exports.
• 5. Review in Public sector investments:
• Review the portfolio of public sector investments with a view to
focus the public sector on strategic, high-tech and essential
infrastructure.
a)The PSUs which were chronically sick and which are unlikely to
be turned around were to be referred to the Board for Industrial
and Financial Reconstruction (BIFR).
New Industrial Policy, 1991 : Outcomes :
Lately National
Investment and
Manufacturing Zones(NIM
Z) emerged. All these
have benefitted the
export sector of the 1991 policy
new act was passed country.
for MSMEs in 2006 attempted to
and a separate liberalize the
ministry was economy by
established to look removing
into the problems of bureaucratic
MSMEs. hurdles in industrial
growth.

Outcomes

Export oriented
The role of public
Units, Export
sector was limited.
Processing Zones,
Only 2 sectors were
Agri-export Zones
finally left reserved
and Special
for public sector.
economic ZOnes Policy provided
easier entry of
multinational
companies,
privatisation, removal
of asset limit on MRTP
companies, liberal
licensing.
P.S.U. – DEFINITION AND ROLES :
• 1. State owned industrial undertakings
• 2. Got a strategic role under the industrial policy
resolution 1956
3.Was expanded to provide a big push to the Indian
economy at the time which was suffering from a weak
industrial base, heavy unemployment, absence of
infrastructure and no concept of savings and investments.
4.Besides the public sector received necessary boost from
the government as the private sector didn’t have funds,
experience, insight and expertise
5.An important example of Socialism
P.S.U. – DEFINITION AND ROLES :
P.S.U. – DEFINITION AND ROLES AFTER 1991 :
PRIVATE SECTOR - ROLE AFTER 1991 :
NATIONAL MANUFACTURING POLICY 2011 :
NATIONAL MANUFACTURING POLICY 2011 :
NATIONAL MANUFACTURING POLICY 2011 :
MAKE IN INDIA : 2014 :
MAKE IN INDIA : 2014 :
MAKE IN INDIA : 2014 :
• Sectors in make in India initiatives
• Renewable energy
• Ports, railways, highways
• Thermal power
• Mining
• Oil and natural gas
• Electrical machinery
• Food processing
• IT sector
• Defence manufacturing
• Pharmaceuticals
• Space
• Tourism & hospitality