Need of IP

One of the instruments for regulation of industry in a country is the declared industrial policy of the
Government. The declaration of industrial policy fulfills the functions of indicating the intentions of the
Government vis-a-vis industry, thus removing the anxiety and hesitancy generated by uncertainty about
Government attitude towards industry, ensuring balanced and well-coordinated growth of industry n
private and public and large, small and medium-scale sectors and over different regions, besides of
course providing a continuing guideline for the formulation of economic plans and strategy of Industrial
development. Needless to add, it is a potent and important tool whereby Government exercises its
regulation and control over industry.

Four Forces of BE
Business environment of a modern business enterprise basically includes four forces

A. Economic and Legal,

B. Political,
C. Social, and
D. Technological.

B. All of us are the products of the political environment around us. Managers and business executives
are no exception. They must understand the working of the political system from time to time.

The businessman of today cannot limit himself to the problems internal to his business unit but
has to intelligently keep himself constantly abreast of the national problems. Such an
understanding will help him in the long run while dealing with his own managerial and business
problems being influenced by the political environment.

Public opinion is a very important aspect of modern life. In a democracy, any act must be
supported by public opinion to be upheld and sustained. Even so the business activity must get
the support of public opinion. Political leaders are the representatives of the public and the
spokesmen of its opinion. Therefore, business and politics are closely related. Without a clear
understanding of dynamics of politics and the support and encouragement from the politicians,
business cannot prosper. The business strategy adopted by the businessman is to be framed
keeping in mind what is the present political situation, what are going to be the steps taken by
political forces in the country and abroad and what will be the repercussions of different political
developments on the life of business. If the general atmosphere in the political circle is against
business-specially the private sector, the businessman has to deal with it by making necessary
modifications in his attitude, policies and practices. If he does not car for the political
environment he may b meeting with the failure as the political forces may finish the chances of
his success by creating insurmountable obstacles in his way. The case of Maruti Limited which
was set up for the manufacture of mini-cars in good example of how the change of political
forces affects favorably or adversely the business venture. During the emergency, when the the
country was governed by the Congress (I), Mr. Sanjay Gandhi was able to gt all sorts of
assistance from the Government including huge finance because of his close relations with the
then Prime Minister Mrs. Indira Gandhi. With the change in Government, i.e., when the Janta
party came into power, the same concern had to see its dooms day as so many charges of
corruption and bungling were laid against Maruti Limited and its Directors because of which the
business came to a close and the legal battle is still going on.

C. Society consists of different individuals belonging to different walks of life including the workers,
farmers, teachers, bureaucrats, consumers, shareholders, etc., etc. The type of thinking which goes on in
the minds of different people and the social environment and the behaviour of the people towards
business is congenial, business can prosper more.

However, if the attitude of the community is hostile to business, the businessman has to answer certain
questions an changes himself according to the wishes of people. The beliefs, attitudes, notions, etc., of
the people on different aspects change from time to time. For example, whereas earlier it was believed
that all human problems arose because of some special act of God, now it is recognised that basically
the problems of human beings are man-made and product of a particular system under which we live.
The modern worker, for example, no longer considers his employer as his father and looks at the wages
as his right. Similarly in a buyers' market, consumers become more conscious of what products would
suit them best and at what prices to buy them. Manufacturers cannot sell everything with the help of
manipulative advertising. The businessman has to satisfy all the forces. He has to answer questions put
before hem by the society and change accordingly. In case he ignores social forces, he shall be uprooted
by them in due course of time.

D Science and technology has developed to such an extent that our entire life and living conditions have
been magically transformed. With the development of technology, new techniques of production and
distribution are emerging making the traditional techniques outdated. As the rate of technological
change gets faster, the businessman has to keep pace with it though innovation and renovation of his
business practices. Specifically, he has to bring changes in the product-their packaging, pricing and
distribution. He has to keep in mind that the fruits of technology are used by him for the benefit of the
consumers and other sections of society. Business planning in modern times must be based upon
realistic forecast of different technological developments likely to take place in future and their impact
on the success of the business activity.

Criticism

The main thrust of the new industrial policy of Janata Government is on small-scale, village and tiny
sector industries as against the large-scale industries mainly controlled by big industrial houses and
multi-nationals.

There is also a new compulsive emphasis towards geographical dispersal of industries from urban
centres to rural and backward areas. However, the new industrial policy seems to be a mere extension
of the industrial policy of 1956, because as stated in the Janta Government statement the new policy is
directed basically towards the removal of distortions. The measures suggested for the promotion of
small-scale industries in the new policy are also found in the Industiral Policy of 1956. All that the Janata
Government has done is to increase the list of 180 items (listed earlier) to 500 items. Moreover, in many
cases, enlarged list is deceptive. For example, even when an item “brushed of all types” has been listed,
elsewhere one finds “wire brushed and fiber brushes”, “paint brushed”, “tooth brush” as separate
items. But mere increase in the number of reserved items is not a necessary indicator of the expanding
role of the small-scale sector. In order to make reservation effective, the large industrial units must be
phased out of the production of certain items. Only small-scale industries be allowed to manufacture
them. The new policy does not give concrete measures whereby the exploitative nature of large-scale
industries, dominance of multinationals and strong hold of capitalist structure can be checked. Even
where the small-scale industrial units are free to operate in the open market, large sized business firms
have greater competitive strength to dominate the market through brand names and other sales tactics.
The foregoing analysis suggests that the industrial policy does not make bold attempt to change the
socio-economic framework in some basic ways but decides to operate within the present socio-
economic structure with a few modifications.