Industrial Policy | Meaning

 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.
Industrial Policy | Meaning
 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 | Objectives
 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.
Industrial Policy | Objectives
6. Providing opportunities for gainful employment.
7. Achieving a self-sustained economy.
8. Achieving faster economic growth.
9. Alleviating poverty.
10. Protecting and developing a healthy small- scale sector.
11. Updating technology and modernization of industry.
12. Liberalization and globalization of economy.
Industrial Policies from 1948 to1991
Industrial Policy Resolution 1948 (6 April, 1948);
Industrial Policy Resolution (30 April, 1956); Industrial
Policy Feb 2, 1973; Industrial Policy Dec 23, 1977;
Industrial Policy Statement of July, 1980; Industrial
Policy, July 24, 1991.
Industrial Policy Resolution 1948 (6
April, 1948)
 The Government of India announced its first
industrial policy resolution on 6 April,1948.
 The policy resolution laid stress on the role of the
state in the development of industry.
 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.
Industrial Policy Resolution 1948 (6
April, 1948)
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.
Industrial Policy Resolution 1948 (6
April, 1948)
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.
 Importance was given to small scale and cottage
industries.
Industrial Policy Resolution (30 April,
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.
Industrial Policy Resolution (30 April,
1956)
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 Feb 2, 1973
 The Industrial Policy Resolution of 1956 still
remained valid, but certain structural distortions had
crept in the system.
 The new policies were hence directed towards
removing these distortions.
 It provided for a closer interaction between the
agricultural and industrial sectors.
 Accorded the highest priority to the generation and
transmission of power.
Industrial Policy Feb 2, 1973
 Special legislation to protect cottage and household
industries was also proposed to be introduced.
 It was also decided that compulsory export
obligations, merely for ensuring the foreign
exchange balance of the project, would no longer
be insisted upon while approving new industrial
capacity.
Industrial Policy Dec 23, 1977
 Industrial Policy Dec 23, 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 Policy Dec 23, 1977
 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 Statement of July,
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.
Industrial Policy Statement of July,
1980
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
 Government is pledged to launching a reinvigorated
struggle for social and economic justice, to end poverty
and unemployment and to build a modern, democratic,
socialist, prosperous and forward-looking India.
 Such a society can be built if India grows as part of the
world economy and not in isolation.
 While Government will continue to follow the policy of
self-reliance, there would be greater emphasis placed
on building up our ability to pay for imports through
our own foreign exchange earnings.
Industrial Policy, July 24, 1991
 Government is also committed to development and
utilisation of indigenous capabilities in technology and
manufacturing as well as its upgradation to world
standards.
 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.
Industrial Policy, July 24, 1991
 The spread of industrialisation to backward areas of
the country will be actively promoted through
appropriate incentives, institutions and infrastructure
investments.
 Foreign investment and technology collaboration will be
welcomed to obtain higher technology, to increase
exports and to expand the production base.
 Labour will be made an equal partner in progress and
prosperity.
 Workers’ participation in management will be
promoted.
Industrial Policy, July 24, 1991
 Need to preserve the environment and ensure the
efficient use of available resources.
 Maintain sustained growth in productivity and gainful
employment and attain international competitiveness.
 In pursuit of the above objectives, Government have
decided to take a series of initiatives in respect of the
policies relating to the following areas:
1. Industrial Licensing.
2. Foreign Investment.
3. Foreign Technology Agreements.
4. Public Sector Policy.
5. MRTP Act.