ROY’S INSTITUTE OF COMPETITIVE EXAMINATION

WBCS (EXE.) ETC. MAIN EXAMINATION

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Industrial Policy
 Industrial Policy can be defined as ‘Government efforts to alter industrial structure to promote productive based
growth.’

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 Soon after Independence, the then Commerce and Industry Minister of India, the late S.P. Mukherjee, announced
the first comprehensive industrial policy in the Constituent Assembly on April 6, 1948. This resolution
contemplated mixed economy which included both the public as well as private sector in the industrial front.
 The 2nd Industrial Policy or Industrial Policy Resolution (IPR) of 1956 is known as Economic Constitution of

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India.

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The 1956 Resolution laid down the following objectives : (a) accelerating the rate of economic growth, (b) speeding
up industrialization, (c) expanding the public sector, (d) building up a large & growing cooperative sector and (e)
prevention of monopolies and the concentration of wealth and income.
 To control and regulate the process of industrial development in the country, Industries (Development and
Regulation) Act, 1951 came into force on May 8, 1952. It empowered the Government of India to issue industrial
licenses and regulate growth of the industry in the country in such a way as to subserve the common good.
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 The Industrial Licensing Policy Inquiry Committee (Dutt Committee), constituted in 1967, recommended that
larger industrial houses should be given licenses only for setting up industry in core and heavy investment sectors,
thereby necessitating reorientation of industrial licensing policy.
 On the basis of recommendation of Dutt Committee, Monopolies and Restrictive Trade Practices (MRTP) Act,
1969 brought into force from 1st June 1970. The principal objectives of the MRTP Act were—
(i) Prevention of concentration of economic power to the common detriment, control of monopolies, and
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(ii) Prohibition of monopolistic and restrictive and unfair trade practices.

 Single large undertakings or groups of inter-connected undertakings with assets of `20 crore or more were put
under the obligation of taking permission from the Govt. and they were called MRTP companies.
 An important relaxation came in 1985 when the Government raised the limit of assets for the purpose of
MRTP Act from `20 crore to `100 crore.
 Under the provisions of the SICA 1985, the Government removed sick industrial companies from the purview
of the MRTP Act for purpose of modernization, expansion, amalgamation or merger.
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 In a major liberalization of the industrial licensing policy announced on December 24, 1985, the Govt. permitted
the unrestricted entry of large industrial houses and companies governed by the FERA into another 21 high-tech-
nology items of manufacture.
 The New Industrial Policy, 1991, scrapped the assets limit for MRTP companies altogether. The 1991
amendment made drastic changes in the MRTP Act. Briefly, the major amendments were the following :
(i) The provision with respect to the concentration of economic power was repealed, unless it was detrimental to
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national interest. This implied that henceforth the emphasis of the Act shifted from monopolies to restrictive
and trade practices.
(ii) As per the new policy, a company need not seek the permission of the MRTP Commission any more for
making investment in new undertakings for capacity expansion or for deversification.
 The Government appointed a committee on Competition Policy and Law under the Chairmanship of Mr. S.V.S.
Raghavan in October 1999 for shifting the focus of the law from curbing monopolies to promoting competition
in line with the international environment. The Committee submitted its report to the PM on May 22, 2000. The
main recommendations of the Committee were :
The enactment of an Indian Competition Act, the setting up of a Competition Commission of India (CCI), the
repeal of the MRTP Act 1969, and winding up the MRTP Commission.
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 WBCS MAIN ECONOMICS HANDOUT - 5 2
Pursuant to the recommendation of this committee, the Competition Act 2002, was enacted on 13th January 2003.
The Competition Act, 2002, as amended by the Competition (Amendment) Act 2007, follows the philosophy of
modern competition laws. The Act prohibits anti-competitive agreements, abuse of dominant position by enterprises
and regulates combinations (acquisition, acquiring of control and M & A), which causes or likely to cause an
appreciable adverse effect on competition within India.
 The objectives of the Competition Act are sought to be achieved through the Competition Commission of India

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(CCI), which has been established by the Central Government with effect from 14th October 2003. It became
fully functional from 2009. CCI consists of a Chairperson and 6 members appointed by the Central Government.
It is the duty of the Commission to eliminate practices having adverse effect on competition, promote and sustain
competition, product the interests of consumers and ensure freedom of trade in the markets of India.

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 The new Industrial Licensing Policy of 1970 classified industries into four categories. First was the ‘core sector’,
which consisted or basic, critical and strategic industries. Second was the ‘heavy investment sector’, comprising
projects involving investment of more than `50 million. The third category, the ‘middle sector’ consisted of

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projects with investments in the range of `10 million to `50 million; and the fourth was the ‘delicensed sector’,
which had investments less than `10 million.

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 Industrial Policy statement of 1977 laid emphasis on decentralization of industries and promotion of small scale,
tiny and cottage industry.
 The Industrial Policy statement of 1980 emphasized the optimum utilization of installed capacity, technological
upgradation and modernization and the promotion of export-oriented units.
 The major highlights of New Industrial Policy 1991 are—
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i. Dereservation of Industries;
ii. Scrapping the assets limit for MRTP Companies;
iii. Delicensing of industries; and
iv. Promotion of foreign investment.
Public sector in India
 In India, a public sector company is that company in which the Union Government or State Government or any
Territorial Government owns a share of 51 % or more. The 1956 Industrial Policy resolution gave primacy to the
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role of the state which was directly responsible for Industrial development.
 The public sector can be classified into :
n Departmental Undertaking – Directly managed by concerned ministry or department. (e.g. Railways, Posts etc.)
n Non-Departmental Undertaking – PSU (e.g. HPCL, IOCL etc.)
n Financial Institution (e.g. SBI, UTI,etc.)
The Importance/Presence of the Public Sector in the Indian Economy :
 Capital Formation
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 Employment Generation
 Balanced Regional Development
 Contribution to Public Exchequer
 Import Substitution
The major problems of PSUs can be stated below :
 Inappropriate investment decisions
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 Improper Pricing Policy

 Excessive overhead cost
 Lack of Autonomy & Accountability
 Overstaffing
 Trade Unionism
 Under Utilization of capacity
Public Sector Reforms in India :
 The Statement on Industrial Policy, of July 24, 1991, recognized that many public enterprises have become a burden
rather than being an asset to the Government.
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 The areas reserved for the public sector were reduced drastically from 17 to 8 (and later to 6). In manufacturing,
the only area which continue to be reserved for the public sector are those related to defense, strategic concerns and
petroleum. Even, here there is no bar to the Government, inviting the private sector to participate.
 A commitment was made to provide greater autonomy to remaining public enterprises through the strengthening of
the MOU (Memorandum of Understanding).
 Volentary retirement scheme was announced in order to rationalize the man power utility

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 Govt has provided greater autonomy to the selected CPSE in the form of Navaratna and Miniratnasatus.
 The decision to disinvest equity in the public sector enterprises was also announced in the statement on Industrial
Policy.

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Some facts on PSUs in India :
 Public sectors had originally been designed to accelerate diversification of Indian industry.
 The leading areas where public sector presence are strong are steel and fertilizers.
 Top three profit making PSUs are Oil and Natural Gas Corporation (ONGC), Indian Oil Corporation and NTPC.

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 The top three loss making CPSEs namely, Bharat Sanchar Nigam Ltd., Air India Ltd. and Mahanagar Telephone

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Nigam Ltd.
 Most of the public sector units performed with – subsidy
 CPSEs are administered by the Ministry of Heavy Industries and Public Enterprises. The Department of Public
Enterprises (DPE) is the nodal department for all the Central Public Sector Enterprises (CPSEs). DPE formulates
policy regarding CPSEs.
NEW PSE POICY 4TH FEB,2021
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• The Government notified the new Public Sector Enterprise (PSE) Policy on 4fr February., 2O2l for Atmanirbhar
Bharat.
• The new PSE Policy envisages classification of CPSEs into Strategic and Non-Strategic Sectors. The strategic sectors
as per the policy are as under: atomic energy; space and defense; transport andtelecommunication; power; petroleum;
coal and other minerals; banking, insurance, and financial services. Under the 4 broad baskets in which the strategic
sectors are classified-i.e., national security, critical infrastructure, energy and minerals and financial services- only
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a bare minimum presence of CPSEs in the aforesaid strategic sectors is to be maintained. The non-strategic CPSEs
will be privatized or otherwise shall be closed.
• Under the New Public Sector Policy(4th February, 2021.), DPE will identify the CPSEs either for closure or privatization
in the non-strategic sectors in consultation with the concerned Administrative Ministries/ Departments, NITI Aayog,
Department of Expenditure and DIPAM.
Maharatna, Navratna & Miniratna :
Criteria for grant of Maharatna status to CPSEs
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The CPSEs meeting the following criteria are eligible to be considered for grant of Maharatna status.
i. Having Navratna status
ii. Listed on Indian stock exchange with minimum prescribed public shareholding under SEBI regulations
iii. An average annual turnover of more than Rs. 25,000 crore during the last 3 years
iv. An average annual net worth of more than Rs. 15,000 crore during the last 3 years
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v. An average annual net profit after tax of more than Rs. 5,000 crore during the last 3 years
vi. Should have significant global presence/international operations.
Investment Limit : To make equity investment to establish financial JVs and wholly owned subsidiaries and
undertake mergers and acquisitions (M&As) in India or abroad, subject to a ceiling of 15% of the net worth
of the concerned CPSE, limited to Rs.5.000 crore in one project.
Eligibility Criteria for Navratna Status
It should also have a composite score of 60 or above out of possible 100 marks in the 6 selected performance
parameters.
1. Net Profit to Net Worth (Maximum: 25)
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2. Manpower cost to cost of production or services (Maximum: 15)
3. Gross margin as capital employed (Maximum: 15)
4. Gross profit as Turnover (Maximum: 15)
5. Earnings per Share (Maximum: 10)
6. Inter-Sectoral comparison based on net profit to net worth (Maximum: 20)

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Investment Limit
To establish financial joint ventures and wholly owned subsidiaries in India or abroad with the stipulation that
the equity investment of the CPSE should be limited to the following.

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a. Rs 1000 crore in any one project
b. 15% of the net worth of the CPSE in one project
Eligibility conditions and criteria for grant of Miniratna status are as under :

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(i) Category-I CPSEs should have made profit in the last three years continuously, the pretax profit should have
been Rs.30 crores or more in at least one of the three years and should have a positive net worth

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(ii) Category-II CPSEs should have made profit for the last three years continuously and should have a positive
net worth.
Navaratna Maharatna and Miniratna PSUs :
As on Jauaray 2021, there are 11 Maharatnas and 13 Navratna Companies and 73 Miniratna (Both I and II) in India.
List of Maharatna Companies in India :
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1. Bharat Heavy Electricals Limited
2. Bharat Petroleum Corporation Limited
3. Coal India Limited
4. GAIL (India) Limited
5. Hindustan Petroleum Corporation Limited
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6. Indian Oil Corporation Limited

7. NTPC Limited
8. Oil & Natural Gas Corporation Limited
9. Power Grid Corporation of India Limited
10. Steel Authority of India Limited
11. Power Finance Corporation Ltd.
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Disinvestment :
The concept of disinvestment follows the dictum: The government has no business to be in business. Thus, the
government continues to disinvest in sectors where private companies are already the dominant players.
Disinvestment, or divestment, refers to the act of a business or government selling or liquidating an asset or
subsidiary or the process of dilution of a government’s stake in a PSU (Public Sector Undertaking).
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Types of Disinvestment :
Disinvestment of a minority stake in PSUs can be done in the following ways :
l Initial Public Offering (IPO) : An offer of shares by an unlisted PSU to the public for the first time.
l Follow-on Public Offering (FPO) : Also known as Further Public Offering, it’s an offer of shares by a listed
PSU.
l Offer for sale (OFS) : Shares of a PSU are auctioned on the platform provided by the stock exchange. This
mode has been used extensively by the government since 2012.
l Institutional Placement Programme (IPP) : Under this, only selected financial institutions are allowed to

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participate and the government stake is offered to only such institutions. E.g., mutual funds, insurance, and
pension funds such as LIC etc.
l CPSE Exchange Traded Fund (ETF) : Through this route, the government can divest its stake in various
PSUs across diverse sectors through a single offering. This mechanism allows the government to monetize its
shareholding in those PSUs which form part of the ETF basket.
l Cross-holdings : In this method, one listed PSU takes up the government stake in another listed PSU.

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Main objectives of Disinvestment in India :
 To meet the budgetary needs

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 To reduce fiscal deficit
 To improve public finances and overall economic efficiency
 To diversify the ownership of PSU for enhancing efficiency of individual enterprise

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 To raise funds for technological upgradation, modernization and expansion of PSUs

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 To raise funds for golden handshake (VRS)
 To introduce, competition and market discipline
Importance of Disinvestment :
 In the short run, it is helpful in financing the increasing fiscal deficit.
 Disinvestment funds can be utilized for long-terms goals such as:
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n Financing large-scale infrastructure development.
n Investing in the economy to encourage spending
n Expansion and Diversification of the firm.
n Investing in social programs like health and education
n It can help in generating a better environment for investment.
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 The salient features of the Disinvestment Policy are:

(i) Public Sector Undertakings are the wealth of the Nation and to ensure this wealth rests in the hands of the people,
promote public ownership of CPSEs;
(ii) While pursuing disinvestment through minority stake sale in listed CPSEs, the Government will retain majority
shareholding, i.e. at least 51 per cent of the shareholding and management control of the Public Sector Undertakings;
(iii) Strategic disinvestment by way of sale of substantial portion of Government shareholding in identified CPSEs
upto 50 per cent or more, along with transfer of management control.
Highlights :
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 In April 1993, the Rangarajan Committee recommended disinvesting up to 49% of PSEs equity for industries explicitly
reserved for the public sector and over 74% in other industries. But the then Government did not take any decision
on the Committee’s recommendations.
 Ministry of Industry (Department of Public Enterprises) vide a resolution dated 23 August 1996, constituted a
Public Sector Disinvestment Commission for a period of three years under Shri G.V. Ramakrishna along with
four other members. The term was further extended till 30 November 1999. The Commission submitted reports on
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58 PSEs. The Commission was reconstituted vide Ministry of Disinvestment dated 24 July 2001 for a period of two
years under Dr. R.H.Patil as Chairman along with four other members. The term of the Commission was subsequently
extended till October 2004. The reconstituted Commission submitted reports on 41 PSEs.
 National Investment Fund :
Government had constituted the National Investment Fund (NIF) in November, 2005 into which the proceeds
from disinvestment of Central Public Sector Enterprises were to be channelized. The corpus of NIF was to be of a
permanent nature and NIF was to be professionally managed to provide sustainable returns to the Government, without
depleting the corpus. Selected Public Sector Mutual Funds, namely UTI Asset Management Company Ltd., SBI
Funds Management Private Ltd. and LIC Mutual Fund Asset Management Company Ltd. were entrusted with
the management of the NIF corpus. As per this Scheme, 75% of the annual income of the NIF was to be used for
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financing selected social sector schemes which promote education, health and employment. The residual 25% of
the annual income of NIF was to be used to meet the capital investment requirements of profitable and revivable
PSUs.
In order to align the NIF with the disinvestment Policy, Government decided (17th January 2013) that the disinvestment
proceeds, with effect from the fiscal year 2013-14, will be credited to the existing NIF which is a ‘Public Account’
under the Government Accounts and the funds would remain there until withdrawn/invested for the approved purposes.

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Some information :
 First privatization of PSU in India took place – Modern Food Industries which has been taken over by
Hinduthan liver on January 2000

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 Maruti Duyog privatized in 2002 by Suzuki Motors
 Hindustan Zinc’s is taken over by Vedanta in 2002 which has seen a hundred-fold increase in its profits on
the back of a six-fold expansion in capacities.

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Recent Developments

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 In 2015, the Government reinitiated the policy of strategic disinvestment in order to open up sectors for private
enterprise to bring efficiency in management that would contribute to general economic development.
 In 2016, the Department of Disinvestment was renamed as the Department of Investment and Public Asset
Management (DIPAM).
 The government has revised its disinvestment estimate for the current financial year (2021–22) to ₹78,000 crore
, down from ₹1.75 lakh crore envisaged in the budget estimate (BE) So far, the total disinvestment government
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proceed is ₹12,029.9 crore, which includes ₹2,700 crore receipt from Air India privatisation and balance ₹9,330
crore through sale of minority stakes in CPSEs.
 In the current financial year, major disinvestments planned include IPO of LIC, Bharat Petroleum Corporation
Ltd (BPCL), RINL and Pawan Hans. According to experts, a 10% IPO of LIC shares may raise over ₹1 lakh
crore.
 The government had transferred the ownership of Air India to Tata Group.
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 Disinvestment target — Rs. 65000 crore for 2022–2023.

Micro, small and medium enterprise :
Introduction :
Worldwide, MSMEs have been accepted as the engine of economic growth and for promoting equitable development.
With low investment requirements, operational flexibility and the capacity to develop appropriate indigenous
technology, SMEs have the power to propel India to new heights. Hence, it seems like there is a silent revolution
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happening in India powered by MSMEs.

Importance of MSMEs for Indian Economy :
Employment : It is the second largest employment generating sector after agriculture.It provides 80% of jobs in
the industry with 20% of capital investment. It also checks the rural-urban migration.
Contribution to GDP : The MSME share to the total Gross Domestic Product (GDP) is about 37%. MSME ministry
has set a target to up its contribution to GDP to 50% by 2025 as India becomes a $5 trillion economy.
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MSMEs contribute around 6.11% of the manufacturing GDP and 24.63% of the GDP from service activities.
Contribution to Export : The MSME share to the total export is 49% based on the data of Ministry of Commerce.
Inclusive growth : MSMEs promote inclusive growth by providing employment opportunities in rural areas especially
to people belonging to weaker sections of the society.
MSME redefined :
The following criteria for classification of micro, small and medium enterprises, namely:—
(i) A micro enterprise, where the investment in Plant and Machinery or Equipment does not exceed one crore
rupees and turnover does not exceed five crore rupees;
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(ii) A small enterprise, where the investment in Plant and Machinery or Equipment does not exceed ten crore
rupees and turnover does not exceed fifty crore rupees;
(iii) A medium enterprise, where the investment in Plant and Machinery or Equipment does not exceed fifty crore
rupees and turnover does not exceed two hundred and fifty crore rupees. This notification shall come into effect
from 01.07.2020.
Problems of the MSME`S.

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t The unavailability of adequate and timely credit facility,
t High cost of credit,

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t Lack of modern technology,
t No research and innovations,
t Insufficient training and skill development,

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t Complex labor laws are the main problems of the MSME`S

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Steps taken to resolve the problems of MSME :
 2 percent interest subvention for all GST registered MSMEs, on fresh or incremental loans.
 Trade Receivables e-Discounting System (TReDS) to enable access to credit from banks, based on their upcoming
trade receivables from corporate and other buyers.
 Public sector companies now compulsorily procure 25%, instead of 20% of their total purchases, from MSMEs.
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 More than 40,000 MSMEs registered on Government e-Marketplace (GeM) portal. It provides transparency in
procurement and facilitates of MSMEs to directly reach out to the buyers.
 Financial support to MSMEs in ZED (Zero Defect Zero Effect) certification to improve quality of products.
 Government provides subsidy towards the expenditure incurred by enterprises to obtain the product certification
licenses from national and international bodies.
 Computerised random allotment for inspector visits to the establishment.
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 Environmental Clearance under air pollution and water pollution laws, have been merged into one. Also, the
return will be accepted through self-certification.
 For minor violations under the Companies Act, the entrepreneur will no longer have to approach the courts,
but can correct them through simple procedures. This signifies simplification of government procedures and
instilling confidence among entrepreneurs.
Government schemes to promote MSMEs
 Udyami Mitra Portal : launched by SIDBI to improve accessibility of credit and handholding services to
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MSMEs.
 MSME Sambandh : To monitor the implementation of the public procurement from MSMEs by Central Public
Sector Enterprises.
 MSME Samadhaan -MSME Delayed Payment Portal –– will empower Micro and Small entrepreneurs across
the country to directly register their cases relating to delayed payments by Central Ministries/Departments/
CPSEs/State Governments
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 A Scheme for Promoting Innovation, Rural Industry & Entrepreneurship (ASPIRE) : creates new jobs
& reduce unemployment, promotes entrepreneurship culture, facilitates innovative business solution etc.
 National Manufacturing Competitiveness Programme (NMCP) : to develop global competitiveness among
Indian MSMEs by improving their processes, designs, technology and market access.
 Micro & Small Enterprises Cluster Development Programme (MSE-CDP) - adopts cluster development
approach for enhancing the productivity and competitiveness as well as capacity building of MSEs.
 Credit Linked Capital Subsidy Scheme (CLCSS) is operational for upgradation of technology for MSMEs.

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Other recent initiatives
 Creation and Harmonious Application of Modern Processes for Increasing the Output and National Strength
(CHAMPIONS) portal launched by Hon’ble Prime Minister on 1st June, 2020, is an ICT based technology system
for making the smaller units big by helping and handholding them. The portal is not only helping MSMEs in
the present situation, but also providing guidance to grab the new business opportunities and grievance redressal
under the Atmanirbhar Bharat Abhiyaan., the MSME sector has not only been given substantial allocation but

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has also been accorded priority in implementation of the measures to revive the economy.
 National Manufacturing Policy :
India’s recent economic growth has been due to a massive surge in the services sector with the manufacturing sector

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continuing to stagnate, contributing only 15-16 per cent of GDP.
It is now being increasingly recognised that unless India’s manufacturing sector picks up strongly, it will be difficult
to sustain rapid economic growth on the one hand, and provide productive employment opportunities to the increasing
labour force on the other hand.

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All these considerations have once again brought back industrial policy into focus in the form of the National

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Manufacturing Policy (NMP) released by the Government of India on November 4, 2011.
 Objectives of NMP :
The main objectives of NMP are as under :
1. Increase manufacturing sector growth to 12-14 per cent over the medium term.
2. Increase the share of manufacturing in GDP from the present level of about 16.0 per cent to 25 per cent by
2022.
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3. Create 100 million additional jobs in the manufacturing sector by 2022.
4. Create appropriate skill sets among the rural migrant and urban poor for their easy absorption in manufacturing.
5. Increase domestic value addition and technological depth in manufacturing.
6. Enhance global competitiveness of Indian manufacturing.
National Investment and Manufacturing Zones :
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National Investment & Manufacturing Zones (NIMZs) are one of the important instruments of National
Manufacturing Policy, 2011.
In September 2015, Andhra Pradesh became the first state to house India’s first national investment and
manufacturing zone after the state assured theCentre of availability of 10 sq km of land in one place in
Prakasham district.
So far, three NIMZs namely Prakasam (Andhra Pradesh), Sangareddy (Telangana) and Kalinganagar (Odisha)
have been accorded final approval and 13 NIMZs have been accorded in-principle approval. Besides these,
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eight Investment Regions along the Delhi Mumbai Industrial Corridor (DMIC) project have also been declared
as NIMZs.
The main objective of Special Economic Zones is promotion of exports, while NIMZs are based on the principle
of industrial growth in partnership with States and focuses on manufacturing growth and employment generation.
The focus industries in NIMZ include employment generating industries such as textiles and garments; capital
goods; industries with strategic significance; SMEs; PSUs and the industries where India has a competitive
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advantage.
SICK INDUSTRIES
Definition of Sick PSEs
 A CPSE will be considered ‘sick’ if it has accumulated losses in any financial year equal to 50% or more of
its average net worth during 4 years immediately preceding such financial year.
Sick CPSEs: A CPSE shall be considered sick if it meets one of the following criteria: a. If it is declared sick
as per the provisions of the Companies Act, 2013. b. If its net worth is negative.
Incipient sick CPSEs: A CPSE would be considered incipient sick if it meets one of the following criteria:

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a. If its net worth is less than 50% of its paid-up capital in any financial year. b. If it had incurred losses
consecutively for three years.
Weak CPSEs: A CPSE would be considered weak or sub optimally performing if it meets one of the following
criteria: a. If its turnover or its operational profit has declined by more than an average of 10% in the last 3 years.
b. If its profit before tax is less than income from the other sources. c. If its trade receivable and inventories
are more than 50% of net worth of the CPSE. d. If the claims against the company, not acknowledged as debts,
are more than its net worth. e. Any other criteria as may be prescribed to quantify early signs of weakness in

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the performance of the CPSEs by the government.
CAUSES SICKNESS
Internal Causes

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• Faults at the planning and construction stage such as wrong choice of location, inadequate market analysis,
etc.
• Purchase of inappropriate/obsolete/ defective plant and machinery .

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• Burden of unpaid debt

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• Entrepreneurial incompetence
• Acute labour problems such as strikes, lockouts, high attrition, etc.
External Causes
• Power cuts
• Erratic supply of inputs or raw materials.
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• Recession in market leading to demand and credit restraints
• Sudden changes in the government policies .
• Tough competition from foreign players in case of some industries
BIFR
Government has set up Board for Industrial & Financial reconstruction (BIFR) under Sick Industrial Companies
(Special Provisions) Act, 1985 with a view to arranging the timely detection of sick and potentially sick
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companies and for the speedy determination of preventive, ameliorative and remedial measures which need to
be taken in respect of such companies. The companies which are registered with BIFR are incurring losses
and having either negative networth or 50% erosion in networth. On 1 December 2016, the Modi government
dissolved BIFR and referred all proceedings to the National Company Law Tribunal (NCLT) and National
Company Law Appellate Tribunal (NCLAT) as per provisions of Insolvency and Bankruptcy Code.
 Make in India Programme :
The ‘Make in India’ program (launched in September 2014) aims at promoting India as an important investment
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destination and a global hub for manufacturing, design and innovation. The ‘Make in India’ initiative does not
target manufacturing sector alone, but also aims at promoting entrepreneurship in the country. The initiative is
further aimed at creating a conducive environment for investment, modern and efficient infrastructure, opening
up new sectors for foreign investment and forging a partnership between government and industry through
positive mindset.
The four pillars are:
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(i) New Processes

(ii) New Infrastructure
(iii) New Sectors
(iv) New Mindset
Six Superstar Sectors Boosting Make in India- automotive, electronics system design & manufacturing,
renewable energy, roads & highways, pharmaceuticals and food processing.
START-UP INDIA
• It is a flagship initiative of G01 since on 16th January 2016, intended
• To build a strong eco system for nurturing innovative and start ups in the country .

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• To have sustainable growth.

• To generate large scale employment opportunities.
• To empower start ups to grow through innovation and design
• It envisaged establishment of Funds for Startups (FFS), corpus for which is 10,000 crore to be managed by
SIDBI
STAND-UP INDIA

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• Launched in 2016, the Stand up India portal provides a digital platform based on three pillars to support
enterprises promotion for SC, ST and women entrepreneurs.
• The loan under the scheme is appropriately secured and backed up by credit guarantee through a scheme

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for which the Department of Financial Service is the settler.
• SIDBI facilitates bank loans repayable up to 7 years and between 10 lakh and 100 lakh for Greenfield
enterprises.

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• With the access to bank accounts and technological education, Stand-up India is aimed to facilitate financial
and social inclusion in the society.

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eBIZ PROJECT
The Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry launched the
eBiz portal on 28.01.2013 E-Biz will serve as 24X7 online single-window system for providing efficient and
convenient Government to Business (G2B) services to the business community in India.
 INVESTMENT AND INDUSTRIAL POLICY OFWEST BENGAL, 2013 : The focus of this Investment
and Industrial Policy is to rapidly build and improve infrastructure, as an enabler for industrial growth, by
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additional 4000 kms of highway and bridges, ports, airports and water transport in Public Private Partnership
(PPP). The state wants to partner with the private sector to tap its financial and technical prowess. Industry, in
turn, could benefit from Bengal’s rich natural resource base, suitable agro-climatic conditions, strategic location
and an exceptional human capital.
At present, manufacturing contributes to about 10% of the State GDP; the aim of the policy is to double this
share in five years. With its power surplus status and rapidly expanding infrastructure and connectivity, this is
a realistic target.
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This policy aims at increasing the growth of manufacturing from 4.7 % (2010-11) to 20% at the end of five
years and to achieve at least 25% share of the NSDP for manufacturing sector.
Generate employment of 13.14 lakhs in 2013-14 & sustain this momentum.
Given the high population density of the state, Micro Small Scale and Medium Enterprise (MSME) stay on
high priority. However, to promote the Large Scale Industries, the aim would be to facilitate investment in
the infrastructure of roads, highways, bridges and ports for maximizing the benefits of the rich mineral base
and surplus power position of the state.To make focused effort on sustainable development of Micro, Small
and Medium Enterprises (MSMEs) with special emphasis in Food Processing and Agro, Textiles & Apparel,
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Leather and Handicrafts and Tourism sectors which offer maximum linkage for Employment generation.
To promote private sector investment in Green Field Projects, Brown field projects and through Public Private
Partnership (PPP) projects.
To promote inclusive development by encouraging local entrepreneurship, especially among socially and
economically disadvantaged groups including women, Scheduled Castes and Scheduled Tribes and minorities.
Extra Information on Industry :
 TEXTILE INDUSTRY
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Role-
l Textile industry is the largest industry of modern india.
l It contributes to around 18% of the manufacturing sector, around 2.5 of the india’s GDP and around 12% of the
country’s export earning AND employs more than 21% of total employment.
l It is one of the largest source of employment generation after agriculture.
 Government announced the Voluntary Retirement Scheme (VRS) in October, 1988.,
 FDI in defence sector is allowed up to 74 per cent through automatic route (from earlier 49percent) for companies
seeking new industrial licenses. FDI beyond 74 percent and up to 100 per cent will be permitted under Government
route.

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 Raise the permissible FDI limit from 49percent to 74percent in Insurance Companies under the automatic route and
allow foreign ownership and control with safeguards.
 Permit foreign investment up to 100percent under the automatic route in cases where the Government has accorded
an ‘in-principle’ approval for strategic disinvestment of a Public Sector Undertaking (PSU) engaged in the Petroleum
and Natural Gas Sector.
 National Infrastructure Pipeline (NIP) was launched with projected infrastructure investment of around Rs. 111

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lakh crore (US$ 1.5 trillions) during FY 2020-2025 to provide world-class infrastructure across the country, and
improve the quality of life for all citizens. It also envisages to improve project preparation and attract investment,
both domestic and foreign in infrastructure. NIP was launched with 6,835 projects, During the fiscals 2020 to 2025,
sectors such as energy (24percent), roads (19percent), urban (16percent), and railways (13percent) amount to around

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70percent of the projected capital expenditure in infrastructure in India.
 PM Gati Shakti an integrated plan ensuring multi-modal and seamless connectivity for people, goods and services.
It covers16 ministries and infrastructure like Bharatmala, Sagarmala, inland waterways, dry/land ports, UDAN etc.
It is also expected to include social infrastructure like hospitals and universities. With continuous improvement in

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digital infrastructure along with development of economic zones like textile clusters, pharmaceutical clusters, defence

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corridors, electronic parks, industrial corridors, fishing clusters, agri zones, GATI-SHAKTI will improve connectivity
and make Indian businesses more competitive.
 PLI Schemes launched in March 2020. The objective of the scheme is to boost domestic manufacturing in sunrise
and strategic sectors, improve cost competitiveness of domestically manufactured goods, enhance domestic capacity
and economies of scale.
 The Government has already committed Rs.1.97 lakh crores, over 5 years starting from 2021-22 in 13 sectors. Recently,
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PLI in the 14th sector - drones and drone components has been included with an additional layout of Rs. 120 crores.
 CHAMPION SECTORS IN INDIA
• In 2020, GOI identified champion sectors in both manufacturing and services sectors (Total 27)
• For promoting their development and achieving their potential
• The sectors have been identified for renewed focus under the Make in India version 2.0
• Department of Industrial Policy and Promotion (DPP), the nodal department for Meke in India, spearheads the
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initiative for the Champion Sectors in Manufacturing and Department of Commerce coordinates the initiative for the
Champion Sectors in Services.
Champion Sectors in Manufacturing (total 15) include :
1. Aerospace and Defence, 2. Automotive & Auto Components, 3. Pharmaceuticals and Medical Devices, 4. Bio-
Technology, 5. Capital Goods, 6. Textiles and Apparels, 7. Chemicals and Petro-Chemicals and8. Electronics System
Design and manufacturing., 9. Leather & Footwear, 10. Food Processing, 11. Gems and Jewellery, 12. Shipping, 13.
Railways, 14. Construction., 15. New and renewable energy,
Champion Sectors in Services (total 12) include:
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1. IT & ITeS, 2. Tourism and Hospitality Services, 3. Medical Value Travel, 4. Transport and Logistics Services,
5. Accounting and Finance Services, 6. Audio Visual Services, 7. Legal Services, 8. Communication Services, 9.
Construction and Related Engineering Services, 10. Environmental Services, 11. Financial Services, 12. Education
Services.
 A dedicated fund of 25000 crore has been proposed to be established to support initiative for sectoral Action Plans
of the Champion Sectors.
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 This initiative aims to raise the share of India’s services sector in global services exports from 3.3 per cent in 2015 to
4.2 per cent in 2022.
 Footloose Industry is a general term for an industry that can be placed and located at any location without effect
from factors such as resources or transport.
 Hard infrastructure is the physical infrastructure of roads, bridges etc., as opposed to the soft infrastructure of human
capital and the institutions that cultivate infrastructure.
 Freight Equalization Policy: It was adopted by government of India to facilitate the equal growth of industry all
over the country. This meant a factory could be set up any where in India and the transportation of minerals would
be subsidized by the Central government. The Policy was introduced in 1952 and remained in force until 1993.

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 Index of Eight Core Industries (Base: 2011-12=100)

The Eight Core Industries comprise 40.27 per cent of the weight of items included in the Index of Industrial Production
(IIP).
1. Coal (weight: 10.33%); 2. Crude Oil (weight: 8.98%); 3. Natural Gas (weight: 6.88%); 4. Petroleum Refinery
(weight: 28.04%); 5. Fertilizer (weight: 2.63%); 6. Steel (weight: 17.92%); 7. Cement (weight: 5.37%) and 8. Electricity
generation (weight: 19.85%).

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Greenfield investment is investment in new plants. It is establishing new production capacity by an investor
or company.
Brownfield investment is an investor investing in an existing plant. Brownfield investment is mainly made
through merger and acquisitions.

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n Continuation of reservation of small scale industries after import libaralisation in anachronistic because Indian
small scale industries have to compete with the large scale industries form out side.
n Most important factor for creation of future of industrial development in INDIA- creation of adequate infrastructural
facilities.

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n Incase of use of the mineral resource of a state by Union Government the state cannot increase royalty without

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permission of the centre.
n Most of the public sector units performed with – subsidy
n Freight equalization policy affected industrial development in West Bengal in the following way – adversely.

MULTIPLE CHOICE QUESTIONS

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1. Attitude of Industrial Policy 1991 toward foreign direct 5. The most important feature of the Industrial Policy
investment was one of— Resolution, 1948 was that of—
a) Improve Export Subsidy a) Public sector b) Private sector
b) Practise exchange control measures c) Mixed economy d) Cooperative sector
c) Practise market opening and free trade in goods and
6. The objective of Industrial Licensing Policy was—
services
d) None of these a) To prevent monopoly and concentration of economic
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2. In Indian states, the state financial corporations are power.

giving assistance mainly to develop— b) To bring about regional balanced development.
a) Agricultural farms c) To regulate industrial investment and production
b) Cottage industry according to plan priorities and targets.
c) Large-scale industry d) All of these
d) Medium and Small-scale industries 7. Government passed MRTP Act for—
3. Which of the following was not an objective of the
a) The prohibition of monopolistic and restrictive trade
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Industrial Policy 1956?

a) Development of co-operative societies
b) Expansion of public sector
c) Develop heavy and machine making industries
d) None of these
4. Consider the following objectives of National
Manufacturing Policy of Indian Economy?
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practices
b) The improvement of monopolistic and restrictive
trade practices
c) The improvement of concentration of economic power
d) None of these
8. The objective of Industrial liberalisation was—

1) To enable the manufacturer sector to contribute at a) To induce private sector investment

least 25% of GDP by 2022. b) To promote both domestic and foreign competition
2) To create 100 million additional jobs in the
c) To infuse technological dynamism
manufacturing sector by 2022.
3) To increase manufacturing sector growth to 12-14% d) All of these
over the medium term. 9. Industrial sickness due to marginal incompetence
Which of the statements given above is/are true? and wrong policies pursued deliberately for want of
Codes : genuine stake is known as –
a) Only 1 b) Only 2 a) Genuine sickness b) Incipient sickness
c) Both 1 and 3 d) All 1, 2 and 3 c) Induced sickness d) None of these
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10. The policy of disinvestment of equity capital of public 18. Which statement does not apply in the pre-reform
sector enterprises is mainly intended to— period, public sector enterprises in India witnessed
a) Hand them over to private entrepreneurs a) High inefficiency and subsidy
b) Convert them into holding companies b) Increased cost of production
c) Make them profit earning enterprises c) High degree of profit
d) Reduce the burden of budgetary support to them d) Both (a) and (b)

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11. In 1996, Government constituted Disinvestment 19. Indicate the statement which is not correct?
Commission under the Chairmanship of— The Industrial policy 1991 witnessed –
a) G V Ramakrishna b) S. Dutt
a) Abolition of Industrial license for majority industries
c) C. Rangarajan d) K Basu

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b) Upper limit of foreign investment reduced
12. Select the correct answer using the codes given below.
c) Upper limit of foreign investment raised
Consider the following statements about National
Investment and Manufacturing Zone (NIMZ) : d) Privatisation of public sector enterprises introduced
20. Industrial sickness due to the managerial incompetence

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1. NMIZs have been set up to increase the share of
manufacturing in GDP to 30% by 2022. and wrong policies pursued deliberately for want of

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2. NMIZs also seek to enhance the skills of workers genuine stake is known as
and incorporate technology in manufacturing. a) Genuine Sickness
3. The industrial units in NMILs will be provided world- b) Incipient Sickness
class infrastructure and tax exemptions. c) Induced Sickness
Select the correct answer using the codes given below. d) None of these
a) 1, 2 and 3 b) 1 only 21. Find the odd one in the list of Navaratras :
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c) 1 and 2 only d) 2 and 3 only a) Bharat Electronics Limited (BEL)
13. Which of the following is an internal cause of industrial b) Rashtriya Ispat Nigam Limited (RINL)
sickness? c) National Thermal Power Corporation
a) Credit restraints d) Hindustan Aeronautics Limited (HAL)
b) Entrepreneurial incompetence 22. Main argument in favour of small scale and cottage
c) Power cut industries in India is that
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d) None of these a) Cost of production is low

14. The first Factory Act was adopted in— b) They require small capital investment
a) 1881 b) 1891 c) 1948 d) 1951 c) They advance the goal of equitable distribution of
15. Which of the following types of industry helps the wealth
industrialisation in the long run? d) They generate large volume of employment
a) Consumer goods industries 23. The biggest public sector undertaking in India
b) Capital goods industries a) Iron and steel plants b) Airways
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c) Export promoting industries

c) Railway d) Roadways
d) Import promoting industries
24. “Golden Handshake Scheme” is associated with
16. Which one of the following subsectors of Indian
Industries has the highest percentage share of a) Inviting foreign companies
employment in Indian Economy? b) Private investment in public enterprises
a) Mining b) Manufacturing c) Establishing Joint Enterprises
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c) Construction d) Electricity d) Voluntary retirement

17. Consider the following statements.
1. India has attained self-sufficiency in almost all
consumer goods.
2. In terms of capital goods, India still depends on the import.
Which of the statement given above is/are correct?
Codes :
a) Only 1 b) Only 2
c) Both 1 & 2 d) Neither 1 nor 2
25. The Government launched the UDYAMI helpline for
which among the following?
a) Large capital industries
b) Female entrepreneur
c) Farmers introducing technology in farming
d) Micro, small & medium size enterprises

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26. Which among the following Industrial policy resolution/ 33. Industrial growth rate accelerated in 1980s due to
statement was based upon the Mahalanobis model of growth of
growth? a) Electronic and Consumer goods
a) Industrial Policy Resolution-1956 b) Basic and heavy capital goods
c) Infrastructural industries
b) Industrial Policy Resolution- 1973
d) Small scale industries
c) Industrial Policy Statement-1977 34. Attitude of Industrial policy 1991 toward foreign direct

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d) None of the above investment was one of
27. Abid Hussain Committee is related to a) Total rejection
a) Reform in taxes b) Increase in the share of FDI

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c) Decrease in the share of FDI
b) Reform in government projects
d) None of the above
c) Reform in small industries 35. Disinvestment of PSE-S was required because of this
d) Reform in middle level industries a) Decrease in competitiveness

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28. Which one of the following is a driving force b) Increasing subsidy

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influencing the industrial growth of an economy? c) Increasing in capacity unutilisation
a) Economic factors only d) All of the above
36. Most of the public sector units performed with
b) Investment only
a) High profit b) Subsidy
c) Innovation/ Market base only c) No profit no loss d) None of the above
d) All of the above 37. Freight Equalization Policy affected industrial
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29. The New Industrial Policy in India was announced in development in West Bengal in the following way
2 phases a) Beneficially b) Adversely
c) Neutrally d) None applies
a) 24th July,1992; 6th August, 1992
38. Industrial Reforms policy took this approach to
b) 6th July,1991; 24th August, 1991 monopolies
c) 24th July,1991; 6th August, 1991 a) Remove MRTP restrictions
d) 6th July, 1992; 24th August 1991 b) Tighten such restrictions
c) Neutral attitude
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30. Under the Monopolies and Restrictive Trade Practices

Act(MRTP Act) 1969, those firms were classified as d) Partly regulate the monopolies
monopolies or MRTP firms which have 39. Number of public sector enterprises (PSE) under new
economic policy
a) Assets above a certain size
a) Increased
b) High expenditure in research and development b) Decreased
c) Transfer-pricing c) Remained same
d) Marketing services d) First increased then decreased
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31. The Board of Industrial and Financial Reconstruction 40. National Renewal Fund was constituted for the purpose
(BIFR) came into existence in of
a) Providing pension for retiring employees
a) 1984 b) 1986 c) 1987 d) 1989 b) Social security
32. In which sector, the public sector is most dominant in c) Rural Reconstruction
India? d) Reconstruction and modernization of industries
a) Transport –––––––
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b) Commercial banking
c) Steel Production
d) Organised term lending financial institutions

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