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INDUSTRIAL POLICY

BEP 114
Meaning
• Rules, regulations, principles, policies, and procedures
laid down by GOI for regulating, developing, and
controlling industrial undertakings in the country
• Prescribes roles of the public, private, joint, and co-
operative sectors for the development of industries
• Indicates role of large-, medium-, and small-scale
sector.
• Incorporates fiscal and monetary policies, tariff policy,
labor policy, and the govt. attitude towards foreign
capital, role to be played by MNC in the development
of industrial sector
Objectives
• Achieving a socialistic pattern of society
• Preventing undue concentration of economic power
• Achieving industrial development
• Achieving economic growth
• Reducing disparities in regional development
• Developing heavy and capital goods industry
• Providing opportunities for gainful employment
• Expanding the public sector for achieving socialism
Objectives
• Achieving faster economic growth
• Achieving a self-sustained economy
• Alleviating poverty
• Protecting and developing a healthy small
scale sector
• Building up a large and growing co-
operative sector
• Updating technology and modernization of
industry
• Liberalization and globalization of economy
Industrial Policies
• Industrial Policy Resolution of 1948
• Industrial Policy Resolution of 1956
• Industrial Policy Statement of 1973
• Industrial Policy Statement of 1977
• Industrial Policy Statement of 1980
• Industrial Policy of 1991
Industrial Policy Resolution
of 1956
• 30th April, 1956
• Classification of industry under three heads – Schedule A,
Schedule B, Schedule C
• Positive approach towards industrialization in many ways:
 Rapid industrial growth backed by balanced regional development
 Appropriate manpower development and industrial harmony b/w
public, private, large and small sectors – basic ideals of the policy
 SSI encouraged to take up some items of Schedule A
 Providing exclusive incentive system, direct subsidies, and
different ial tax rates protected the SS sector
New Industrial Policy 1991
• July 24, 1991 & August 6, 1991
• Major aspects:
 Industrial licensing removed except in 18 items
 Direct foreign investment upto 51% of equity
allowed in high-priority industries
 Threshold of assets of MRTP companies and
dominant undertakings removed.
 Automatic clearance introduced for import of
capital goods, provided foreign exchange
requirement for such import are met through
foreign equity
New Industrial Policy 1991
 Automatic permission for foreign technology
agreements in high priority industries upto sum of
Rs. 1 crore granted
 Foreign equity proposals need not be accompanied
by foreign technology agreement
 Existing and new industrial units provided with
broad banding facility to produce any article as
long as no additional investment in P&M is
involved.
 Pre-eminent role of PSU in eight core areas
including arms and ammunitions, oil, rail transport,
and mining of coal and mineral.
New Industrial Policy 1991
 Part of government’s shareholding in PSU is
proposed to be disinvested which will be offered
to MFs, FIs, general public, and workers.
 Chronic loss-making PSU to be referred to BIFR for
formulation of revival schemes
A simplified procedure for new projects was
introduced to manufacture goods not covered by
compulsory licensing. Even substantial expansion
of a project requires submitting a memorandum in
prescribed form to secretariat for industrial
approvals.
Areas covered
• Industrial Licensing
• Foreign Investment
• Technology transfer and import of
foreign technology
• Public Sector policy
• Policy related to MRTP
• An exclusive SSI policy