Industrial Policy of India

MEANING :  It means rules,regulations,principles policies and procedures laid down by the government for regulating, developing and controlling industrial undertaking in the country. It prescribes the respective roles of the public, private, joint and cooperative sectors for the development of industries.

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Achieving a socialistic pattern of society Achieving industrial development Achieving a self sustained economy Alleviating poverty 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 Resolution Of 1973  Industrial Policy Resolution Of 1977  Industrial Policy Resolution Of 1980  Industrial Policy Resolution Of 1991

Industrial Policy Resolution Of 1948

This was the first industrial policy resolution announced by government of India. Highlights---It visualized a mixed economy Division of the Industrial sector into 4 major categories. Small and Cottage Industries were given privileges. Considered the importance of private participation

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1.State Monopoly •Arms and ammunition •Atomic Energy •Rail Transport Rail Transport 2. Mixed Sector (IPR - 1948 ) •Six industries were specified -Coal -Iron & Steel -Aircraft Mfg -Ship Building -Telephone, Telegraph & Wireless (Excluding Radio) -Mineral Oils -The existing can continue and after 10 years, the government will take over those undertakings by paying a compensation which is fair and equitable.

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3.The field of government control •The government will regulate Industries in this category -Automobiles -Heavy Machinery -Heavy Chemicals -Fertilizers -Sugar -Paper -Cement -Cotton -Woolen textiles etc 4. The field of private enterprises All the other Industries

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General Focus To accelerate the rate of economic growth and to speed up industrialization and, in particular, to develop heavy industries and machine making industries, to expand the public sector, and to build up a large and growing co-operative sector •To provide opportunities for gainful employment and improving living standards and working conditions of the people •To reduce disparities in income and wealth •To prevent private monopolies and the concentration of economic power in different fields in the hands of small numbers of individuals.

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Schedule - A 1.Arms and ammunition and allied items of defence equipments. 2.Atomic energy. 3.Iron and Steel. 4.Heavy castings and forgings of iron and steel. 5.Heavy plant and machinery required for iron and steel production, for mining, for machinery tool manufacture and for such other basic industries as may be specified by the Central Government. 6.Heavy electrical plant including large hydraulic and steam turbines. 7.Coal and lignite. 8.Mineral oils. Mining of iron ore, manganese ore, crome-ore, gypsum, sulphur, gold and diamond. 10.Mining and processing of copper, lead, zinc, tin, molybdenum and wolfram. 11.Minerals specified in the Schedule to the Atomic Energy (Control of production and Use) Order, 1953. 12.Aircraft. 13.Air transport. 14.Railway transport. 15.Shipbuilding. 16.Telephones and telephones cables, telegraph and wireless apparatus (excluding radio receiving sets). 17.Generation and distribution of electricity.

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10.Mining and processing of copper, lead, zinc, tin, molybdenum and wolfram. 11.Minerals specified in the Schedule to the Atomic Energy (Control of production and Use) Order, 1953. 12.Aircraft. 13.Air transport. 14.Railway transport. 15.Shipbuilding. 16.Telephones and telephones cables, telegraph and wireless apparatus (excluding radio receiving sets). 17.Generation and distribution of electricity.

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Schedule - B 1.All other minerals except 'minor minerals' as defined in Section 3 of the Minerals Concession Rules 1949. 2.Aluminium and other non-ferrous metals not included in Schedule A. 3.Machine tools. 4.Ferro-alloys and tool steels. 5.Basic and intermediate products required by chemical industries such as the manufacture of drugs, dye-stuffs and plastics. 6.Antibiotics and other essential drugs. 7.Fertilizers 8.Synthetic rubber. 9.Carbonisation of coal. 10.Chemical pulp. 11.Road transport. 12.Sea transport.

Industries placed under schedule “A" were treated as the exclusive responsibility of the state. Industries in schedule ‘‘B”were progressively state owned. Industries owned in schedule ‘’C” were left for private sector.

Industrial policy statement of 1973
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It was an extension of the industrial policy 1956. Features:a) role of public sector stressed in attaining a socialistic pattern of society. b) Foreign investment was allowed only in specific industries, subject to FERA & FEMA restrictions c) Small-scale and cooperative sectors were assigned a special role to play d)In the area of agriculture cooperative enterprises were encouraged

Industrial policy 1977
The Janta party govt presented this industrial policy Main objectives were 1. Preventing monopoly 2. Maximizing production of consumer goods 3. Making industry responsive to social needs’ 4. It aimed at maintaining the close interaction of agriculture & industrial sector 5. Thrust area was generation of rural employment opportunities

Industrial policy of 1980

1. 2. 3. 4. 5.

Congress Govt on July 1980 announced new industrial policy Development of industrially backward areas Consumer protection against high prices and bad quality Promoting the process of rural industrialization Efficient operational management of public sector Dealing with industrial sickness

This policy focused attention on the need for promoting competition in the domestic market, technological up gradation and modernization The policy laid the foundation for an increasingly competitive export based and for encouraging foreign investment in high-technology areas. This found expression in the Sixth Five Year Plan which bore the distinct stamp of Smt. Indira Gandhi. It was Smt. Indira Gandhi who emphasized the need for productivity to be the central concern in all economic and production activities.

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These policies created a climate for rapid industrial growth in the country. Thus on the eve of the Seventh Five Year Plan, a broad-based infrastructure had been built up. Basic industries had been established. A high degree of selfreliance in a large number of items - raw materials, intermediates, finished goods - had been achieved. New growth centre of industrial activity had emerged, as well as a new generation of entrepreneurs. A large number of engineers, technicians and skilled workers had also been trained.

In 1985 and 1986 under the leadership of Shri Rajiv Gandhi aimed at increasing productivity, reducing costs and improving quality. The accent was on opening the domestic market to increased competition and readying our industry to stand on its own in the face of international competition. The public sector was freed from a number of constraints and given a larger measure of autonomy. The technological and managerial modernization of industry was pursued as the key instrument for increasing productivity and improving our competitiveness in the world. The net result of all these changes was that Indian industry grew by an impressive average annual growth rate of 8.5% in the Seventh Plan period

Industrial policy 1991

Industrial Policy announced in July 1991, besides liberalisation of economy and globalisation, also aimed at building upon the gains achieved, to correct the distortions, maintain a sustained growth in productivity and gainful employment and attain international competitiveness. It envisaged pursuit of these objectives to be tempered by the need to preserve the environment and ensure the efficient use of available resources.

All sectors of industry whether small, medium or large, belonging to public, private or cooperative sectors were to be encouraged to grow and improve on their post performance. The New policy also encompasses encouragement of entrepreneurship, development of indigenous technology through investment in research and development, brining in new technology, dismantling of the regulatory system, development of the capital markets and increasing competitiveness for the benefit of the common man.

While recognizing the role of public sector, the new policy seeks to ensure that the public sector is run on business lines envisaging privatization, disinvestments and public sector restructuring. It was decided to take a series of initiatives covering the following areas: (a) Industrial Licensing (b) Foreign Investment (c) Foreign Technology Agreements (d) Public Sector Policy (e) MRTP Act (Monopoly and Restrictive Trade Practices Act)

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The Industrial Policy Resolution of 1956 identified the following three categories of industries: Those that would be reserved for development in public sector, Those that would be permitted for development through private enterprise with or without State participation Those in which investment initiatives would ordinarily emanate from private entrepreneurs. Over the years, keeping in view the changing industrial scene in the country, the policy has undergone modifications. Industrial licensing policy and procedures have also been liberalised from time to time

In the above context, industrial licensing will henceforth be abolished for all industries, except those specified, irrespective of levels of investment. These specified industries will continue to be subject to compulsory licensing for reasons related to security and strategic concerning social reasons, problems related to safety and overriding environmental issues, manufacture of products of hazardous nature and articles of elitist consumption. The exemption from licensing will be particularly helpful to the many dynamic small and medium entrepreneurs who have been unnecessarily hampered by the licensing system .

While freeing Indian industry from official controls, opportunities for promoting foreign investments in India should also be fully exploited. The Indian entrepreneur

has now come of age so that he no longer needs such bureaucratic clearances of his commercial technology relationships with foreign technology suppliers. Indian industry can scarcely be competitive with the rest of the world if it is to operate within such an environment. With a view to injecting the desired level of technological dynamism in Indian industry, Government will provide automatic approval for technology agreements related to high priority industries within specified parameters. Similar facilities will be available for other industries as well if such agreements do not require the expenditure of free foreign exchange. Indian companies will be free to negotiate the terms of technology transfer with their foreign counterparts according to their own commercial judgments.

Public sector policy

In the pursuit of our development objectives, public ownership and control in critical sector of the economy have played an important role in preventing the concentration of economic power, reducing regional disparities and ensuring that planned development serves the common good. The Industrial Policy Resolution of 1956 gave the public sector a strategic role in the economy. Massive investments have been made over the past four decades to build a public sector, which has a commanding role in the economy. Today key selectors of the economy are dominated by the mature public enterprises that have successfully expanded production, opened up new areas of technology and built up a reserve of technical competence in a number of areas.

Monopolies and Restrictive Trade Practices Act (MRTP Act)

The principal objectives sought to be achieved through the MRTP Act are as follows: Prevention of concentration of economic power to the common detriment, control of monopolies, and Prohibition of monopolistic and restrictive and unfair trade practices.

The MRTP Act will be restructured by eliminating the legal requirements for prior governmental approval for expansion of present undertakings and establishment of new undertakings.

 Simultaneously, provisions of the MRTP Act will be

strengthened in order to enable the MRTP Commission to take appropriate action in respect of the monopolistic, restrictive and unfair trade practices. The newly empowered MRTP Commission will be encouraged to require investigation suo motu or on complaints received from individual consumers or classes of consumers.

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