INDUSTRIAL POLICY

It lays a wide canvas and sets the tone for

implementation of govt regulatory and promotional
roles.
Rationale
 Correct the imbalances in the development.
 Direct the flow of resources in the most desirable areas o f
investment
 Prevent the wasteful use of scarce resources and ensure
their conservation.
 Empower the Govt to regulate the establishment and
expansion of Pvt sectors
 Demarcate the areas among public, pvt,and Joint sectors.
 Prevent the formation of monopolies(Fiscal,monetary
measures)
 Guidance for importing Foreign capital.
IPR-1948
 1. Acceptance of the dual Sector.
 Division of Industries
 State Monopoly (Arms, Atomic energy etc)
 Mixed Sector (Coal ,Aircraft, Iron Steel etc)
 Govt Control.(Regulatory Role-A utomobiles,
fertilizers,sugar,paper mill etc)
 Pvt Enterprise

 Role of small and cottage Industries

Industrial Policy-1956
 Constitution was adopted
 Planning Commission
 Socialism
 Govt was rich enough to invest in public sector
Objectives
 Accelerate the rate of economic growth & speed up
industrialization
 Expand Public Sector and develop heavy and machine
making industry
 Increase employment opportunities
 Prevent creation of monopolies
 Reduce disparity o f income and wealth
 Promote private sector
 Expand cottage Industry
 Balanced regional development
 Schedule A had 17 Industries
 Schedule B had 12 Industries
 Rest were thrown open to Private Participation

1956 Policy was hailed as the Economic

Constitution of India
Industrial Policy -1991

 Announced on 24th July drastically

altered the Industrial scenario of our
country.
 Objectives
 Build on the many sided gains already made.
 Encouragement to Indian entrepreneurship and employment
generation.
 Development of Indigenous Technology through greater
investment in R&D and bringing in new Technology
 Removing regulatory system
 Increasing competitiveness of Indian Industries PSU’s on
Business lines and cut their loss
 Protect the interest of workers
 Abolish Monopoly (except on Strategic or Security ground
 Link Indian Economy to the Global Market
 Industrial Licensing Policy
 Foreign Investment
 Foreign Technology agreement
 Public Sector Policy
 MRTPC Act
Merits of 1991 Policy
 Changes long overdue are old initiative aimed at
making Indian Industry more competitive internally
and Internationally , by freeing the economy from the
shackles of unnecessary control .
 Delicencing host of industries and abolition of all
registration schemes will free entrepreneurs from red
tapism.
 Liberalization of the rules relating to direct foreign
investment (permitting 51 % equity participation)will
facilitate technology transfer.
 Transferring sick units to BIFR will help improve the
conditions of PSU’s.
Limitations
 Scrapping of Licensing means absence of mechanism to
determine priorities and to develop backward areas.
 Policy is silent on tackling growing industrial sickness .
Govt has not announced clear exit policy for sick units
(relenting to trade union pressure).
 Off loading 20% equity in profit making units is a
revenue raising exercise than genuine privatization
 Infrastructural deficiencies will deter foreign
investment.
 Policy was drafted at the behest of IMF, which means
virtual surrender of economic sovereignty .