New Industrial policy 1991

By Manaswini Jaiswal
Roll no – 12
 INTRODUCTION
The industrial policy mean the procedures, principles, policies rules and regulations which
control the industrial undertaking of the country and pattern of industrialization. It
explains the approach of government in context to the development of industrial sector.
The industrial policy in the pre-reform period i.e. before 1991 put greater emphasis on the
state intervention in the field of industrial development.

These policies no doubt have resulted into the creation of diversified and rigidities in the
system. Thus during late 70’s and 80’s government initiated liberalization measures in the
industrial policy framework. The drastic liberalization measures were however, carried out
in 1991.
 WHY IT HAS BEEN INITIATED ?

 To create a high- wage,

 High-productivity
 High-innovation
 High-investment economy based on diversity of
ownership and enterprise type with many different
industry sectors
 INDUSTRIAL POLICY 1991
In order to accelerate Industrial Development in India, and in accordance with the changing circumstances, various industrial
policies were declared in the years 1948, 1956,1977, 1980 and 1985, but in spite of all efforts the pace and as well as the
level of Industrial Development in India, could not reached according to its need. Therefore, in order to lift unnecessary
restrictions on Industries, under the licensing policy, and to increase their efficiency, development and technological level, in
order to make Indian goods usable in the competitive global market , on 24 th July, 1991, in Lok Sabha the Minister of States
for industries, Mr.P.J. Kurian declared the Industrial Policy, 1991 .

The government announced series of initiative in respect of the following areas:

 Abolishment of Industrial licensing for all except 18 Industries, some examples are: coal, petroleum, sugar, animals fats,
leather, wood based products etc.
 Role of public sector reduced substantially from 17 to just 8
 Entry of Foreign Firms and Investments
 Other important Liberalization Measures
 National Manufacturing Policy
The success of India’s economic story has mainly been due to services sector growth. Despite
strong policy measures, the industrial sector( especially manufacturing) has stagnated. The
maximum contribution of the sector in the overall GDP is close to 15%, which is far less than
that of other emerging economies like China ( whose share is close to 45%). As a result of
which , India has failed to provide gainful employment to its massive labor force.

Lack of employment in the manufacturing sector has put excessive pressure on the
agriculture sector on the agriculture sector to provide employment, which is not possible
under any economic model.

The government recognising this fact and in order to promote manufacturing sector launched
National Manufacturing Policy on November 2011.
 Objectives of the National Manufacturing policy

 Increase manufacturing sector growth to 14-15%

 Increase share of manufacturing in the GDP to 25% by 2022.
 Create 100 million additional jobs in the manufacturing sector by 2022.
 Skill development of the rural population and urban poor so that they can be
absorbed in the manufacturing sector.
 Increase domestic value addition and Technological advancement in the
manufacturing .
 Increase global competitiveness of Indian manufacturing firms.
 FEATURES OF NEW INDUSTRIAL POLICY,1991

In order to remove the regional imbalances, under this industrial policy,

various provisions have been made to encourage industries in rural areas.
Reservation of small scales industries.

This policy has stated that the government shall keep giving assistance to
small scale industries. The limit for small scale industries has been reduced
from Rs 3 Crores to Rs. 1 crore, since 24 December, 1991.