Industrial policy

Meaning
 Industrial policy means rules, regulations , principles ,
policies , and procedures laid down by government for
regulating , developing and controlling industrial
undertakings in the country. It prescribes the respective
roles of the public, private joint and cooperative sectors for
the development of industries.
 It also indicates the role of the large , medium , and small
sector . It incorporates fiscal and monetary policies, tariff
policy , labour policy and the government attitude towards
foreign capital, and role to be played by multinational
corporations in the development of the industrial sector.
 General Objectives of Industrial
policy
 Accelerating the overall rate of growth through industrialization
 Expanding the industrial base in relation to industrialization needs of
the country.
 Generating employment and reducing poverty.
 Reducing regional disparities in industrial development
 Preventing monopolies and concentration of industrial power
 Creating competitive conditions and encouraging the growth of
entrepreneurship
 Promoting balanced industrial development
 Promoting linkages with others sectors of the economy.
 Assisting small enterprises
 Encouraging the growth of industrial research and development.
 What does an industrial policy
contain ?
 Comparative roles of public , private , joint and
cooperative sectors in the economy
 Categorization of industries from the point of view of
assistance , market entry , control and regulation
 Jurisdiction
 Structure of control of the private sectors
 Role , attitude and policy towards foreign investment of
the companies
 Thrust or priority areas of industrialization
 Role of cottage and small industries vis a vis large
industries
 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
 Four categories
 The manufacture of arms and ammunition , the production
and control of atomic energy , and the ownership and
management of railway transport were to be the exclusive
monopoly of the Central Government.
 The second category covered coal , iron and steel , aircraft
manufacture , ship building , manufacture of telephone and
wireless apparatus etc. New undertakings in these industries
could henceforth be undertaken only by the state .
 The third category was made up of industries of such basic
importance that the central Government would feel it
necessary to plan and regulate them.
 A fourth category , comprising the remainder of the
industrial field ‘, was left open to private enterprise ,
individual as well as cooperative.
Industrial policy resolution of
1956
 Objectives
 Speeding up the processes of industrialisation in India
 Developing heavy and capital goods industries
 Expanding an effective public sector
 Accelerating the rate of economic growth
 Building up a large and growing cooperative sector
 Encouraging private sector industries
 Preventing private monopolies
 Developing small scale , village and cottage industries
 Achieving balanced economic development
 Participation of workers in management.
 Maintenance of industrial peace
 Classification of Industries
Schedule “A”- seventeen industries
 Arms and ammunition and defence equipments
 Atomic energy
 Heavy castings and forging of iron and steel
 Iron and steel
 Heavy plant and machinery required for iron and steel production , Mining machinery tools
and other basic industries
 Heavy electrical plants
 Coal and Lignite
 Mineral oils
 Mining of iron ore , manganese ore , chrome ore , gypsum gold diamonds and sulphus
 Mining and processing of copper , zinc , tin , wolfram and molybdenum
 Minerals as per atomic energy Order, 1953
 Aircraft
 Air transport
 Railway transport
 Shipbuilding
 Telephone and Telephone cables , telegraphs and wireless instruments excluding radio
reviewing sets
 Generation and distribution of electricity.
 Schedule B
 Other mineral excepting minor minerals defined in the
minerals Concession rules , 1949, Section B
 Aluminum and other non ferrous metals not included in
Schedule “ A”
 Ferro alloys and tools steels
 Manufacture of dugs , dye stuffs , plastics and other basic and
intermediate products required by chemical industries
 Antibiotic and other essential drugs
 Fertlisers
 Synthetic rubber
 Carbonization of coal
 Chemical pulp
 Road transport
 Sea transport
 Schedule A industries were treated as the
exclusive responsibility of the state
 Schedule B industries progressively state
owned
 Schedule c industries were left for private
sector
 Industrial Policy 1973

 Extension of the industrial policy resolution

1956
 Basic objectives growth, social justice and
self reliance
 Features
 State would be directly responsible for the future
development of industries
 Role pf PSUs further stresses in attaining socialistic
pattern of society
 Both PSUs and private sectors assigned specific role
 Initiatives towards development of Joint sectors –they
were supposed to function under direction of Government
 FI allowed only in Specific sectors
 All proposals were screened subject to FERA and FE,MA
requirement
 SSI and cooperative sectors were assigned to play a
special role
 In the area of agriculture cooperatives were encouraged
 Industrial Policy Statement
1977
 Janta Part came to power in March 1977
Objectives
3. Preventing of monopoly and concentration of economic
poor
4. Maximising production of consumer goods
5. Making industry responsive of social needs

 Aimed at making use of the available human resources

for maximum benefit of the masses
 It was consumption oriented and labour intensive policy
 Thrust was to generate rural employment opportunities
 Basic Elements
 Development of SSI , cottage industries, tiny sectors units ,
village and household industries
 Encouraging the large scale industrial units for meeting the
minimum needs of the population
 Public Sector was to be used as a producer and supplier of
essential consumer goods
 Import of technology only in high priority areas
 Restricted foreign collaborations – the ownership and
control were to remain in Indian Hands
 An important contribution of 1977 policy was the setting
up of District Industries Centre ( DIC) in every district for
the development of SSIs. It continues to function
effectively
 New Industrial Policy 1980
 Congress came to power again in 1980
 Committed to rapid and balanced industrialization for
benefiting the common masses
 Growth oriented policy
 Factors considered by the policy were import , export ,
labour relations , pollution control, ecological balance,
merger and amalgamation , correcting industrial sickness,
pricing policy, take over of sick units , foreign
collaboration and investment.
 Objectives
 Optimum utilization of the installed capacity
 Higher employment generation
 Achieving higher productivity and maximum production
 Development of industrially backwards areas
 Promotion of agro based industries
 Faster promotion of export oriented and import
substitution industries
 Consumer protection against high prices and bad quality
 Promoting economic federalism with spread of investment
in rural as well as urban areas.
 Revival of economy by overcoming infrastructural gaps
 NIP 1991
 Despite the impressive growth performance of the new
Industrial policy Statement of 1980, serious budgetary and
Fiscal deficits of the government and BOP crises led India
to a critical economic and financial situation. There was no
other alternative but to introduce a new regulatory and
liberal economic reign
 Major Aspects
1. Industrial Licensing dispensed with except in 18 items
2. Direct foreign investment up to 51 per cent of equity allowed in high
priority industries
3. The threshold of the assets of MRTP companies and dominant
undertakings removed
4. Automatic clearance introduced for import of capital goods , provided
foreign exchange requirement for such import are met through foreign
equity
5. Automatic permission for foreign technology agreements in high
priority industries up to sum of Rs 1 crore granted
6. Foreign equity proposals need not be accompanied by foreign
technology agreement
7. Pre eminent role of Public sector in eight core sector areas including
arms and ammunition , mineral oils , rail transport and mining of coal
and mineral
8. Part of government’s shareholding in public sector is proposed to be
disinvested which will be offered to mutual funds , financial institutions
, general public and workers
9. Chronic loss making public sector units to be referred to the Board of
Industrial and Financial Reconstruction ( BIFR) for formulation of
revival schemes.
1. A simplified procedure for new projects was introduced
to manufacture goods not covered by compulsory
licensing . Even a substantial expansion of a project
requires submitting a memorandum in the prescribed
form to the secretariat for industrial approvals.
2. Decisive contribution was expected from foreign
investment including foreign corporate bodies , foreign
individuals and non resident Indians
3. Industrial policy for the small scale sector announced on
August 6, 1991 provided a four point scheme to provide
financial support to this sector.
 Areas Covered

 Industrial Licensing
 Foreign Investment
 Technology transfer and import of foreign
technology
 Public sector policy
 Policy relating to MRTP act
 An exclusive small sector policy.