Industrial Policy of India

MEANING AND OBJECTIVES

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.
OBJECTIVES
 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----
1. It visualized a mixed economy
2. Division of the Industrial sector into 4 major categories.
3. Small and Cottage Industries were given privileges.
4. Considered the importance of private participation
 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.
 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
INDUSTRIAL POLICY OF INDIA 1956

 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.
 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.
 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.
 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

 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

 Congress Govt on July 1980 announced new industrial

policy
1. Development of industrially backward areas
2. Consumer protection against high prices and bad
quality
3. Promoting the process of rural industrialization
4. Efficient operational management of public sector
5. 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.
 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 self-
reliance 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)
 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.