INDUSTRIAL POLICY IN INDIA

by :
DR. T.K. JAIN
AFTERSCHO☺OL
centre for social entrepreneurship
sivakamu veterinary hospital road
bikaner 334001 rajasthan, india
www.afterschoool.tk
mobile : 91+9414430763

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 WHAT IS INDUSTRIAL
POLICY ?

The overall policy framework by the

government towards industry. The Industrial
policies were announced in 1948, 56, & 91.
The basic structure of today is that of 1956 and
1991. It defines the scope of industries an the
level of involvement of the government in
industrial regulation and promotion.
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 What is an industry ?

Section 3(d) of I.D.R. Act defines industrial undertaking to include any

undertaking pertaining to a scheduled industry carried on in one or more
factories by any person or authority including Government. What is not a
factory : where the number of workers employed is less than 50 where
power is used or, less than 100 where no power is used, it would not be
considered to be factory under the Act and consequently, it would not be an
‘industrial undertaking’ for the purposes of this Act. Though the word
‘undertaking’ is not separately defined in the Act, the basic feature expected
to be present to constitute an undertaking is the existence of a factory as
defined in the Act where some manufacturing process is carried on.

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 Owner

The term owner under Section 3(f) of IDRA has been

defined to mean the person who, or the authority
which, has the ultimate control over the affairs of the
undertaking and where the said affairs are entrusted to
a manager, managing director or managing agent,
such manager, managing director or managing agent
shall be deemed to be the owner of the undertaking.
He has the responsiblity to obtain licence and take
permission from the government.

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 Set up under IDRA

There was schedule I to IDRA, which

contained list of industries for which prior
licence was necessary. Every indutrial
undertaking had to take prior licence and get
itself registered. Small scale industries and
anciliary industry were exempted. There was a
development council and an advisory council
to advise the government.
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 What is small scale industry ?

When investment in plant and machinary is

less than 5 crore rupees (earlier this limit was
Rs. 1 crore), it is called small scale industry. It
can be set up by registration with DIC (district
industry centre)

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 What is ancillary industry ? ?

These units are to help large industry. They

make spare parts / components for large
industry. They are located near large industries.
There is also investment limit for ancilliary
industry. Example of ancilliary industry :
companies which make steerings, spare parts
for Automobile companies.
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 Location of industry

Industrial undertakings are free to select the

location of a project. However, in the case of
cities with population of more than one million
(as per the 1991 census), the proposed location
should be at least 25 KM away from the
Standard Urban Area limits

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 Environmental clearances

Industries have to obtain Statutory clearances

relating to Pollution Control and Environment
for setting up an industrial project and
expansion/ modernisation of existing projects.
Environment Protection Act, 1986 has listed 32
projects for which these clearances are
compulsory.
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 Micro and small companies

Micro means investment upto 25 lakhs in plant

and machinery. Now MSME act is there under
which large companies have to make timely
payments to MSME (micro,small,medium
enterprises). Section 20 of IRDA asks the
State Government to establish by notification,
one or more Micro and Small Enterprises
Facilitation Councils
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 Agriculture industry – export
focus
1. A new scheme called the Vishesh Krishi and Gram Udyog Yojna
(Special Agricultural and Village Industry Scheme) has been introduced for
promoting the export of fruits, vegetables, flowers, minor forest produce,
and their value added products and gram Udyog products; 2. Funds have
been earmarked under Assistance to States for Infrastructure Development
of Exports (ASIDE) for development of Agri Export Zones (AEZ) 3.
Capital goods imported under EPCG have been permitted to be installed
anywhere in the AEZ; 4. Import of restricted items, such as panels, have
been allowed under the various export promotion schemes 5. Import of
inputs such as pesticides have been permitted under the Advance
Authorisation for agro exports; 6. New towns of export excellence
with a threshold limit of Rs 250 crore have been notified.

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 Handloom Industry Export

1. Specific funds have been earmarked under Market Access Initiatives (MAI)/
Marketing Development Assistance (MDA) Scheme for promoting handloom
exports 2. Duty free import entitlement of specified trimmings and embellishments
has been fixed as 5% of FOB value of exports during the previous financial year; 3.
Duty free import entitlement of hand knotted carpet samples has been fixed as 1%
of FOB value of exports during the previous financial year; 4. Duty free import of
old pieces of hand knotted carpets on consignment basis for re-export after repair
has been permitted 5. New towns of export excellence with a threshold limit of
Rs 250 crore have been notified 6. A trade mark for handloom on lines similar
to woolmark to be introduced to enable handloom products to develop a niche
market with a distinct identity.

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 Handicraft exports
1. New Handicraft SEZs have been established to procure products from the
cottage sector and do the finishing for exports;
2. Duty free import entitlement of trimmings and embellishments has been
fixed as 5% of the FOB value of exports during the previous financial year. The
entitlement is broad banded, and extends also to merchant exporters tied up with
supporting manufacturers; 3. The Handicraft Export Promotion Council has been
authorized to import trimmings, embellishments and consumables on behalf of those
exporters for whom direct import may not be viable;
4. Specific funds have been earmarked under MAI and MDA Schemes for
promoting Handicraft exports;
5. The duty free import of trimmings, embellishments and consumables have
been exempted from Countervailing Duties;
6. New towns of export excellence with a reduced threshold limit of Rs 250
crore have been notified.
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 JEMS AND JEWELLERY
EXPORT
1. Import of gold of 8 carat and above has been allowed under the
replenishment scheme subject to certain conditions.
2. Duty free import entitlement of consumables for metals other than
Gold and Platinum has been fixed as 2% of FOB value of exports during
the previous financial year;
3. Duty free import entitlement of commercial samples has been fixed
as Rs. 3,00,000;
4. Duty free re-import entitlement for rejected jewellery has been fixed
as 2% of the FOB value of exports;
5. Cutting and polishing of gems and jewellery, is treated as
manufacturing for the purposes of exemption under Section 10A of the
Income Tax Act.

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 LEATHER GOODS EXPORTS
1. Duty free import entitlement of specified items has been fixed as 5% of FOB
value of exports during the preceding financial year;
2. The duty free entitlement for the import of trimmings, embellishments and
footwear components for footwear (leather as well as synthetic), gloves, travel bags
and handbags has been fixed as 3% of FOB value of exports of the previous
financial year. The entitlement also covers packing material, such as printed and
non printed shoeboxes, small cartons made of wood, tin or plastic materials for
packing footwear;
3. Machinery and equipment for Effluent Treatment Plants have been exempted
from basic customs duty;
4. Re-export of unsuitable imported materials such as raw hides and skins and
wet blue leathers is permitted;
5. CVD is exempted on specified lining and interlining material;
6. CVD is exempted on raw, tanned and dressed fur skins falling under Chapter
43 of ITC(HS).
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 What is an SBU?

Strategic business unit – a unit which has

independent decision making power withing
overall corporate strategy of the corporation. It
can take strategic decisions like product,
market, technology, etc. An SBU is an
independent unit within the corporate umbrella.

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