HISTORICAL BACKGROUND

East India Company The Britishers came to India in the year 1600 as trader of east India company. The britishers did not become a ruling power in India until the second half of the 18th century till when it was a trading concern. Modern industrial enterprises in India developed only after 1850. The first isolation attempt at officially encouraging the growth of large scale industry took place around 1900.

MEANING OF INDUSTRIAL POLICY

Industrial policy means rules ,regulations, principles,

policies & procedures laid down by govt. for regulating, developing & controlling industrial undertaking in the country . After independence the govt. of India has formulated policies for industrial growth and development. These policies have substantially regulated the business in the country

OBJECTIVES OF INDUSTRIAL POLICY

Achieving a socialistic pattern of society. Preventing undue concentration of economic power. Achieving industrial growth. Achieving economic growth. Developing heavy & capital goods industry. Providing opportunity for employment. Protecting & developing healthy small scale sector. Building up a large & growing cooperatives sector. Updating technology & modernization of industry. Liberalization & 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 6th APRIL, 1948

o Items under the central government control Arms &

Ammunition, Production & control of atomic energy, railway transport & others. o Item under the state government control Coal, Iron & steel, aircraft manufacture, shipbuilding, telephones, telegraphs & wireless apparatus. o Items of basic importance planned & regulated by the central government Salt, automobiles, tractor, heavy machinery, fertilizer, cement, sugar, paper & so on. o Items for the private sector All other items left to the private sector.

INDUSTRIAL POLICY RESOLUTION th APRIL, 1956 OF 30

o The classification of industries under three heads, viz.,

Schedule A, schedule B made in this policy are still being followed. o Classification of industries Schedule Ao Arms & ammunitions & defense equipment. o Atomic energy o Heavy castings & forging of iron & steel. o Iron and steel o Heavy plant & machinery required for iron & steel production, mining, machinery tools, & other basic industries.

o Coal and lignite o Minerals and oils o Mining of iron ore, manganese ore, chrome ore,

gypsum, gold, diamonds. o Mining & processing of copper, zinc, lead, tin. o Minerals as per Atomic Energy Order, 1953 o Aircraft o Air transport o Railway transport o Shipbuilding o Telephones & telephones cable, telegraph & wireless o Generation & distribution of electricity.

SCHEDULE B Other minerals excepting minor minerals defined in the minerals concession rules. Aluminum & other non-ferrous metals not included in schedule A. Ferro alloys & tool steels Machine tools Antibiotics & other essential drugs Fertilizers Synthetic rubber Carbonization of coal Chemical pulp Road transport Sea transport

OBJECTIVES
1)
2) 3)

4)

5)

Improving living standards & working conditions for the mass of the people. To reduce disparities in income & wealth. To prevent private monopolies & concentration of economic power in different fields in the hands of small numbers of individuals. The state will progressively assume a predominant & direct responsibility for setting up new industrial undertakings & for developing transport facilities. Undertake state trading on an increasing scale.

6) At the same time private sector will have the opportunity to develop & expand. 7) The principal of cooperation should be applied whenever possible & a steadily increasing proportion of the activities of the private sector developed along cooperative lines. 8) The adoption of the socialist pattern of society as the national objectives. 9) The need for planned & rapid development. 10) All industries of basic & strategies importance, or in the nature of public utility services, should be in the public sector.

INDUSTRIAL POLICY FEB 2, 1973

The industrial policy resolution of 1956 still remained

valid, but certain structural distortions had crept in the system. The new policies were hence directed towards removing these distortions. It provide for a closer interaction between the agricultural & industrial sectors. Accorded the highest priority to the generation & transmission of power.

 An exhaustive analysis of industrial products was made

to identify products which are capable of being produced in the small scale sector. The list of industries exclusively reserved for the small scale sector was expanded from 180 items to more than 500 items. Within the small scale sector, a tiny sector was also defined with investment in machinery & equipment up to Rs. 1 lac & situated in towns with a population of less than 50,000 according to 1971 census figures, & in villages.

INDUSTRIAL POLICY DECEMBER 23, 1977

Industrial policy highlights on producing

inputs needed by a large number of smaller units & making adequate marketing arrangements. The nuclear plant would also work for upgrading the technology of small units.

The government would promote the development of a system of linkages between nucleus large plants & the satellite ancillaries.

 To boost the development of small scale industries, the

investment limit in the case of tiny units was enhanced to Rs. 2 lacs, of a small scale units to Rs. 20 lacs & of ancillaries to Rs. 25 lacs. A scheme for building buffer stocks of essential raw materials for the small scale industries was industries development corporations in the states & national small industries corporation in the centre. Industrial processes & technologies aimed at optimum utilization of energy or the exploitation of alternative sources of energy would be given special assistance, including finance on concessional terms.

INDUSTRIAL POLICY OF JULY, 1980

Objectives Of The Policy Are: Optimum utilization of installed capacity. Maximum production & achieving higher productivity. Higher employment generations. Correction of regional imbalances.

Strengthening of the agricultural base through

agro based industries & promotion of optimum intersectoral relationship. Promotion of export-oriented industries. Promotion of economic federalism through equitable spread of investment & dispersal of returns. Consumer protection against high prices & bad quality.

INDUSTRIAL POLICY JULY 24, 1991

Announced by Narasimha Rao in July, 1991 Aim of New Industrial Policy (NIP) of 1991: Unshackling the Indian industrial economy from the

cobwebs of unnecessary bureaucratic control. Introducing liberalization with a view to integrate the Indian economy with the world economy. Removing restriction on direct foreign investment as also to free the domestic entrepreneur from the restriction of MRTP Act, & Shedding the load of public enterprises, which have shown a very low rate of return or were incurring losses over the years.

INDUSYRIAL POLICY 1991

Industrial Sector Reforms
Public Sector Policy Industrial Licensing Policy MRTP Act

External Trade Reforms

Foreign Investment Foreign Technology

Agreements

Pre- 1991 Policy

1. Industrial Licensing was the new
rule
2. Public sector monopoly/dominance in strategic, basic & heavy industries 3. MRTP Act restriction on entry & growth of large companies 4. Foreign investment allowed only in select industries that too subject to normally, a ceiling of 40% of total equity & prior permissions 5. Restrictive policy towards foreign technology

Current Policy
1. Licensing is an exception
2. All but two industries to the private sector 3. No such restrictions 4. Foreign investment allowed in a large number of industries, including up to 100% or equity in many of them. Automatic route available subject to specified conditions. 5. Very liberal policy towards forign technology

EVALUATION OF ECONOMIC POLICY - 1991

Positive Aspects: Fulfilled a long-felt demand of the corporate sector for

declaring in very clear terms that licensing was abolished. Business houses intending to float new companies or undertake substantial expansion were not required to seek clearance from the MRTP commission.

Bottlenecks created by the bureaucracy were struck down by this singular decision of the government. NIP unshackled many of the provisions, which acted a brakes on the growth of large private corporate sector. Overall relief in the dismantling of industrial licensing & regime of controls.

 Negative Aspects: Policy Regarding Foreign capital:

assertion by critics assert that the welcome foreign

capital may lead us to selling of our sovereignty to multinationals. Prudence demanded that upmost care to be taken to invite foreign capital in high priority industry only.
Public sector policy:

The govt. should concentrate on improving the

performance of the redeemable and surplus generating public sector enterprises which constitute 85% of the investment.

 Social security policy : Industrial policy sidetracked issues and generated a

fear in the mind of the workers that the govt. was not sincere in protecting the interest of the workers. Govt. of India could successfully go in for shedding its load of loss making enterprises and help the working class to assume the ownership role and nurse these enterprises to health.
MRTP policy :

Failure of MRTP to break the monopolistic or

oligopolistic character of the Indian economies.

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