unit -i industrial policy

7/28/2019 Unit -i Industrial Policy

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COMPILED BY Mrs R VINAYALAXMI MBA @ SITS

Industrial Policy

What is an Industrial Policy ? ‘Industrial Policy is an important governments

document. It lays a wide canvas and sets a tone for

implementation of government regulatory and promotional roles’

The industrial policy has a lasting impact on thecountry’s industries




Rationale

It helps in making out of the following features to

the industrial sector

To bring out the balance between different sorts of industries

To direct the scarce source of resources in most desirableareas of investments according to national priorities

Empower the government to regulate the establishmentand expansion of private industries

Demarcate the areas of large, medium and small scaleindustries

Prevent the formation of the monopolies through thefiscal and monetary policies

Give the guidelines to foreign capital where it should be permitted to operate




• It ensures scarce resources of the nation areutilized in the interest of the nation and not in

the interest of the profits• It tries to create the employment opportunities

• It promotes entrepreneurship in the country

• It protects the juvenile Indian industry withenough protection from multinationals

• It provides the direction to the financial

institutions as to which industry they have tolend liberally where to restrict etc




Industrial Policy Resolution of 1948

The first industrial policy of India was issued by thegovernment of India on April 6, 1948.

Following are the industries bifurcated in the 1948policies

Industries where the state had a monopoly New investment by state

The field of government control

Industries open to private sector




Industrial Policy 1956

Four developments set the tune for Adoption of 1956 policy

• Adoption of the constitution

• Introduction of planning commission

• Acceptation of socialist policy

• Government was rich enough to invest in public

sector




Objectives of the Policy

• To accelerate the economic growth and speed up

industrialization

• To expand the public sector and develop the machine

making industry

• To increase the employment opportunities and increase the

standard of living of the people• To prevent the monopolies

• To reduce the existing disparities of income and wealth

• To build up large and growing private sector

• To expand the cottage village and small scale sector

• To achieve balanced industrial development and other socio

economic objectives




The policy has categorized the production

of the goods into three schedules

Where schedule A consisted of 17 industries With theinclusion of ammunition and allied items of defense

equipment, atomic energy and other metal industries

Schedule B consisted of 12 industries aluminum andseveral non ferrous metals such drugs , fertilizers

and synthetic rubber etc

Schedule C was left over with many other industries

which were kept under private undertaking



Industrial Policy 1977

• In March 1977 the Janatha Party has come into

existence and Morarji Desai has became the

Prime Minister

• The government then was in an attitude that

since 20 years there was an excessive

emphasis on heavy industries which has to be

shifted to the small scale and ancillary




The objectives of the 1977 policy were as

follows

• The small scale reservations were went up to180 to 807 licenses in 1978

• Tiny sector units have to be developed with the

investments up to 1 lakh in heavy machineryand where population less than 50000 in a

town

• Small scale industries comprising industrialunits up to 10 lakhs in the ancillaries and

investment in fixed capital up to 15 lakhs




• In large scale industries the following

industries were given a scope

• The large scale industries investment wasrestricted to steel, non ferrous metals, cement,

oil refineries

• Capital goods industries for meeting themachinery requirements of basic industries as

well as small scale industries

• High technology industries which requiredlarge scale production and which were related

to agriculture and small scale development

such as fertilizers, pesticides and

etrochemicalsCOMPILED BY Mrs R VINAYA

LAXMI MBA @ SITS



• The industrial policy of 1977 stated that funds

of the public sector financial institutions and

banks should be devoted to the growth of small

scale sector and medium scale sector industries

• The development of public sector has been

reduced to ancillary and small scale industries

where it contributes to the decentralization

production




New Industrial Policy 1980

• The congress government in 1980 has introduced a

new industrial policy, the objectives of which were as

follows

• Higher employment generation• Optimum utilization of installed capacity

• Development of industrially backward areas

• Promotion of agro based industries• Consumer protection against high prices and bad

quality





Review of Pre 1991 Industrial Policy

• Licensing and Underutilization of Capacity

• Licensing and concentration of economic

power • Discretionary powers of licensing authority

• Licensing and regional imbalances

• Delaying and processing of applications




New Industrial Policy 1991

• On July 24, 1991 the government headed by P.V.

Narsimha Rao announced the new industrial policy

Objectives

• To build the self reliance

• Entrepreneurship development, increasing of the

employment opportunities

• Removing the imbalances in the development• Removing the regulatory system




• Increasing the competition

• Incentives to backward areas• Protect the interest of the workers

• Abolish the monopoly of the of any sector

• Ensure the public sector undertakings on business lines and cut their losses

• Enhanced the support to the small scale sector

• To link the Indian economy with the globaleconomy



Privatization

Privatization means transfer of Govt. shares inCompany to private hand for greater

participation of general people in public

company. Now in certain Govt. companies private shares reaches up to 51% .




Globalization

Globalization means open the door of India for whole world and anyone can come to India and

sale and purchase the products of Companies

or established business. Indian Govt. has faiththat this will increase the foreign investment in

India.





Liberalization Trends1. Exemption from Licensing

2. Relaxation from MRTP and FERA companies3. Delicensing

4. Reendorsement of capacity

5. Broad banding of industries6. Minimum Economic Scales of Operations

7. Development of Backward Areas

8. Incentives for Export Production9. Enhancement of Investment limit for SSI units



Merits and De Merits of New Industrial

Economic Policy

Merits

• It will increase foreign direct investment

• It will increase the standard of living of

Indians

• Every thing will available in Indian market.

• Indian businessman will get power from

foreign healthy competition.




Demerits

• It will increase the multinational companies

which will be danger for Indian security.

• It will unprotect Indian businessmen and

companies.

• It will increase unemployment due to increase

the use of computer.

• It will increase the prices due to abolishing

some licensing sector.





Industries (Development and

Regulation) act, 1951

The act was passed by the parliament in oct

1951 and came into force on may 8, 1952

It aimed at both development and

regulation of the private sector ,

prevention of monopoly, balanced regional

development



U d th t i ti i i t




• Under the restrictive provision category

all measures designed to curb unfair

practices adopted by industries Which

included the

I) Registration and licensing of industrial

undertakings

II) Enquiry of industries listed in the

schedule

III) Cancellation of registration and licensse

unit -i industrial policy

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