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HISTORY OF INDUSTRIAL
POLICY Pandit Jawaharlal Nehru laid the foundation of
modern India.
The goals and objectives set out for the nation by
Pandit Jawaharlal Nehru were:
Rapid Agricultural and industrial development.
Rapid expansion of opportunities for gainful
employment.
Progression reduction of social and economicdisparities.
Removal of poverty and attainment of self
reliance.
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INDUSTRIAL POLICY
Industrial policy refers to government policytowards industries:
Rules, regulations, principles, policy andprocedure.
Reflects the government attitude.
Defines the respective roles of different sectors.
State must play active role in development ofindustries.
Establishment
Functioning Growth
Management
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INDUSTRIAL POLICY OF INDIA
INDUSTRIAL POLICY RESOLUTION, 6 April, 1948
INDUSTRIAL POLICY RESOLUTION, 30th April, 1956
INDUSTRIAL POLICY FEB 2, 1973
INDUSTRIAL POLICY DEC 23, 1977
INDUSTRIAL POLICY STATEMENT OF JULY, 1980
INDUSTRIAL POLICY, JULY 24, 1991
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OBJECTIVES OF INDUSTRIAL
POLICY
Proper flow of scarce resources. Correct the imbalances in the development. Enhancing gainful employment.
Reducing poverty. Prevention of concentration of wealth in few
hands. Achieving economic growth.
Liberalization and globalization. Updating technology and modernization of
industry. Attaining international competitiveness.
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INDUSTRIAL POLICY
RESOLUTION 1948(6 April, 1948)
This industrial policy was designed to
attain the following objectives: To establish a social order.
To promote standard of living
To increase both agriculturaland industrial promotion.
Full employment opportunities.
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`
MAIN FEATURES OF
INDUSTRIAL POLICY,1948 Acceptance of the importance of both private and
public sectors.
Division of industrial sector:
Industries where state had a monopoly.
- arms and ammunition
- atomic energy
- rail transport
Mixed sector- coal
- iron and steel
- aircraft manufacture
- ship building
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MAIN FEATURE CONTINUES
- manufacture of telephone, telegraph
and wireless apparatus
- mineral oils.
Field of Government control:
- automobiles, heavy machinery, heavy
chemicals, machine tools, fertilizers,
electrical engineering, sugar, paper,
cement, cotton and wooden textiles.
Field of private enterprise
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MAIN FEATURE CONTINUES.
Role of small and cottage industries.
Other important features:
The role of foreign capital in industrialdevelopment of the economy was recognized.
Harmonious relations between management
and labour.
- Proper working condition and fairwages
Labour participation in management.
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OBJECTIVES
Statetrading onaincreasingscale
Plannednationaldevelopment
To provide opportunity to the privatesectorto
growthandexpand
Labourshould participateinitenthusiasm
INDUSTRIAL POLICY
RESOLUTION 1956
(30 April, 1956)
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INDUSTRIAL POLICY
RESOLUTION
Emphasis in the continuous increase in
production and its equitable distribution
State must play progressive role in the
development of the industries
To provide justice, liberty, equality and fraternity
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DIRECTION OF POLICIES
Men and women are equal
Equal pay for both men and women
Childhood and youth are protected against the
exploitation
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To develop the heavy industries
To develop the machine making industries
To expand the public sector
And to built the large and growing co-
operative sector
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WHAT TO DO TO ACHIEVE THE
OBJECTIVES
Improve the life standard and theworking condition for the people
To prevent the private monopolies
Concentration of economic power on the
small number of individuals
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CLASSIFICATION OF THE
INDUSTRIES
First
The industries whose development will be
exclusive responsibility of the state
Second
The industries which are progressively state
owned
Third
It includes the all other industries
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FEATURES
Private sector must fit to the framework
of social and economic policy of the state
Government want to stress the role ofsmall scale industries in developing the
national economy.
{Since they provide large number of
employment }
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TO PROVIDE THE STEADILY SUPPLY
OF RESOURCES
Lack of resourses is very common due to
the lack of power supply, water , and
transport facilities .
It is one of the national aims of the
nation
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ESSENCE
Government of India trust that this statement
of the industrial policy will receive supportfrom all section of the people and promote
the rapid industrialization
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INDUSTRIAL POLICY
RESOLUTIONFEBRUARY 2, 1973
1. The Industrial Policy Resolution of 1956still remained valid, but certain structuraldistortions had crept in the system.
2. The new policies were hence directedtowards removing these distortions.
3. It provided for a closer interaction betweenthe agricultural and industrial sectors.
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4. Accorded the highest priority to the generation andtransmission of power.
5. An exhaustive analysis of industrial products was
made to identify products which are capable ofbeing produced in the small scale sector.
6. The list of industries exclusively reserved for the
small scale sector was expanded from 180 items tomore than 500 items.
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7. Within the small scale sector, a tiny
sector was also defined with investment
in machinery and equipment up to Rs.1
lakh and situated in towns with apopulation of less than 50,000 according
to 1971 census figures, and in villages.
8. Special legislation to protect cottage and
household industries was also proposed to
be introduced.
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INDUSTRIAL POLICY
RESOLUTION
23 Dec, 1977S.Industrial policyhighlights on producinginputneededbyalarge
no ofsmallerunitsand makingadequate marketingarrangement.
Thenucleus plant wouldalso workforupgradingthetechnology ofsmallunits.
Thegovernment would promotethedevelopment ofasystem of
linkagebetweennucleuslarge plantandthesatelliteancillaries.
To boostthedevelopment ofsmallscaleindustries.
Theinvestmentlimitinthecase oftinylimits wasenhancedto
Rs.2 lakh ofasmallscaleunitsto Rs.20lakhand ofancillariesto
Rs. 25lakh.
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A Scheme for building buffer stocks of essential rawmaterials for the small scale industries was
introduced for operation through the small industries
development corporation in the states.
The national small industries corporation in the
centre.
Industry process and technology amid at optimum
utilization of energy or the exploitation of alternative
sources of every would be given special assistance .
And also including finance on concessionary terms.
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INDUSTRIAL POLICY
RESOLUTION
Jul, 1980S.It was based on the industrial policy resolution of1956.
Optimum utilization of installed capacity.
Maximum production and achieving higherproductivity.
Higher employment generation.
Collection of regional imbalances.
Promotion of export oriented industries.
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Strengthen of the agriculture base through agro
based industries and promotion of optimum
intersectorol relationship.
Promotion of economic federalism throughequitable spread of investment and dispersal of
returns.
Consumer protection against high price and badquality.
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INDUSTRIAL POLICY
RESOLUTION
24 Jul, 1991 On 24th July 1991,thegovernmenthead Mr.
P.V.Narasimha Rao,announcedanew industrial policywhichsoughtto drasticallyaltertheindustrialscenario inourcountry.
Thereareseveralfundamentaldeparturesinthenewpolicy. The mostimportantinitiativesare withrespecttothevirtualscrapping ofindustriallicensingandregistration policies,anendto the monopolylaw andamore welcomingapproachto foreigninvestments,apartfrom redefiningtherole ofthe publicsector. Thesemeasures,long overdue,are welcomingasthey wouldfreetheindustryfrom regulations, most ofwhichhave outlivedtheirutility.
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OBJECTIVES
The objectives of the New Industrial Policy are:
Encouragement to Indian entrepreneurship, promotion of
productivity and employment generation.
Development of Indigenous technology through greater
investment in R&D and bringing in new technology to help
Indian manufacturing units attain worlds standards.
Removing the regulatory system and other weaknesses.
Increasing the competitiveness of industries for the benefit of
the common man.
Incentives for the industrialization of backward area.
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In pursuit of the above objectives, theGovernment has decided to take a series
of initiatives in respect of the policies
relating to the following areas:
A. Industrial Licensing
B. Foreign Investment
C. Foreign Technology AgreementsD. Public Sector Policy
E. Monopolies and Restrictive Trade
Practices
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A. INDUSTRIAL LICENSING POLICY
Industrial licensing policy and procedures have alsobeen liberalized from time to time. A full realization ofthe industrial potential of the country calls for acontinuation of this process of change.
Major policy initiatives and procedural reforms arecalled for in order to actively encourage and assistIndian entrepreneurs to exploit and meet the emergingdomestic and global opportunities and challenges.
The industrial licensing system has been graduallymoving away from the concept of capacity licensing. Thesystem of reservations for public sector undertakingshas been evolving to the ethos of greater flexibility andprivate sector enterprise has been gradually allowed toenter into many of these areas on a case by case basis.
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B. FOREIGN INVESTMENT
Foreign investment would bring attendantadvantages of technology transfer, marketingexpertise, introduction of modern managerialtechniques and new possibilities for the promotionof experts.
In order to invite foreign investment in high priorityindustries, requiring large investment andadvanced technology, it has been decided to provideapproval direct foreign investment upto 51% foreignequity in such industries
Promotion of exports of Indian products calls for asystematic exploration of world markets possibleonly through intensive and highly professionalmarketing activities.
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C. FOREIGN TECHNOLOGY AGREEMENTS
There is a great need for promoting anindustrial environment where the acquisitionof technological capability receives priority. In
the fast changing world of technology, therelationship between the suppliers and theusers of technology must be a continuous one.
With a view to injecting the desired level of technological dynamism in the Indianindustry, the Government will provideautomatic approval for technologicalagreements related to high priority industrieswithin specified parameters.
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D. PUBLIC SECTOR POLICY
The Industrial Policy Resolution of1956 gave thepublic sector a strategic role in the economy.
After the initial exuberance of the public sectorentering new areas of industrial and technicalcompetence, a number of problems have begun tomanifest themselves in many of the publicenterprises. The most striking example is thetake over of sick units from the private sector.
Public sector units accounts for almost one-thirdof the total losses of central public enterprises.
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E. MONOPOLIES AND RESTRICTIVE
TRADE PRACTICES ACT (MRTP ACT)
With the growing complexity of the industrial
structure and the need for achieving economies of
scale f or ensuring high productivity andcompetitive advantage in the international
market.
Pre-entry scrutiny of investment decision not
required.
MRTP act is restructured by eliminating the
legal requirements.
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INDUSTRIAL
LICENSING POLICY
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INDUSTRIAL LICENSING
License is a written permission issuedby the central government to anindustrial undertaking stating such
details as the location, the article to bemanufactured, production capacity andother relevant particulars.
Ours is one of the few countries in theworld where an entrepreneur isrequired to obtain an industrial licensefrom the government before venturinginto new business.
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OBJECTIVES OF
INDUSTRIAL LICENSING
Planned industrial development throughappropriate Regulations and controls.
Directing industrial investment inaccordance with plan Priorities.
Ensuring government control overindustrial activities In India.
Regulating the industrial capacity as pertargets set for Planned economy.
Preventing concentration of industrial andeconomic Power and monopoly.
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Checking unbalanced growth of industrial
establishments and ensuring economic size of
industrial units.
Utilizing full capacity of large scale industries .
Utilizing appropriate technology .
Protecting of small scale industries against
undue competition of large scale industries .
Broadening the industrial base in India through
new entrepreneurship development and
ensuring industrial dispersion.
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THE INDUSTRIES
(DEVELOPMENT &
REGULATION) ACT , 1951.
To implementtheindustrial policy.
To ensureregulationanddevelopment of
importantindustries.
To ensure planning andfuture
development ofnew undertakings .
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PROVISIONS OF INDUSTRIES (D
& R) ACT , 1951
Provisions of IDRA
Preventive Provision
Curative Provision
Creative Provision
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PREVENTIVE PROVISIONS
Threetypes ofprovisionsareincludedinthe
preventive provisions .
Registrationandlicensing policies
Investigation provisions
revocation oflicense provisions.
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CURRATIVE PROVISIONS
Taking overthe management orcontrol of
industrialenterprise.
Control ofsupply, price,anddistribution of
certaincommodities.
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CREATIVE PROVISIONS
Creative provisions are positive in nature and
involves cooperation between central government ,
industry, labor and consumers of goods produced
by scheduled industries.
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EXEMPTIONS FROM LICENSING
Items relating to an industries which is notincluded in the first schedule of the act .
Items to be manufactured in an undertakingwhich does not come under the definition of a
factory under the industries (D and R ) Act ,1951.
Expansions which does not come undersubstantial expansion ,that is ,up to 25% ofthe existing capacity.
Small scale units subject to certain conditions.
Items which do not fall under the definition of new article.
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CRITICISMS OF INDUSTRIAL
LICENSING
Issue oflicensestendsto giveanexaggerated
picture ofindustrialcapacity.
The process ofconsideration ofapplicationsat
vario
uslevels
and
at
vari
ous
ti
mes
co
ntributesto
delaysandhighercosts.
Thereisverylittlefollow up oflicensingto see
thatapproved projectsfructifyinasatisfactory
phasedschedule.
One oftheimportant purposes ofindustrial
licensing ofachievingregionaldispersal of
industrieshasnotbeenachieved.
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Industrial Licensing
PolicyThe industrial Licensing Policy in India can
be studied in the following ways
1.The Industries (Development and
Regulation) Act, 1951
2.Industrial Licensing Policy 1951-60
3.Industrial Licensing Policies for 1960-704.Industrial Licensing Policies 1970-77
5.Industrial Licensing Policy 1980-90
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INDUSTRIAL LICENSING POLICY
1951-60
Industrial Licensing prior to 1960 aimed at achieving
the following among others
1. Development of industries and encouraging
industrial activity in accordance with the planpriorities
2. Checking the concentration of economic power
3. Reduction of regional disparities
4. Proper allocation of foreign exchange
5. Development, protection, and encouragement of
small scale industries
6. Modernization of technology and achievement of
industrial growth
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INDUSTRIAL LICENSING POLICY
1960-70
The Industrial Licensing policy came in for sharp
criticism from various committees. The main
criticism leveled against it were
promotion of large industrial houses and
Usage of some unethical practices followed by a
section of large business houses
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INDUSTRIAL LICENSING POLICY
1970-80
Licensing policy of 1970
Government of India banned the entry of large
industrial houses and foreign companies into anyfield except core industries, heavy industries, heavy
investment projects, and export oriented projects.
Several other restrictive policies followed
Licensing policy of 1977
A new policy statement was announced by the
government on December 23, 1977
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The 1977 licensing policy provided thrust
mainly in two respects:
1. Priority to small-scale, village, and tiny
sector industries in future industrializationand
2. Geographical dispersal of industries from
metropolitan centers to rural and backwardareas.
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INDUSTRIAL POLICY STATEMENT
1980-90
In pursuance of this policy, a newlicensing policy was adopted, aiming atreviving the economic infrastructureinhibited by the infrastructural gapsand inadequacies in performance.
The basic objective was to transmit thefruit of industrialization and economicprogress to maximum number ofpeople, both in urban and rural areas.
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In order to make Indian industry more competitive,
the government felt the need for releasing the
industry from bureaucratic obstructions andreducing the number of clearances.
all new units with an investment upto Rs 75 crore
in Centrally notified backward areas and Rs 25
crore in other areas were exempted from licensing.
Import of capital good was allowed to the ttune of
30 percent of the plant and machinery.
Export oriented units and units located in Export
Processing Zones with an investment upto Rs 75
crore were de- licensed
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Conclusion
In a planned economy, adequate control
measures have to be exercised by the
government for providing necessarydirection to the industries, especially the
private sector, to contribute their best
towards the socio-economic objectives of
the nation. Hence, the governmentcontrol measures should be viewed in
this light.
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