Industry and Infrastructure D evelopment in India Since 1947 Incorporating An Exhaustive Analytical Account of Various Policies and Programmes for Development of Industry and Infrastructure with Focus on a Post-Independence Industrial Policy • Public Sector Enterprises D Micro, Small, and Medium Enterprises a Industrial Finance a Industrial Sickness o Tax Incentives for Industrialisation/Infrastructure Development D Industrial Relations and Labour Laws D Indian Industry and WTO D Energy Needs and Sources o Transport Infrastructure and Services • Communications and Information Technology a Special Economic Zones D Urban Infrastructure and Services • Rural Infrastructure and Services Plan-wise Review of Industrial Policy and Development: I to Xi Plan Year-wise Review of Developments in Industry/Infrastructure in India: 1947-48 to 2008-09 22 Appendices Containing Information on Indian Industry and Infrastructure Glossary of Industrial/lnfrastructural Terms By Anup Chatterjee K. Narindar Jetli NEW New Century Publications 'CENTURY New Delhi, India
Transcript
Industry and InfrastructureD evelopment in India
Since 1947Incorporating
An Exhaustive Analytical Account of Various Policies and Programmes forDevelopment of Industry and Infrastructure with Focus on
a Post-Independence Industrial Policy • Public Sector Enterprises D Micro, Small, andMedium Enterprises a Industrial Finance a Industrial Sickness o Tax Incentives forIndustrialisation/Infrastructure Development D Industrial Relations and Labour Laws
D Indian Industry and WTO D Energy Needs and Sources o Transport Infrastructure andServices • Communications and Information Technology a Special Economic Zones
D Urban Infrastructure and Services • Rural Infrastructure and Services
Plan-wise Review of Industrial Policy and Development: I to Xi Plan
Year-wise Review of Developments in Industry/Infrastructure in India:
1947-48 to 2008-09
22 Appendices Containing Information on Indian Industry and Infrastructure
Glossary of Industrial/lnfrastructural Terms
By
Anup ChatterjeeK. Narindar Jetli
NEW
New Century Publications'CENTURY New Delhi, India
ContentsAuthors' Note on the Book vii-xvi
Part I: Development of Industry in India
1. Indian Industry: An Introduction 1-201.1 Pre-Independence Industrial Scene
1.1.1 Self-sufficient Village Economy1.1.2 Well-knit Urban Economy1.1.3 Consequences of British Rule1.1.4 Unbalanced Occupational Structure1.1.5 Modern Factory System1.1.6 Introduction of Railways1.1.7 Other Developments1.1.8 Critical Appraisal
1.2 Legal Framework for Industrialisation1.2.1 Constitutional Provisions1.2.2 Industrial (Development and Regulation) Act, 19511.2.3 Monopolies and Restrictive Trade Practices (MRTP) Act, 19691.2.4 Consumer Protection Act, 19861.2.5 Foreign Exchange Management Act (FEMA), 19991.2.6 Competition Act, 2003 and Competition Policy
1.3 Consumer Protection in India1.3.1 Need for Consumer Protection1.3.2 United Nations and Consumer Protection1.3.3 Role of Standards1.3.4 Central Consumer Protection Council1.3.5 Quality Council of India
2. Post-Independence Industrial Policy: A General Review 21-352.1 Industrial Policy Resolution, 19482.2 Industrial Policy Resolution, 1956
2.2.1 Categorisation of Industries2.2.2 Other Features
2.3 Devaluation of the Rupee and Industrial Liberalization, 19662.4 Industrial Licensing Policy Inquiry Committee (ILPIC), 19692.5 Secretariat for Industrial Approvals (SIA), 1973
Contents xxi
2.6 Industrial Policy Statements 1973,1977 and 1980 "2.7 Industrial Policy, 1950-80: A Critique
2.7.1 Expansion of Public Sector2.7.2 Regulation and Controls of Private Sector2.7.3 Absence of Internal Competition2.7.4 Absence of Foreign Competition
2.8 Disillusionment and Rethinking ;2.9 Pressure for Industrial Liberalisation
2.9.1 Internal Factors2.9.2 External Factors
2.10 New Economic Policy and Industrial Liberalisation, 19852.11 Industrial Policy Statement, 1991: The Turning Point2.12 Industrial Policy Outlook2.13 Conclusion
3. Plan-wise Review of Industrial Policy andDevelopment: I to XI Plan 36-61
3.1 First Five Year Plan: 1951-52 to 1955-563.2 Second Five Year Plan: 1956-57 to 1960-613.3 Third Five Year Plan: 1961-62 to 1965-663.4 Annual Plans
3.5 Fourth Five Year Plan: 1969-70 to 1973-743.6 Fifth Five Year Plan: 1974-75 to 1978-793.7 Sixth Five Year Plan: 1980-81 to 1984-853.8 Seventh Five Year Plan: 1985-86 to 1989-903.9 Eighth Five Year Plan: 1992-93 to 1996-973.10 Ninth Five Year Plan: 1997-98 to 2001-023.11 Tenth Five Year Plan: 2002-03 to 2006-073.12 Eleventh Five Year Plan: 2007-08 to 2011-12
4. Public Sector Enterprises 62-784.1 Objectives of Public Sector Enterprises
4.1.1 Development of Infrastructure4.1.2 Balanced Regional Development4.1.3 Employment Generation
xxii Industry and Infrastructure Development in India Since 1947
4.1.4 Promotion of Competitive Conditions4.1.5 Check on Concentration of Economic Power
4.2 Organisation of Public Sector4.2.1 Departmental Undertakings4.2.2 Government Companies4.2.3 Public Corporations4.2.4 Holding Companies
4.3 Poor Performance and Rethinking4.4 Industrial Policy Statement, 1991 on Public Sector4.5 Public Sector Disinvestment Commission
4.5.1 Classification of Industry Groups4.5.2 Objectives and Strategy4.5.3 Loss-making PSUs4.5.4 Profit-making PSUs4.5.5 Criteria for Disinvestment4.5.6 Use of Disinvestment Proceeds4.5.7 National Investment Fund
4.6 Disinvestment/Privatisation in Action4.7 Supreme Court Judgement, September 16,20034.8 Public Sector at the State Level4.9 Future of Public Sector
5. Micro, Small, and Medium Enterprises (MSMEs) 79-1005.1 Micro, Small and Medium Enterprises Development
(MSMED) Act, 20065.1.1 Background5.1.2 Classification and Definitions of MSMEs5.1.3 Main Provisions of the MSMED Act, 2006
5.2 Advantages of Micro, Small and Medium Enterprises (MSMEs)5.2.1 High Employment Potential5.2.2 Widely Dispersed Entrepreneurial Base5.2.3 Relatively Low Capital Investment5.2.4 Regional Balanced Development5.2.5 Export Potential
5.3 Social Face of MSMEs in India5.4 Problems of MSMEs
5.4.1 Inadequate Availability of Finance and Credit5.4.2 Inadequate and Irregular Supply of Raw Material
Contents xxiii
5.4.3 Technological Obsolescence *•5.4.4-Lack of Infrastructural Facilities5.4.5 Deficient Managerial and Technical Skills5.4.6 Imperfect Knowledge of Market Conditions
5.5 Policy Measures to Help Small Industries5.5.1 Reservation of Items for Exclusive Production by
Small-scale Industries (SSI)5.5.2 Excise Duty Concessions —5.5.3 Priority in the Disbursement of Loans by the
Financial Institutions5.5.4 Other Concessions
5.6 Recent Policy Initiatives for Promoting Small Industries5.7 Small-Scale Industries in the 2006-2007 Union Budget5.8 MSMEs and Globalisation5.9 Sectoral Profiling of MSMEs
5.9.1 Handlooms5.9.2 Handicrafts5.9.3 Powerlooms5.9.4 Silk and Sericulture5.9.5 Unorganised Wool Sector5.9.6 Khadi and Village Industries (KVI)5.9.7 Coir Industry5.9.8 Food Processing Industries
5.10 Conclusion
6. Sources of Industrial Finance 101-1106.1 Need for Industrial Finance6.2 Sources of Industrial Finance
6.2.1 Internal Sources6.2.2 External Sources
6.3 Development Financial Institutions (DFIs)6.4 All-India Financial Institutions (AIFIs)
6.5 State Level Institutions6.6 Development Finance Institutions (DFIs): The Changed Scenario
xxiv Industry and Infrastructure Development in India Since 1947
6.7 Conclusion
7. Extent of Industrial Sickness 111-1147.1 Causes of Industrial Sickness
7.1.1 External Causes7.1.2 Internal Causes
7.2 Measures to Help Sick Industrial Units7.3 Government Policy Regarding Nationalisation of Sick Industrial Units
8. Tax Incentives for Industrialisation andInfrastructure Development 115-124
8.1 Meaning of Tax Incentives8.2 Forms of Tax Incentives
8.2.1 Deductions8.2.2 Tax Credit
8.3 Rationale for Tax Incentives8.3.1 Individuals8.3.2 Business Organisations8.3.3 General Purpose Incentives
8.4 Problems Created by Tax Incentives8.5 Alternatives to Tax Incentives8.6 Tax Holiday Schemes in India
8.6.1 Tax Holiday for Newly Established IndustrialUndertakings in Free Trade Zones, Electronic HardwareTechnology Parks, or Software Technology Parks
8.6.2 Tax Holiday for Newly Established Hundred Per CentExport-Oriented Undertakings
8.6.3 Tax Holiday for Exporters of Wood-based Handicraft Items8.7 Justification for Tax Incentives for Infrastructure Development8.8 Tax Incentives for Infrastructure Development in India
8.8.1 Incentives under Section 35-AC8.8.2 Extension of Tax Concessions for Infrastructure
in the 2006-07 Union Budget
9. Industrial Relations and Labour Laws 125-1409.1 Industrial Relations: Post-Independence Trends
9.1.1 From Laissez Faire to State Intervention9.1.2 First National Commission on Labour (NCL), 1969
Contents xxv
9.1.3 Declaration of Emergency, 1975 *9.1.4 Post-Emergency to 19909.1.5 Post-liberalisation Period (1991 onwards)
9.2 Industrial Disputes Act, 19479.3 Contract Labour
9.3.1 Meaning and Forms of Contract Labour9.3.2 Contract Labour (Regulation and Abolition) Act, 19709.3.3 Employers Viewpoint "9.3.4 Workers Viewpoint9.3.5 Issues in Regulating Contract Labour
9.4 Second National Commission on Labour, 20029.5 Labour Reforms: A Touchy Issue9.6 Conclusion
10. Indian Industry and WTO 141-15210.1 WTO: An Introduction10.2 Non-Agricultural Market Access (NAMA)10.3 Non-tariff Barriers10.4 Services10.5 Singapore Issues10.6 Anti-dumping and Subsidies Agreements10.7 TRIPS and Public Health10.8 Agreement on Textiles and Clothing (ATC)10.9 Textile Sector in the Post-Quota Era10.10 Implications for India10.11 Measures Taken by the Government
Part II: Infrastructure Development in India
11. Infrastructure Development: Issues and Policies 153-17911.1 Meaning and Types of Infrastructure
11.1.1 Economic Infrastructure11.1.2 Social Infrastructure
11.2 Infrastructure and Economic Development11.2.1 Infrastructural Bottlenecks
11.3 Traditional Approach to Infrastructure11.4 Commercialisation of Infrastructure Services: The New Approach11.5 Allocation of Risks: The Key Problem
xxvi Industry and Infrastructure Development in India Since 1947
11.5.1 Build-Operate-Transfer (BOT)11.5.2 Public-Private Partnership11.5.3 Value Guarantees
11.6 Infrastructure Finance: Nature and Options11.6.1 Role of Financial Institutions11.6.2 Debt Market11.6.3 External Sources
11.7 India Infrastructure Finance Company Limited (IIFCL)11.8 Recent Policy Announcements on Infrastructure
11.8.1 Infrastructure in Recent Union Budgets11.8.2 Eleventh Five Year Plan (2007-12) on Infrastructure
11.9 FDI in Infrastructure11.10 Conclusion
12. Energy Needs and Sources 180-21012.1 Energy Needs of India12.2 Electric Power
12.2.1 Basic Facts12.2.2 Legal and Regulatory Framework12.2.3 Institutional Reforms12.2.4 Private Sector Participation in Power Sector12.2.5 FDI in the Power Sector12.2.6 Poor Performance of State Electricity Boards (SEBs)12.2.7 Scope for Commercialisation of Power Sector12.2.8 Accelerated Power Development Programme (APDP)12.2.9 Hydro Power Development12.2.10 Nuclear Power12.2.11 Captive Power Generation12.2.12 Tax Incentives to Power Sector12.2.13 Trading in Electricity12.2.14 Rural Electrification12.2.15 New Tariff Policy of Central Electricity Regulatory
Commission (CERC) for 2004-0912.2.16 National Electricity Policy: Main Features12.2.17 Partnership in Excellence12.2.18 Eleventh Five Year Plan (2007-12) on Electric Power12.2.19 Recent Initiatives in the Power Sector12.2.20 Conclusion
Contents xxvii
12.3 Coal12.3.1 Eleventh Five Year Plan (2007-12) on Coal12.3.2 Conclusion
12.4 Oil and Gas12.4.1 Recent Initiatives in Oil and Gas12.4.2 Eleventh Five Year Plan (2007-12) on Oil and Gas12.4.3 Conclusion ^
13. Transport Infrastructure and Services 211-24713.1 Need for Integrated Transport System13.2 Indian Railways
13.2.1 Introduction of Railways13.2.2 Importance of Railways13.2.3 National Rail Vikas Yojana13.2.4 Railway Safety Review Committee13.2.5 Participation of State Governments13.2.6 Public Private Partnership13.2.7 Technological Upgradation13.2.8 Dedicated Freight Corridors (DFCs)13.2.9 Other Initiatives13.2.10 Eleventh Five Year Plan (2007-12) on Railways13.2.11 Conclusion
13.3 Roads and Road Transport13.3.1 Introduction13.3.2 Deficiencies of Road Network13.3.3 National Highways Development Project13.3.4 Pradhan Mantri Gram Sadak Yojana (PMGSY)13.3.5 Public-Private Partnership (PPP)13.3.6 Special Accelerated Road Development
Programme in the North Eastern Region (SARDP-NE)13.3.7 Current Issues in Road Network Development13.3.8 Eleventh Five Year Plan (2007-12) on Roads Network13.3.9 Conclusion
13.4 Shipping and Ports13.4.1 Importance of Maritime Activities13.4.2 Maritime Agencies/Legislations13.4.3 Coastal Shipping13.4.4 Inland Water Transport (IWT)
xxviii Industry and Infrastructure Development in India Since 1947
13.4.5 Ports13.5 Civil Aviation
13.5.1 Civil Aviation Agencies13.5.2 From Monopoly to Competition13.5.3 Recommendations of Naresh Chandra Committee13.5.4 Modernisation of Delhi and Mumbai Airports13.5.5 Greenfield Airports13.5.6 Non-metro Airports13.5.7 Other Recent Initiatives13.5.8 Eleventh Five Year Plan (2007-12) on Civil Aviation13.5.9 Conclusion
14. Communications and Information Technology 248-27114.1 Telecommunications
14.1.1 Importance of Telecommunications14.1.2 Telecommunications in India14.1.3 New Telecom Policy (NTP), 199914.1.4 Bharat Sanchar Nigam Limited (BSNL) and
Mahanagar Telephone Nigam Limited (MTNL)14.1.5 Telecommunications Regulatory Authority of India (TRAI)14.1.6 FDI in Telecommunications14.1.7 Telecommunication Services in Rural Areas14.1.8 Recent Policy Initiatives in Telecom Sector14.1.9 Agenda for Reforms14.1.10 Eleventh Five Year Plan (2007-12) on
Telecom and Connectivity14.1.11 Vision for the Future14.1.12 Conclusion
14.2 IT and IT-enabled Services14.2.1 Introduction14.2.2 Strategies of Indian IT-BPO Companies14.2.3 Information Technology in Indian Banking14.2.4 Information Technology in Agriculture14.2.5 Challenges Ahead
14.3 Postal Services14.3.1 Project Arrow
14.4 Information and Broadcasting14.4.1 Broadcasting Sector
Contents xxix
15. Special Economic Zones (SEZs) ' 272-28715.1 Economics of SEZs
15.1.1 Meaning of SEZs15.1.2 Types of SEZs15.1.3 Configuration of a SEZ15.1.4 Advantages of SEZs15.1.5 Pre-conditions for the Success of SEZs15.1.6 Possible Reasons for the Failure of a SEZ15.1.7 Role of the Government15.1.8 Role of the Private Sector15.1.9 SEZs and Small Enterprises15.1.10 Global Experience
15.2 SEZs in India15.2.1 Experience with Export Processing Zones (EPZs)
15.3 Main Features of the SEZ Policy in India15.4 Criteria for Approval15.5 Conversion of EPZs into SEZs
15.5.1 How are SEZs Different from EPZs?15.5.2 Will EPZ Conversion Help?
15.6 Performance of SEZs in India15.7 Apprehensions and Concerns15.8 SEZs and National Security15.9 Lessons from China
15.9.1 Size of SEZ15.9.2 Customs Regulations15.9.3 Incentives Package15.9.4 Labour Laws15.9.5 Involvement of State and Local Authorities15.9.6 DTA Sales15.9.7 Foreign Investment and Technology
15.10 Conclusion
16. Urban Infrastructure and Services 288-30516.1 Degree of Urbanisation in India16.2 Constitution (Seventy-fourth Amendment) Act, 199216.3 Features of Urban Infrastructure Services16.4 Urban Housing16.5 Urban Transport
xxx Industry and Infrastructure Development in India Since 1947
16.6 National Urban Health Mission (NUHM)16.7 Safe Drinking Water
16.7.1 Major Issues in Urban Water Supply16.7.2 Eleventh Plan Programmes for Urban Water Supply
16.8 Sanitation Including Solid Waste Management16.9 Jawaharlal Nehru National Urban Renewal Mission (JNNURM)16.10 Eleventh Five Year Plan (2007-12) on Urban Infrastructure16.11 Financing of Urban Infrastructure16.12 Cost Effectiveness16.13 Institutional Structure16.14 Conclusion
17. Rural Infrastructure and Services 306-32217.1 Constitutional Provisions17.2 Rural Housing
