Industrial policy 1980 to till

Industrial policy means rules, regulations,principles, policies, and procedures laiddown by government for regulating,developing and controlling industrialundertakings in the country. It prescribes therespective roles of the public, private jointand cooperative sectors for the developmentof industries. It also indicates the role of thelarge, medium and small sector. Itincorporates fiscal and monetary policies,tariff policy, labour policy and thegovernment attitude towards foreign capital,and role to be played by multinationalcorporations in the development of theindustrial sector.

MEANING

OBJECTIVES OF INDUSTRIAL POLICY

Accelerating the overall rate of growth through industrialization.

Expanding the industrial base in relation to industrialization needs of

the country.

Generating employment and reducing poverty.

Preventing monopolies and concentration of industrial power.

Creating competitive conditions and encouraging the growth of

entrepreneurship

Promoting balanced industrial development.

Promoting linkages with others sectors of the economy.

Assisting small enterprisesEncouraging the growth of industrial

research and development

FEATURES OF NIP 1991

De-reservation of Public Sector: The number of industries reserved for public sector was reduced to 8 industries. At present, there are only three industries reserved for public sector which include. (a) Atomic energy (b) Railways, and (c) specified Minerals.

De-licensing: -The most important features of NIP, 1991 was the abolition of industrial licensing of all industries except six industries. The six industries are of social and strategic concern. The six industries are 1. Hazardous Chemicals. 2. Alcohol 3. Cigarettes 4. Industrial Explosives 5. Defence Products 6. Drug and pharmaceuticals.

Disinvestment of public sector: -The NIP 1991 permitted disinvestment of public sector units. Disinvestment is a process of selling government equity in PSUs in favour of private parties. Disinvestments aim at certain objectives. (1) To provide better customer Service. (2) To make effective use of disinvestment funds. (3) To overcome the problem of political interference. (4) To enable the government to concentrate on social development.

Foreign Investment: Approval will be given for direct foreign investment up

to 51 percent foreign equity in high priority industries . There shall be no

bottlenecks of any kind in this process

Foreign Technology Agreements: Automatic permission will be given for

foreign technology agreements in high priority industries up to a lump sum

payment of Rs. 1 crore, 5% royalty for domestic sales and 8% for exports,

subject to total payment of 8% of sales over a 10 year period from date of

agreement or 7 years from commencement of production. No permission will

be necessary for hiring of foreign technicians, foreign testing of indigenously

developed technologies.

MRTP Act: Emphasis will be placed on controlling and regulating

monopolistic, restrictive and unfair trade practices. Simultaneously, the newly

empowered MRTP Commission will be authorized to initiative investigations

on complaints received from individual consumers or classes of consumers in

regard to monopolistic, restrictive and unfair trade practices.

Public Sector Policy: The priority areas for growth

of public enterprises in the future will be the

following:

Essential infrastructure goods and services.

Exploration and exploitation of oil and mineral

resources.

Technology development and building of

manufacturing capabilities in areas which are

crucial in the long term development of the

economy and where private sector investment is

inadequate.

Manufacture of products where strategic

considerations predominate such as defence

equipment.

POSITIVES & WATCH-OUTS

POSITIVES:

De-licensing of industries helped entrepreneurs to quickly seize business opportunities.

Removal of Govt control helped under the MRTP act facilitated expansion and growth.

There was greater inflow of foreign capital and technology due to easing of restrictions.

Burden of the public sector has been reduced.

WATCH-OUTS:

The bureaucracy has a tendency to attempt to defeat measures aimed at deregulations.

Foreign investors still regard the policy and procedural system in India still confusing . Rather many feel that the policy & development of china environment is superior to India.

Distortion of Industrial pattern occurred due to slow pace of investment in few basic and strategic industries.

Absence of mechanism slow down the development of backward areas.

POST 90S-THE REFORM PHASE

Major reforms took place in 2002-2007

Reforms in International Competition: Removal of

quantitative restrictions in imports.

Decline in role of Public Sector : Disinvestment

process converted many of the existing public

sector enterprises into non governmental

enterprises.

"The National Industrial Policy 1996: A Strategic Plan for Economic Growth and Development", popularly known as the NIP, was laid Parliament and was presented to the nation.

The four (4) main components of the NIP are:

• Macroeconomic Policy

• Industrial Strategy

• Social Policy

• Environmental Policy

The National Industrial Policy provides for an integrated approach to development. It seeks to provide a favourable environment in the country to attract new investors in both the export and domestic sectors and also, increase earnings from both traditional and non-traditional exports.

The NIP sets specific targets for economic growth and identified strategic clusters for development. Monitoring of the clusters was based on the establishment of Industry Advisory Councils (IACs) which would have both public and private sector involvement.

UPTO 2005 SCENARIO :

Substantial changes :

Only 6 industries require compulsory licensing

Only 3 industries reserved for the public sector

Restriction on FDI: up to 100% under automatic

route for most manufacturing activities in SEZs, FDI

ceiling in pvt. Banking sector up to 74%; oil

exploration (100%); natural gas and LNG pipelines

(100%); telecom (74%)

Small scale industries sector : reduced no. of items

reserved from 821 (1991) to 506 (2005)

INDUSTRIAL POLICY 06-11

INCENTIVES AND CONCESSIONS :

REDUCTION OF REGISTRATION AND STAMP DUTY

CHARGES :Concessional registration charges at Re 1 per Rs 1,000/-

Capital Investment Subsidy (for SSIs)20% of the value of the fixed assets, subject to a maximum of Rs 10 lakhs per

unit. Additional subsidy of 5% of the value of fixed assets, subject to a

ceiling of Rs 1.00 lakh for SC/ST/PH/Minority & Ex Servicemen. In case of

woman entrepreneurs, the ceiling for additional subsidy would be Rs 5 lakhs.

Industrial Infrastructure Development/Common Infrastructure/Facilities

in Notified Industrial Clusters

A separate infrastructure Up gradation Fund of Rs 500 crores would be

created for up gradation of infrastructure facilities in existing industrial

areas/estates and also for maintenance.

INDUSTRIAL POLICY 2012 - 2016

Objectives of the Industrial Policy of the Government

are –

to maintain a sustained growth in productivity

to enhance gainful employment

to achieve optimal utilisation of human resources

to attain international competitiveness

to transform India into a major partner and player in the global arena

Policy focus is on –

Deregulating Indian industry;

Allowing the industry freedom and flexibility in responding to market forces and

Providing a policy regime that facilitates and fosters growth of Indian industry.

IMP MEASURES TAKEN :

Industrial Entrepreneurs’ Memorandum (IEM)

Policy for Small Scale Industries

Non-Resident Indians Scheme

Electronic Hardware Technology Park (EHTP)/Software Technology Park (STP)scheme

Policy for Foreign Direct Investment (FDI)

Liberalization of Industrial Licensing Policy At present, only five industries are under compulsory licensing mainly on

account of environmental, safety and strategic considerations. They are:

Specified Hazardous chemicals

Cigars and cigarettes

Distillation and brewing of alcoholic drinks

Industrial explosives

Electronic Aerospace and defense equipment

LESSONS FROM INDIA:

Industrial Policy should not be about:

Controlling Prices

Controlling Quantity

Specifying Geographical Location of Activity

Pre-emption by Public Sector

Policy Body, Regulatory Body and Service Provider being

Government Agencies