Industrial Policy | Meaning
Industrial policy means rules, regulations, principles, policies and procedures laid down by government for regulating, developing, and controlling industrial undertakings in the country.
It prescribes the respective roles of the public, private, joint, and co-operative sectors for the development of industries.
It also indicates the role of the large, medium and small scale sector.
Industrial Policy | Meaning
It incorporates fiscal and monetary policies, tariff policy, labour policy, and the government attitude towards foreign capital, and Role to be played by multinational corporations in the development of the industrial sector.
Industrial Policy | Objectives
Industrial policy statements have been announced from 1948 onwards.
A number of objectives have been projected by the Government of India while making industrial policy declarations.
Some of the important objectives can be identified as follows:
1. Achieving a socialistic pattern of society.
2. Preventing undue concentration of economic power.
3. Achieving industrial development.
4. Reducing disparities in regional development.
Industrial Policy | Objectives
6. Providing opportunities for gainful employment.
7. Achieving a self-sustained economy.
8. Achieving faster economic growth.
9. Alleviating poverty.
10. Protecting and developing a healthy small- scale sector.
11. Updating technology and modernization of industry.
12. Liberalization and globalization of economy.
Industrial Policy Resolution 1948 (6 April, 1948);
Industrial Policy Resolution (30 April, 1956); Industrial Policy Feb 2, 1973; Industrial Policy Dec 23, 1977;
Industrial Policy Statement of July, 1980; Industrial Policy, July 24, 1991.
Industrial Policies from 1948 to1991
Industrial Policy Resolution 1948 (6 April, 1948)
The Government of India announced its first industrial policy resolution on 6 April,1948.
The policy resolution laid stress on the role of the state in the development of industry.
The industrial activities were divided into four broad areas:
1. Items under central government control –
Manufacture of arms and ammunition, The production and control of atomic energy, Ownership and
management of railway transport, etc.
Industrial Policy Resolution 1948 (6 April, 1948)
2. Items under the state government control – Coal, Iron and Steel, Aircraft manufacture,
Shipbuilding, Manufacture of telephone, telegraph and wireless apparatus, excluding radio receiving sets, Mineral oils, etc.
3. Items of basic importance (planned & regulated by central government) –
Salt, Automobiles and Tractors, Electric Engineering, Other Heavy Machinery, Machine Tools, Heavy
Chemicals, Fertilizers and Pharmaceuticals, Power, Cotton and Woollen Textiles, Cement, Sugar, Paper and Newsprint, etc.
Industrial Policy Resolution 1948 (6 April, 1948)
4. Items for Private Sector –
The rest of the industrial field will be open to private enterprise.
It also emphasised on securing a continuous increase in production and its equitable
distribution.
Importance was given to small scale and cottage industries.
Industrial Policy Resolution (30 April, 1956)
Industrial Policy Resolution (30 April, 1956) was also regarded as the “Economic Constitution of India”.
Major Objectives of Industrial Policy Resolution (30 April, 1956) are as follows:
1. Improving living standards and working conditions for the mass of the people.
2. To reduce disparities in income and wealth.
3. To prevent private monopolies and concentration of economic power.
Industrial Policy Resolution (30 April, 1956)
4. Development of transport facilities.
5. The State will progressively assume a predominant and direct responsibility for setting up new industrial undertakings and for developing transport facilities.
6. Undertake State trading on an increasing scale.
7. Planned and rapid development.
8. Expand public sector.
9. Disparities in levels of development between
different regions should be progressively reduced.
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 provided for a closer interaction between the agricultural and industrial sectors.
Accorded the highest priority to the generation and transmission of power.
Industrial Policy Feb 2, 1973
Special legislation to protect cottage and household industries was also proposed to be introduced.
It was also decided that compulsory export obligations, merely for ensuring the foreign
exchange balance of the project, would no longer be insisted upon while approving new industrial capacity.
Industrial Policy Dec 23, 1977
Industrial Policy Dec 23, 1977 Highlights on
producing inputs needed by a large number of smaller units and making adequate marketing arrangements.
To boost the development of small scale industries, the investment limit in the case of tiny units was
enhanced to Rs.2 lakh, of a small scale units to Rs.20 lakh and of ancillaries to Rs.25 lakh.
Industrial Policy Dec 23, 1977
Industrial processes and technologies aimed at
optimum utilisation of energy or the exploitation of alternative sources of energy would be given
special assistance, including finance on concessional terms.
Industrial Policy Statement of July, 1980
Industrial Policy Statement of July, 1980 was based on Industrial Policy Resolution (30 April, 1956).
The major objectives are as follows:
1. Optimum utilisation of installed capacity.
2. Maximum production and achieving higher productivity.
3. Higher employment generation.
4. Promotion of export-oriented industries.
Industrial Policy Statement of July, 1980
5. Consumer protection against high prices and bad quality.
6. Correction of regional imbalances.
7. Strengthening of the agricultural base through agro based industries and promotion of optimum inter- sectoral relationship.
Industrial Policy, July 24, 1991
Government is pledged to launching a reinvigorated struggle for social and economic justice, to end poverty and unemployment and to build a modern, democratic, socialist, prosperous and forward-looking India.
Such a society can be built if India grows as part of the world economy and not in isolation.
While Government will continue to follow the policy of self-reliance, there would be greater emphasis placed on building up our ability to pay for imports through our own foreign exchange earnings.
Industrial Policy, July 24, 1991
Government is also committed to development and
utilisation of indigenous capabilities in technology and manufacturing as well as its upgradation to world
standards.
Government will continue to pursue a sound policy framework encompassing encouragement of
entrepreneurship, development of indigenous technology through investment in research and
development, bringing in new technology, dismantling of the regulatory system, development of the capital markets and increasing competitiveness for the benefit of the common man.
Industrial Policy, July 24, 1991
The spread of industrialisation to backward areas of the country will be actively promoted through
appropriate incentives, institutions and infrastructure investments.
Foreign investment and technology collaboration will be welcomed to obtain higher technology, to increase
exports and to expand the production base.
Labour will be made an equal partner in progress and prosperity.
Workers’ participation in management will be promoted.
Industrial Policy, July 24, 1991
Need to preserve the environment and ensure the efficient use of available resources.
Maintain sustained growth in productivity and gainful employment and attain international competitiveness.
In pursuit of the above objectives, Government have decided to take a series of initiatives in respect of the policies relating to the following areas:
1. Industrial Licensing.
2. Foreign Investment.
3. Foreign Technology Agreements.
4. Public Sector Policy.
5. MRTP Act.
