INDUSTRIAL POLICY
At the time of independence, Indian economy was facing severe problems of illiteracy, poverty,
low per capita income, industrial backwardness and unemployment. After India attained its
independence in 1947, a sincere effort was made to begin an era of industrial development.
The government adopted rules and regulations for the various industries.
Industrial Policy
It is a document that sets the tone in implementing, promoting the regulatory roles of the
government. It was an effort to expand the industrialization and uplift the economy to its
deserved heights.
Industrial Policy of 1948
Presented by Dr. Shyama Prasad Mukherjee the then Industry minister.
The main goal of this policy was to accelerate the industrial development by introducing
a mixed economy where the private and public sector was accepted as important in the
development of the economy.
It saw the Indian economy in socialistic patterns.
The large industries were classified into four categories:
Industries with exclusive State Monopoly/Strategic industries: It included industries
engaged in the activity of atomic energy, railways and arms, and ammunition.
Industries with Government control: This category included industries of national
importance. 18 such categories were mentioned in this category such as fertilizers, heavy
machinery, defense equipment, heavy chemicals, etc.
Industries with Mixed sector: This category included industries that were allowed to
operate independently in the private or public sector. The government was allowed to
review the situation to acquire any existing private undertaking.
Industry in the Private sector: Industries which were not mentioned in the above
categories fall into this category. High importance was granted to small businesses and
small industries, leading to the utilization of local resources and creating employment.
Industrial Policy Resolution, 1956
This replaced the policy of 1948. The features of this policy were:
A new classification of Industries.
Non-discriminatory and fair treatment for the private sector.
Promotion of village and small-scale industries.
To achieve development by removing regional disparity.
Labor welfare.
It classified industries into three categories:
Schedule A industries: consisting of 17 industries was the exclusive responsibility of the State.
Schedule B industries: consisting of 12 industries was open to both the private and public sectors;
however, such industries were progressively State-owned.
Schedule C industries: all other industries not included in these two Schedules constituted the
third category which was left open to the private sector.
Industrial Policy Statement 1977
A] Target on the development of small-scale and cottage industries.
Household and cottage industries for self-employment.
Tiny sector investment up to 1 lakhs.
Small scale industries for investment up to 1-15 lakhs.
B] Large-scale sector
Basic industries: infrastructure and development of small-scale and village industries.
Capital goods industries: meeting the requirement of cottage industries.
High technological industries: development of agriculture and small scale industries such
as petrochemicals, fertilizers and pesticides.
C] Restrict the control of big business houses.
D] Role of the public sector:
Development of ancillary industries.
To make available expertise in technology and management in small and cottage
industries.
E] Revival and rehabilitation of sick units.
New Industrial Policy, 1991
Public sector de-reservation and privatization of the public sector through disinvestment.
Industrial licensing.
Amendments to Monopolies and Restrictive Trade Practices (MRTP) Act, 1969.
Liberalized Foreign Investment Policy.
Foreign Technology Agreements (FTA).
Dilution of protection to SSI and emphasis on competitiveness enhancement.
Way Forward
India now has much liberalized policy regime focusing on increased foreign investment
and lesser regulations.
We have made good progress in Ease of Doing Business ranking.
Campaigns such as Make in India and Start up India have helped to enhance the business
ecosystem in the country.
However, electricity shortages and high prices, credit constraints, high unit labor costs
due to labor regulations, political interference and other regulatory burdens continue to
remain challenges.
There is a need for a new Industrial Policy to boost the manufacturing sector in the
country.
Government in December 2018 also felt the need to introduce a new Industrial Policy
that would be a road map for all business enterprises in the country.
