Some of the Government Policies for development and promotion of Small-Scale

Industries in India are:

1. Industrial Policy Resolution (|PR) 1948,

Nere w u r s
2. Industrial Policy Resolution (|PR) 1956,
/
3. Industrial Policy Resolution ((PR) 1977,

4. Industrial Policy Resolution (IPR) 1980 and

|PR 22
5. Industrial Policy Resolution ((PR) 1990.
Lawrence A. Veit
Since Independence, India has several Industrial Policies to her credit.. So much so that
be a far well-to-do nation",
tempted to say that "if India has as much industry as it has industrial policy, it would
Policies for the development and
With this background in view, in what follows is a review of lndia's Industrial
promotion of small-scale enterprises in the country.

1. Industrial Policy Resolution (IPR) 1948:

importance of small-scale industries in the overallindustrial
The IPR, 1948 for the first time, accepted the
development of the country.
particularly suited for the utilization of local resources and for
It was well realizedthat small-scale industries are
creation of employment opportunities.
capital, skilled labour, marketing, etc. since a long
However, they have to face acute problems of raw materials,
period of time.
small-scale enterprises should be solved by
Therefore, emphasis was laid in the IPR, 1948 that these problems of
Governments. In nutshell, the main thrust of IPR
the Central Government with the cooperation of the State
1948, as far as small-scale enterprises were concerned, was 'protection.

2. Industrial Policy Resolution (|PR) 1956:

pattern of industrial development in the
The main contributionof the IPR 1948 was that it set in the nature and
taken place in the country. For
country. The post-IPR 1948 period was marked by significant developments
First Five Year Plan 1951-56 had been
example, planningg has proceeded on an organized manner and the
introduced to regulate and control
completed. Industries (Development and Regulation) Act, 1951 was also
industries in the country.
the basic aim of social and economic policy
The parliament had also accepted the socialist pattern of society' as
during this period.
 It was this background that the declaration ofa new industrial policyresolution seemed essential. IniS Came in
the form of IPR 1956.

Tne iR 1956 providedthat along with continuing policy support to the smallsector, it also aimed at to ensure
that decentralized sector acquires sufficient vitality to self-supporting and its
that of large- scale industry in the development is integrated Witn
country.
To mention, some 128 items were reserved for
exclusive production in the small-scale sector.
Besides, the Small-Scale Industries Board (SSIB) constituted a working group in 1959 to
examine and formulate a
development plan for small-scale industries during the, Third Five Year Plan, 1961-66. In the Third Five Year Plan
period, specific developmental projects like 'Rural Industries Projects' and
started to strengthen the small-scale sector in the 'Industrial Estates Projects' were
country.
Thus, to the earlier emphasis of 'protection' was added
'development.' The IPR 1956 for small-scale industries
aimed at "Protection plus Development." In a way,the IPR 1956
initiated the modem SSl in India.
3. Industrial Policy Resolution (|PR)1977:

During the two decades after the IPR 1956, the economy
witnessed lopsided industrial development skewed in
favor of large and medium sector, on the one hand, and increase in
led to a renewed emphasis on industrial policy. This gave
unemployment, on the other. This situation
emergence to IPR 1977.
The Policy Statement categorically mentioned:
"The emphasis on industrialpolicy so far has been mainly on large industries,
neglecting cottage industries
completely, relegating small industries to a minor role. The main thrust of the new industrial policy will be on
effective promotion of cottage and small-scale industries widely dispersed in rural areas and small
towns. It is
the policy of the Government that whatever can be produced by smal! and
cottage industries must oniy be so
produced."

The IPR 1977 accordingly classified small sector into three broad categories:

1.Cottage and Household Industries which provide self-employment on alarge scale.

2. Tiny sector incorporating investment in industrial units in plant and machinery up to Rs. 1lakh and situated in
towns with a population of less than 50,000 according to 1971 Census.
3. Small-scale industries comprising of industrial units with an investment of up to Rs. 10 lakhs and in case of
ancillary units with an investment up to Rs. 15 lakhs.

The measures suggested for the promotionof small-scale and cottage industries included:
(i) Reservation of 504 items for exclusive production in small-scale sector.

(i) Proposal to set up in each district an agency called 'District Industry Centre' (DIC) to serve as afocal point of
 The main
DIC wasintroduced in May 1978.
scheme of
development for small-scale and cottage industries. The and support required by Sma
services
promote underasingle roof all the
objective of setting up DICs was to
and village entrepreneurs. (IPR 1956), the
protection (IPR 1948) and development developed, and
earlier thrust of f 'protected,
What follows from above is that to the sector was, thus, to be
resolution,the small
IPR 1977 added "promotion'. As per this
promoted.'

(IPR) 1980:
4. Industrial Policy Resolution July 23,1980. The main
objective
Resolution (IPR) on
Industrial Policy through optimum
utilization of
Government of India adopted a new industrial production
Ihe increase in
lPR 1980 was defined as facilitating an
of
of industries.
installed capacity and expansion
envisaged:
the resolution from Rs. 10 lakhs to
Rs. 20
As to the small sector, of tiny units,
Rs.1 lakh to Rs. 2 lakhs in case
investment ceilings from case of ancillaries.
()Increase in lakhs to Rs. 25 lakhs in
small-scale units and from Rs. 15 Centres in
lakhs in case of
earlier scheme of the District Industry
plants to replace the
Introduction of the concept of nucleus maximum small-scale
industries there.
() promote the
backward district to compatible with
each industrially in the villages well
industries to generate economic viability
(ii) Promotion of village and rural
the environment. remained the best sector
1956. The small-scale sector still
reemphasized the spirit of the IPR the country.
Thus,the IPR 1980 self-employment b¡sed opportunities in
and
for generating wage
Resoiution (iPR) 1990: continued to give
5. Industrial Policy sector, the resolution
small-scale
announced during June 1990. As to the generation.
The IPR 1990 was the objective of employmènt
small-scale enterprises to serve
increasing importance to as
resolution to boost the development of small-scale sector were
The important elements included in the
follows:
industries (fixed in 1985) was raised from
and machinery for small-scale
(i) The investment ceiling in plant lakhs.
correspondingly, for ancillary units from Rs. 45 lakhs to Rs. 75
Rs. 35 lakhs to Rs. 60 lakhs and
Rs. 5 lakhs provided the unit
Investment ceiling for tiny units had been increased from Rs. 2 lakhs to
(iü)
50,000 as per 1981 Census.
is located in an area having a population of

manufacture in small- Scale sector.

(ii) As many as 836 items were reserved for exclusive
small-scale sector in rural and backwardareas
(iv) Anew scheme of Central Investment Subsidy exclusively for

..
 capable of generating more employment at lower cost of capital had been mooted and implemented.
(iv) With aview, to improve the competitiveness of the products manufactured in the
small-scale sector,
programmes of technology up gradation willbe implemented under the umbrella of an apexTechnology
Development Centres in Small Industries Development Organisation (SIDO).
(v) To ensure both adequate and timely flow of credit facilities for the small- scale
industries, a new apex bank
known as 'Small Industries Development Bank of India (SIDBI)' was established in 1990.

(vì) Greater emphasis on training of women and youth under

Entrepreneurship Development Programme (EDP)
andto establish a special cell in SID0 for this purpose.

(vii) Implementation of delicencing of all newunits with investment of Rs. 25 crores in

fixed assets in non
backward areas and Rs. 75 crores in centrally notified backward areas. Similarly,
delicensing shall be
implemented in the case of 100% Export Oriented Units (EOU) set up in Export Processing Zones (EPZ) up to an
investment ceiling of Rs. 75 lakhs.

Assets

Compaty yet to Poy

Commg k'ayhhy inchde awrt

ded.