New Industrial Policy

Group 9
Section ‘B’
An industrial policy is any government
regulation or law that encourages the
ongoing operation of, or investment in, a
particular industry.
Rapid agricultural and industrial
development of country
Rapid expansion of opportunities for
employment
Progressive reduction of social and
economic disparities, removal of poverty
and attainment of self-reliance.
1948:Emphasized the importance of securing a
continuous need of production and its equitable
distribution
1956: Acceleration of the rate of economic growth
and the speeding up of industrialization
1973:Identified high-priority industries where
investment from large industrial houses and
foreign companies would be permitted.
1977: Laid emphasis on decentralization and on the
role of small-scale, tiny and cottage industries.
1980: Focused attention on the need for promoting
competition in the domestic market, technological
upgradation and modernization
1985-86: Aimed at increasing productivity,
reducing costs and improving quality.
Designed in 2 parts:-
1. July 24th1991,concerned large

industries including medium sized
industries
2. August 6th1991,dealt with small
industries
 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.
 Up gradation to world standards in terms of
manufacturing and technology.
 To provide enhanced support to the small-scale sector.
 To enhance foreign investment and technology
collaboration, to obtain higher technology, to increase
exports and to expand the production base.
 To abolish the monopoly of any sector or any
individual enterprise.
 To ensure that the public sector plays its
rightful role.
 All sectors of industry whether small,
medium or large, belonging to the public,
private sector or cooperative sector will be
encouraged to grow and improve on their
past performance.
Government has decided to take a series of
initiatives in respect of the policies relating to
the following areas.

• Industrial Licensing.
• Foreign Investment
• Foreign Technology Agreements.
• Public Sector Policy
• MRTP Act.

 Encourage and assist Indian entrepreneurs to
exploit and meet the emerging domestic and
global opportunities and challenges.
 This can be done only if the role played by
the Government were to be changed from
that of only exercising control to one of
providing help and guidance.
 Industrial licensing abolished for all
industries, except those specified,
irrespective of level of investment.
Compulsory licensing for reasons related
to security and strategic concerns, social
reasons, problems related to safety and
over-riding environmental issues,
manufacture of products of hazardous
nature and articles of elitist consumption.
 In locations other than cities of more than 1
million population, there will be no requirement
of obtaining industrial approvals from the
Central Government except for industries
subject to compulsory licensing
 Existing units will be provided a new broad

banding facility to enable them to produce any
article without additional investment
 The exemption from licensing will apply to all

substantial expansions of existing units
 Tobring advantages of technology transfer,
marketing expertise, introduction of modern
managerial techniques and new possibilities
for promotion of exports.
 Decided to provide approval for direct

foreign investment upto 51% foreign equity in
Annexure 1 industries
 To encourage foreign trading companies
to assist us in export activities
 To negotiate with world's largest

international manufacturing and
marketing firms and provide the avenues
for large investments in the development
of industries and technology in the
national interest.
 To remove unnecessary governmental
interference in the relationship between
suppliers and user of technology.
 Automatic approval of technological
agreements.
 Greater competitive pressure will also induce
our industry to invest much more in research
and development
 No clearance needed for foreign technicians
and testing
Public ownership and control
Preventing the
concentration of economic
power, reducing regional
disparities and ensuring
that planned development
serves the common good
Industrial Policy Resolution of
1956

 Atomic Energy.
 Coal and lignite.
 Arms and ammunition and allied items of defense equipment,
Defense aircraft and warships.
 Mineral oils.
 Mining if iron ore, manganese ore, chrome ore, gypsum,
sulphur, gold and diamond.
 Mining of copper, lead, zinc, tin, molybdenum and wolfram.
 Minerals specified in the Schedule to the Atomic Energy
(Control of Production and Use) Order, 1953.
 Railway transport
New approach to public sector needed & following were
considered as priority areas –
 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 defense equipment.
At the same time the public sector will not be barred
from entering areas not specifically reserved for it.
 Industries based on low technology, small
scale and non-strategic areas, inefficient
and unproductive areas, areas with low or
nil social considerations or public
purpose, will be reviewed
 Those public enterprises which are in high
priority areas or are generating good or
reasonable profits will be provided a
much greater degree of management
autonomy through the system of
memoranda of understanding(MOU)
 Sickpublic enterprises which are unlikely to
be turned around will, for the formulation of
revival schemes, be referred to the Board for
Industrial and Financial Reconstruction
(BIFR), or other similar high level institutions
created for the purpose.
 Inorder to raise resources and encourage

wider public participation, a part of the
government's shareholding in the public
sector would be offered to mutual funds,
financial institutions, general public and
workers.
 Boards
of public sector companies would be
made more professional and given greater
powers.
 Therewill be a greater thrust on performance
improvement through the Memoranda of
understanding (MOU) systems through which
managements would be granted greater
autonomy and will be held accountable.
 Tofacilitate a fuller discussion on performance,
the MOU signed between Government and the
public enterprise would be placed in Parliament.
(Monopolies and Restrictive Trade
Practices Act)
 Prevention of concentration of economic power to
the common detriment, control of monopolies, and
 Prohibition of monopolistic and restrictive and
unfair trade practices.
 The MRTP Act will be restructured by eliminating
the legal requirement for prior governmental
approval for expansion of present undertakings and
establishment of new undertakings.
 The newly empowered MRTP Commission will
be authorized to initiate investigations suo
moto or on complaints received from
individual consumers or classes of consumers
in regard to monopolistic, restrictive and
unfair trade practices.
 Necessary comprehensive amendments were
made in the MRTP Act in this regard and for
enabling the MRTP Commission to exercise
punitive and compensatory powers.
 Overlooking Employment
 Unresolved Issues:-
a) To reorient industrial production

b) To re-examine the viability of
engineering industry
c) Linkages between the industry and
agriculture
 No exit provision for entrepreneurs
 Little for labour
 Administrative hurdles
 Little for R&D
 Uncertain Prospects for SSI:-
a) Credit supply
b) Integration of production
c) Forces of competition
On 11th Feb 2000, Automatic approval was made
available for the following:
 Up to 74% FDI in Advertising sector.
 Up to 100% FDI in Film industry
With a view to further liberalizing the FDI

regime, the Government also permitted FDI up
to 100% on the automatic route in the
advertising sector.
 Govtin 2002 permitted FDI up to 100% for
development of integrated townships, including
housing,commercial premises,resorts,city and
regional level urban infrastructure facilities
On 5th July 2002, As part of the ongoing
liberalization of the FDI regime, the
Government decided to allow FDI up to
100% in tea sector, including tea
plantation
 On 12th January 2005,govt. decided that new proposals for
foreign investment/technical collaboration would be allowed
subject to the following guidelines:
 Prior approval of the Government would be required only in
cases where the foreign investor has an existing joint
venture or trademark agreement in the 'same' field. The onus
to provide requisite justification as also proof to the
satisfaction of the Government that the new proposal would or
would not in any way jeopardize the interests of the existing
joint venture or trademark partner or other stakeholders would
lie equally on the foreign investor and the Indian partner
On 13th January 2006, govt. decided to allow
 FDI up to 49% with prior approval of the

Government for setting up Up-linking
teleports;
 FDI up to 100% with prior approval of the
Government for Up-linking a Non-News &
Current Affairs TV Channel;
The following industries require compulsory
industrial license:
 Distillation and brewing of alcoholic drinks.
 Tobacco and manufactured tobacco
substitutes;
 Electronic Aerospace and defense equipment
 Industrial explosives
 Hazardous chemicals
(HCN,phosgene,isocyanides etc)
 MRTP Act : 14 Restricted trade practices
 Now : Only 4
 Cartelization and sharing of territories

 Restricting production and supply
 Collusive bidding
 Predatory pricing

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Group 9

1. July 24th1991,concerned large

 Existing units will be provided a new broad

 The exemption from licensing will apply to all

 Decided to provide approval for direct

 To negotiate with world's largest

 Essential infrastructure goods and services.

 Inorder to raise resources and encourage

a) To reorient industrial production

With a view to further liberalizing the FDI

 FDI up to 49% with prior approval of the

 Cartelization and sharing of territories

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