Contents
INDUSTRIAL POLICY
RESOLUTIONS: (IPR)
INDUSTRIAL POLICY
STATEMENT OF 1956:-
Reasons for the revision
were:-
Highlights of the IP of
1991:-
1. Industrial
policy usually means government action to influence the ownership &
structure of industry and its performance and it takes the form of paying
subsides of providing finance in other ways or of regulation.
2. Any
government action aimed at affecting industry may be considered to be part of
industrial policy, which makes it a limitless field.
3. A
country must formulate industrial policy as an instrument of industrialization
·
Protection and development
of small and medium enterprises.
·
To maintain a sustained
growth in productivity and have a balanced growth.
·
To enhance gainful
employment.
·
To attain international
competitions.
·
To achieve optimal
utilization of human resources.
·
To transform India into a
major partner and player in the global arena.
·
Government of India
adopted a policy resolution on 30 April 1948 called the first Industrial Policy
Resolution of 1948, which made it clear that India was going to have a mixed
economy.
·
On the basis of ownership,
the industries were classified into four categories.
·
Basic and strategic
industries such as arms and ammunition atomic energy, railway etc. shall be the
exclusive.
·
In the case of industries
like coal, iron, steel, ship building, manufacture of telegraph, telephone,
wireless apparatus mineral oils etc. the state took over the exclusive
responsibility of all future development and the existing industries were allowed
to function for 10 years after which the state would review the situation and
explore the necessity of nationalization.
·
In the 3rd
group, 18 industries including automatable, tractors, machine tools etc. were
allowed to be in the private sector, subject to government regulation and
supervision
·
All other industries were
left open to the private sector. However the state might participated and /or
intervene if circumstances so demanded.
·
The Industries
(Development and Regulation) act was passed in 1951 to implement the IPR, 1948.
·
On 30 April 1956, the
Government revised its first IPR of 1948 and announced the Industrial Policy
(IP) of 1956
a)
Introductions of the
Constitution of India.
b)
Adoption of a planned
economy.
c)
Declaration by the
parliament that India was going to have a socialist pattern of society.
1.
The IPR 1956 has been
known as the “Economic constitution of India” or “the Bible of state
capitalism”.
2.
IPR 1956 classified
industries into three categories : they were:
3.
Schedule A consisting of
17 industries would be the exclusive responsibility of the state.
4.
Out of these 17, four
states industries, namely arms and ammunition atomic energy, railways and air
transport would be central Government monopolies.
5.
New units in the remaining
industries would be developed by the state governments.
6.
Schedule B, consisting of
12 industries would be open to both the private and public sectors and such
industries would be progressively state owned.
7.
All the other industries
not included in these two schedules constituted the third category which was
left open to the private sector. However, the state reserved the right to
undertake and by type of industrial production.
8.
The IPR 1956 stressed the
importance of cottage and small scale industries for expanding employment
opportunities and for wider decentralization of economic power and activity.
9.
Features of the new policy
that distinguishes it from the previous policy are
·
Expansion of role of the
state
·
Reduced threat of
nationalization
·
More meaningful approach
to the concept the of a “mixed economy”
·
The long awaited
liberalized industrial policy was announced by the government of India on 24
July 1991.
·
This policy has dismantled
all needless irksome bureaucratic controls on industrial growth.
·
The new policy considered
that big and monopoly business houses and foreign capital and multinational
corporations (MNCS) are no longer “fearsome” and in fact they are begin to this
policy has decided to take a series of this policy has decided to take a series
of initiatives in respect of the polices relating to
*
industrial licensing
*
MRTP act.
*
Public sector policy
*
Foreign investment
*
Foreign technology
agreements.
·
Industrial licensing will
be abolished for all projects except for schedule a industries (18 industries).
·
At present there are only 5 industries which
carry the burden of compulsory licensing.
*
Aerospace and defense
related electronics
*
Gun powder, industrial
explosives and detonating fuse
*
Dangerous chemicals
*
Tobacco, cigarette related
products.
*
Alcoholic drinks.
·
The policy provider for
automatic clearance for import of capital goods in cases where the foreign
exchange availability is ensured through foreign equity.
·
As per the MRTP Act, the
policy states that the pre - entry scrutiny of investment decisions by the so
called MRTP companies will no longer be required.
·
The policy intends to
scrap the asset limit of the MRTP companies.
·
De reservation of
industries:
·
The industries which were
reserved for the central government by the IPR, 1956 were cut down to only
eight. At present there are only two industries which are fully or partially
reserved for that.
*
Atomic energy and nuclear
research and other related activities
*
Railways [Many of the
functions related to the railways cannot the sector as a fault fledged railway
service provider.]
·
In order to invite foreign
investment in high priority industries requiring large investments and advanced
technology it has been decided to provide approval for direct foreign
investment up to 51 p.c. (percent) foreign equity in such industries
·
The policy provides that
in locations other than cities of population of more than one million, there
will be no requirement for obtaining industrial approvals except industries
subject to compulsory licensing.
·
This new policy has been
hailed as a “landmark” in the opening up of the Indian economy. This policy is
a great leap towards privatization.
·
Competition among firms is
the essence of the new industrial policy.
·
In order to improve
competition and thus contain the distortions caused by monopoly power, the
competition act, 2002 was passed in December 2002.