EEP Assignment

Group Members

Anand Sudhakaran

Kiran P V

Namitha Nandu

Vijayaveni A

V Srinivas

Industrial Policy

Industrial policy is a statement which defines the role of government in industrial development.

Evolution of Industrial Policies in India

Industrial Policy Resolution, 1948

In this resolution both public and private sectors were involved towards industrial development.
Accordingly, the industries were divided into four broad categories:

a. Exclusive government monopoly: This includes the manufacture of arms and ammunition,
production and control of atomic energy and the ownership and management of railway
transport.
b. Government monopoly for new units: This category included coal, iron and steel, aircraft
manufacture, ship building, manufacture of telephone, telegraphs and wireless apparatus
and mineral oils.
c. Regulation: This category included industries of such basic importance like machine tools,
chemicals, fertilizers, non-ferrous metals, rubber manufactures, cement, paper, newsprint,
automobiles, electric engineering etc. which the Central Government would feel necessary
to plan and regulate.
d. Unregulated private enterprises: The industries in this category were left open to the private
sector, individual as well as cooperative. The main thrust of the 1948 Industrial Policy was
to lay the foundation of a mixed economy where both the private and public enterprises
were to be given importance and work together to develop economy to accelerate the pace
of industrial development.

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Industrial Policy Resolution, 1956

The Industrial Policy Resolution of 1956 classified the entire industrial sector in three
Schedules:

a. Schedule A: In this category, those industries were included whose future development was
the exclusive responsibility of the State. 17 industries were included in this category. This
included heavy and strategic industries such as defence equipment; Atomic energy, etc.
b. Schedule B: In this category those industries were included which were progressively State-
owned and in which the private enterprises would be expected only to supplement the
efforts of the State. In this category 12 industries were included.
c. Schedule C: All industries not listed in schedule A or B were included in the third category.
These industries were left open to the private sector.
d. Small scale sector: To encourage small scale sector direct subsidy was provided to this
sector. Suitable taxation relief was given to this sector and it was made objective of the
state to protect the small scale sector by advancing technical assistance.
e. Foreign Investment: allowed foreign capital participation in Indian economic development
but the major share should belong to India.

Monopolistic and Restrictive Trade Practices Act, 1969

This act was hallmark of infamous license quota permit system. Companies having more than
specified value of assets needed to take permission/license before any expansion and
commencement of operations. Its objectives were:

a. To prohibit monopolistic and restrictive trade practices (except by government).

b. To prevent concentration of economic power in few hands.
c. To control the Monopolies.
d. To protect consumer Interest.

Industrial Policy Resolution, 1977

This policy resolution was a move away from the Nehruvian- Mahalanobis ideology to
Gandhian ideology of economic development. The policy classified the small sectors into three
categories:

a. Cottage and household industries that provide self-employment on a wide scale.

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b. Tiny sector incorporating investment in industrial unit in machinery and equipment up to
Rs. 1 lakh and situated in towns with a population of less than 50000.
c. Small-scale industries comprising industrial units with an investment of Rs. 10 lakh and in
case of ancillaries with an investment in fixed capital upto Rs. 15 lakh.

Industry Policy Resolution, 1980

The major changes in the Industrial policy resolution, 1980 are:

a. Some of the items reserved for the small scale industry were dereserved.
b. Many units/companies were operating on excess capacities, than allowed by law. These
excess capacities were regularized.
c. Foreign Investment was allowed with technology transfer.
d. Regulations, Licensing, restrictions were eased a bit signalling inclination towards private
sector.

Industrial Policy 1991

Industrial policy 1991 set out directions for industrialisation in an economy that began its
journey in liberalisation. It dealt with liberalising licensing and measures to encourage foreign
investments. A policy for public sector enterprises and the Monopolies and Restrictive Trade
Practices Act were introduced. Elements of Industrial Policy, 1991

The Government decided to take series of initiatives in key areas: (a) Industrial Licensing (b)
Foreign Investment (c) Foreign Technology Agreements (d) Public Sector Policy (e) MRTP
Act