Central and state government industrial policies and regulations

Industrial policies and Regulations for entrepreneurship devolopment;

The trem industrial policy refers to the governments policy towards industries-the establishment,functioning,growth and management. The policy will indicate the respective areas of large,medium and small-scale sectors.It also spell of Govt.policy towards foriegn capital,labour,tariff&other related aspects.Naturally the industrial devolopment of a country will be shaped,guided,fostered, reegulated & controlled by its industrial policy.

On 24th july 1991,the Govt.headed by Mr.Narasimha Rao,announced a inndustrial policy.The most important initiative were with respect to virtual scrapping of industrial licensing & registration policies,an end to the monopoly Law& a more welcoming approach to foriegn invt.

Industrial policy & Recent Devolopment

Industrial Licensing Foreign Investment Foreign technology awareness Public sector policy MRTP etc................

1. INDUSTRIAL LICENSING
Industrial licensing in india is a unique instrument of direct control designed to implement a major part of the industrial policy The industrial regulations act 1957 through which the licensing system is operated , in effect empowers the Govt.of license new investment,expansion of licensed units,production of new articles,change of location by the licensed units.

OBJECTIVES OF INDUSTRIAL LICENSING

Planned industrial devolopment through appropriate regulation & controls. Balanced industril growth & devolopment through regulation of proper location of industrial units & to check regional disparities. Ensuring Govt.control over industrial activities in india. Preventing concentration of industries & economic power & monopoly&restrictive industrialpractices.

 Utilizing full capacity of large scale industries. Utilizing appropriate technology.

2.FOREIGN INVESTMENT
Foreign investment with its attendant advantage of technology transfer,marketing,expertice,introduction of modern managerial techniques and export promotion. Industrial policy resolution provides foreign equity upto 51% in high priority industries which include 34 board areas like electrical equipment, Food processing & hotel & tourism industry etc.....

For the promotion of export of indian product in world markets,the Govt.would encourage foreign trading companies to assist indian export in export actvities. Approvel would be given for FDI upto 51% of foreign equity in high priority industries.

 While the import of components,raw materials and intermediate goods,and payment of know how fees and regularities would be governed by the general policy applicable to other domestic units,the payment of devidents would be monitered through Reserve Bank of India to ensure that outflows an account of devidend payments are balanced by Export earnings over a period of time.

3.FOREIGN TECHNOLOGY AGREEMENTS

Foreign technology collaborations are permitted either through the automatic route under delegate powers exercised by RBI. Automatic Approvel RBI, through its regional offices,accords automatic approvel to all industries for foriegn technology collaboration agreements. Lump sum payments not exceeding us $2 million

 Royalty payable being limited to 5% for domestic sales & 8% to export,subject to a total payments of 8% on sales over 10yrs period. Period for payment of royalty not exceeding 7yrs from the date of commencement of commercial production or 10yrs from the date of agreement. Payments of royalty upto 2% for export and 1% for domestic sales is allowed under the automatic route on use of trademarks & brand names for foreign collabarators without technology.

GOVT.APPROVAL
Proposals attracting compulsory licensing. Items of manufacture reserved for the small scale sectors. Proposals improving any previous I V or Technology transfer/trademark agreement in the same or allied field in india.They defined of same&allied field would be as per 4 digit NIC 1987 code & 3 digits NIC 1987 code. Extension of foreign technology collaboration agreement. Proposals not meeting any ornall of the parameters for automatic approval.

4.PUBLIC SECTOR POLICY

Industrial policy of 1956,public sector was paying a strategic role in indian economy.There was enjoying a preferential treatment from the govt.The 1956 policy reserved 17 industries for the publi sector but in 1991 policy reduced this number to 8,future refused to 2. The perfomance of public setor was far from satisfactory most PSUs posted losses.Even companies like SAIL,which enjoyed high demand posted loss year.

Memorandum of Understanding
Memorandum of understanding were signed with PSU more autonomy accountability to PSUs.It was started in 198788 with four public sector.presently more than 100 psus covered by MOU. BIFR-Board of Industrial and Financial Reconstruction. Disinvestment & privatization.

5.MONOPOLICIES & RESTRICTIVE TRADE PRACTICES ACT(MRTP ACT)

MRTP act will be reconstructed by eliminating the requirment for prior govt.approvel for expansion for present undertakings and the establishment new unertakings.The provisions relating to major,amalgamation & take-over will new undertakings.

Promotional schemes provided by Govt;

Govt. Announced various schemes & benefits for promoting entrepreneurship 1. TAX HOLIDAY Under the sec 80J of income tax act 1961,new industrial undertakings,include SSI,are exempted from the payments of income tax on their profits subject to maximum of 6% PA. Tax excemption allowed for 5yrs from commencement of production

 Units should not have been formed by the splitting or re-constitution of existing unit. Unit should employ 10 or more workers in manufacturing process with power or atleast 20 workers. 2.Depreciation Under sec.32 Income Tax act,1961 SSI,deduction on depreciation account on block of asset at prescribed rate. In SSI,deduction from actual cost of plant & machinery allowed to max. Of RS20 dep. Calculated by means of diminishing balance is calculated on its written down value.

3. Rehabilitation allowances SSI under sec 33-B Income Tax act of 1961, Flood,typhoon,cyclone,eaarthquake etc... Civil disturbance Accidental fire 4. Investment allowances It was introduced in 1976 to replace the initial depreciation allowances the invst.allowances under the sections 31A of income tax act 1961,25% of cost of acquistion of new plant

SSI avail of invst.allowances provided it has put to use of machinery or plant either in year of installation. 5.Expenditure on specific research; under sec 35 income tax act 1961 following deductions in respect of expenditure on scientific research. Any revenue expenditure incurred on scientific resarch related to business of an assess in previous year. Any sum paid to a scientiific research association or a university, college institution or to public company which has its object undertaking of a scientific research. Any capital expenditure incurred on scientific research related to the business of the assess subject to the provision of sec 32(2) of income tax act 1961.