Understanding of

Concept of Industrial Policy

Main objectives of industrial policy
Role & functions of Department of
Industrial policy & promotion
Industrial Policy 1991

It covers rules, regulations, principles, policies, & procedures

laid down by government for regulating & controlling industrial
undertakings in the country.

It prescribes the respective roles of the public, private, joint,

cooperative large, medium & small scale sectors for the
development of industries.

 It

incorporates fiscal & monetary policies, tariff

policy, labor policy.

It

shows the government attitude not only

towards external assistance but also toward
public & private sectors.

To maintain a sustained growth in productivity

To enhance gainful employment
To prevent undue concentration of economic power
To achieve optimal utilization of human resources
To attain international competitiveness and
To transform India into a major partner and player in the
global arena

The Department of Industrial Policy & Promotion

was established in 1995 and has been
reconstituted in the year 2000 with the merger of
the Department of Industrial Development.

Encouragement to foreign technology collaborations at

enterprise level and formulating policy parameters for
the same;
Administration of Industries (Development &
Regulation) Act, 1951
Formulation of policies relating to Intellectual Property
Rights in the fields of Patents, Trademarks, Industrial
Designs and Geographical Indications of Goods and
administration of regulations, rules made there under

 Promoting

industrial development of industrially

backward areas and the North Eastern Region
including International Co-operation for industrial
partnerships and

Promotion

of productivity, quality and technical

cooperation.

 Industrial

Policy Resolution of 1948

Industrial Policy Resolution of 1956
Industrial Policy Resolution of 1973
Industrial Policy Resolution of 1977
Industrial Policy Resolution of 1980
The New Industrial Policy of 1991

 Policy

focus is on

Deregulating Indian industry;

Allowing the industry freedom and flexibility in
responding to market forces and
Providing a policy regime that facilitates and
fosters growth of Indian industry.

In pursuit of the industrial objectives, Government 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

The Industrial Policy Resolution of 1956 identified the

following three categories of industries:
Those that would be reserved for development in public sector.
Those that would be permitted for development through private
enterprise with or without State participation.
Those in which investment initiatives would ordinarily emanate from
private entrepreneurs.

 Industrial

Licensing is governed by the Industries

(Development & Regulation) Act, 1951.
Industrial licensing was abolished for all
industries, except those specified (18 industries),
irrespective of levels of investment.

Limit on foreign equity holdings raised from 40% to 51% in a

wide range of industries
Foreign Equity Proposals need not to be accompanied by
Foreign Technology Transfer Agreement
Procedure for FDI streamlined by creating a Foreign
Investment Promotion Board to consider individual
application case by case

Foreign technology agreements in high-priority industries

upto Rs. 1 crore were given automatic permission.

No permission was required for hiring foreign technicians and

foreign testing of indigenously developed technologies.

List of industries reserved for the public (Schedule A) reduced

from 17 to 8

List of sector reserved for dominance by public sector

(Schedule B) effectively abolished

Disinvestment in selected public sector enterprise to raise

finance for development, bring in greater accountability & help
create a new culture in their working for improved efficiency

Removed the threshold limits of assets in respect of MRTP companies and

dominant undertakings

Eliminated the requirement of prior approval of Central Government for

Establishment of new undertakings
Expansion of undertakings
Merger, Amalgamation and Takeover
Appointment of Directors under certain circumstances.

The newly empowered MRTP Commission will be authorised to initiate

investigations on complaints received from individual consumers or classes
of consumers in regard to monopolistic, restrictive and unfair trade
practices.