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Industrial Policy
Faculty – Lovely School Of Business
LPU

Learning Outcome…
Understanding of…
 Concept of Industrial Policy
 Main objectives of industrial policy
 Role & functions of Department of
Industrial policy & promotion
 Industrial Policy 1991

Industrial Policy
 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.

Industrial Policy Contd...
 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.

Main Objectives
 To maintain a sustained growth in
productivity
 To enhance gainful employment
 To prevent undue concentration of
economic power

Main Objectives
 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

Introduction of DIPP
 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.

Role & Function of DIPP
 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 Policies
 Industrial Policy Resolution of 1948
 The New Industrial Policy of 1991

Industrial Policy 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.

Industrial Policy 1991
 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

Industrial Licensing Policy
 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 Policy
 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.

Foreign 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
 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.

Public Sector Policy
 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

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

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