3. introduction
The term industrial policy (Ip) refers to the govt. policy
towards the development of industries, their working and
management. It is the policy of government intervention
which is sector specific.
It gives preferential treatment to a particular sector over
others. Sectors are recognized by policy makers, which are
worthy of government support and targets are set.
4. Contd…..
Before Ip, laissez fair model of economy was in place. It
literally meant no intervention and it let’s the market of demand
and supply have a free hand – the capitalist mode of economy.
This stayed on till the great depression.
The great depression brought major changes. It rendered
wide range of communities unaffordable to the market and
hence belied excessive faith placed in the free market thereby
portraying market failures.
5. Contd….
The Russian Revolution also contributed greatly to the
demise of the old market system. It brought in a sentimental
wave against concept of free markets.
All these factors brought about the birth of industrial
policy.
6. Objectives
• Rapid and balanced Industrial Development
• Prevention Of Concentration Of Economic Power
• Balanced regional Growth
• To accelerate the rate of economic growth
• To expand the public sector
• Consumer protection
7. Contd….
• To achieve optimal utilization of human resources
• To expand the cottage, village, and small scale
industries
• To enhance gainful employment
• To attain international competitiveness and
• To transform India into a major partner and player
in the global arena.
8. Weapons of industrial policy
• Use of tariffs/ non-tariff barriers
• Subsidies
• Import Substitution
• Reserved Industries
• Licensing Requirements
9. Evolution of Industrial Policy
• 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
• The Industrial Policy of 2010-2015
10. Industrial Policy Resolution of 1948
1. Exclusive govt. monopoly
2. Govt. monopoly for new units
3. Regulation
4. Unregulated private enterprises
11. 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.
Contd….
12. Industrial Policy Resolution of 1956
This policy categorized industries into three Schedules
• Schedule A
• Schedule B
• Schedule C
Efforts were made to encourage small-scale industries and
various proposals were made in the policy resolution
13. Contd….
One of the major objectives of resolution was reduction in
regional inequalities and imbalances. But contrary to this, the
actual operation of this policy resulted in increased regional
inequalities.
In the case of foreign Investment, the policy allowed
foreign capital participation in the Indian Economic
development, provided the major share belong to India.
14. Industrial Policy Resolution of 1973
• Provide for a closer interaction between the
agricultural and industrial sectors
• Identify products to be reserved for the small scale
sector: list of industries exclusively reserved for the
small scale sector expanded from 180 items to more
than 500 items
15. Contd....
• In the areas of price control of agricultural and
industrial products, the prices would be regulated to
ensure an adequate return to the investor
• Priority to the generation and transmission of power.
16. Industrial Policy Resolution of 1977
• Development of small scale sector. Small scale sector
was classified into three categories Viz:
a) Cottage and household industries.
b) Tiny sector with less than 1 lakh investment.
c) Small scale sectors with investment upto 10 lakhs.
.
17. Contd….
• District industrial centres were to setup in
each district to support small scale and cottage
industries.
• Programmes to enlarge the areas of operation of
Khadi and village industries
18. Contd….
• Special arrangements for the application of
technology to improve the productivity
• Large scale sectors should devise programme
for small scale and village industries.
• Framing policies encouraging worker’s
participation in management.
19. Industrial Policy Resolution of 1980
Formulated w.r.t the Industrial Policy Resolution of 1956 to
provide for
• Optimum utilization of installed capacity
• Maximum production and achieving higher productivity;
• Higher employment generation
• Correction of regional imbalances
20. Contd….
• Promotion of export-oriented industries
• Strengthening of the agricultural base through agro
based industries and promotion of optimum inter-
sectoral relationship
• Foreign Investment was allowed with technology
transfer
21. The New Industrial Policy of 1991
• Industrial Licensing Policy
• Policy on Public Sector
• Monopolistic and Restrictive Trade Practice Limit
• Policy on Foreign Investment and Technology
Agreements
• Some of the items reserved for small scale industry
were de reserved.
22. Contd…..
• Abolition of Phased Manufacturing Programs
for New Projects
• Removal of Mandatory Convertible Clauses
• Provision to Small Scale Sectors
• Enhancement of the laborer's conditions
23. Contd….
The major objectives of the new industrial policy
package is to build on the gains already made, correct the
distortions or weaknesses that may have crept in,
maintain a sustained growth in productivity and gainful
employment and to attain international competitiveness.
24. Industrial Policy of 2010
In 2010, the government announced a new 5 year plan policy.
• Increased investment limit
• VAT reimbursement
• Subsidies for Micro and Small Scale Industries
• To Promote Agro-based and Food Processing Industries
• Publicity of Trade Related Intellectual Property Rights
(TRIPR) under WTO
25. merits
• Knowledge spillover
• Protection of Infant Industry
• Coordination of Industries
• Informational Externalities
• Freedom to Entrepreneurs
26. Contd…
• Sped up the industrial growth rate and economic growth
• Changes the center of economic life
• More Employment
• Success in Global Economy
• Less Transportation Costs
27. demerits
• Influenced by Special Interest
• Knowledge Deficit
• Distortions of markets and production patterns
• Reduction in the Expected Foreign Investment
