Librilazation Privatization and Globalization

1. Libralisation, Privatisation and
Globalisation

2. Libralisation
• Abolished Industrial licensing for all industries
except for a short list of 18 industries.
• 1999 - Reduced to 6 industries
– drugs and pharmaceuticals, hazardous chemicals,
explosives such as gun powder and detonating
fuses, tobacco products, alcoholic drinks, and
electronic, aerospace and defense equipment.
– 2015 – Drugs and Pharmaceuticals removed

3. Privatisation
• The number of industries reserved for public
sector was reduced from 17 (as per 1956
policy) to only 8 industries
– Arms and Ammunition, Atomic Energy, Coal,
Mineral Oil, Mining of Iron Ore, Manganese Ore,
Gold, Silver, Mining of Copper, Lead, Zinc, Atomic
Minerals and Railways.
• Currently only Atomic Energy and Railways.

4. Globalisation
• Foreign Investment and Capital
– Foreign companies allowed to have majority stake in
India.
– In 47 high priority industries, up to 51% FDI was
allowed. For export trading houses, FDI up to 74% was
allowed.
• Current position: Numerous sectors has 100% FDI
allowed.
– Foreign Investment Promotion Board (FIPB)
established to negotiate with foreign firms and
approve FDI in selected areas.
– Abolished – June 2017.

5. • Foreign Technology Agreements
– Automatic permission was given for foreign
technology agreements in high priority industries
up to a lump sum payment of Rs. 1 crore.
• Board for Industrial and Financial
Reconstruction
– The PSUs which were chronically sick and which
are unlikely to be turned around were to be
referred to BIFR.

6. • March 1991, the BIFR registered 1020 cases and heard 954.
• 175 were dismissed as not maintainable, and
• 124 were approved for the company to try to become net-worth
• 182 revival plans were sanctioned by the board
• 120 cases be wound up.
• 2007, the BIFR had registered 5,471 references
• 1,337 being recommended for winding up and
• 825 revival schemes being sanctioned.
• March 2008 , There were 66 sick Public Sector Enterprises
registered with the board
• Government had approved 34 for revival.

7. • BIFR has had mixed success. Some examples of
successful recoveries are the recovery of Bharat
Heavy Electricals Limited in the 1980s, the
turnaround of Arvind Mills, Scooters India and
the North Eastern Regional Agricultural
Marketing Corporation.
• Attempts to revive failed, at Binny and Co., Calico
Mills, Guest Keen Williams, Hindustan
Cables, Metal Box Company and Wyman Gordon.

8. • MRTP Act
– The MRTP Act amended to remove the threshold
limits of assets in respect of MRTP companies and
dominant undertakings.
– The MRTP Limit for MRTP companies was made
Rs. 100 Crore.
• Currently, MRTP act is replaced by
Competition Act 2002.

9. • Government established National Renewal
Fund (NRF) to provide a safety net to the
labour affected by technological changes.
– This fund was later abolished in 2000.

13. • 2000-08, privatisation in South Asia totalled USD
17.45 b, with the bulk coming from
– India (55%) followed by
– Pakistan (43%),
– Afghanistan, Bangladesh, Nepal and Sri Lanka (2 %).
• Infrastructure – 51 %
• Energy – 26%
• Financial sector – 12%
• Manufacturing and services – 10%
• Primary sector – 2%.
https://www.econstor.eu/bitstream/10419/149156/1/dp10297.pdf

14. Privatization and Disinvestment in India
Source: Dept. of Inv and Pub Asset Mgmt.
3,037.74
1,912.51
0
4,843.10
168.48379.67 910
5,371.11
1,860.141,871.26
5,657.69
3,347.98
15,547.41
2,764.87
1,569.68
0
4,181.39
0
23,552.93
22,144.21
13,894.05
23,956.81
15,819.46
24,348.7123,996.80
46,246.58
0.00
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
30,000.00
35,000.00
40,000.00
45,000.00
50,000.00

15. Comparison under successive
governments
9961
1289
33655
8515
99367
94592
0
20000
40000
60000
80000
100000
120000
1991-1996 1997-1998 1998-2004 2004-2009 2009-2014 2014-
UF (JDU)
0%
NDA (BJP)
52%
UPA (INC)
48%
Source: Dept. of Inv and Pub Asset Mgmt.

16. Recent Disinvestments
NAME OF CPSES
% OF GOIS SHARES
DISINVESTED
METHOD OF
DISINVESTMENT RECEIPTS
GOIS SHAREHOLDING
POST
DISINVESTMENT
HCL .07 Employees OFS 3.73 82.88%
NALCO 9.2125 OFS 1191.73 65.38%
HUDCO 10.193 IPO 1207.35 89.807
Page SUM 0.00
Total SUM 2402.81
http://dipam.gov.in/disinvestments/recent

17. Companies awaiting disinvestment
• Source: Hindustan Times

18. IT and ITES in India

21. Entrepreneurship and Startups

24. • Ease of starting business 151 (2016) – 155
(2017)
• Ease of doing business 131 (2016) – 130
(2017)
• http://www.doingbusiness.org/rankings
(world bank)

25. Startup India Action Plan
• The Action Plan proposes a 19-point action list which includes
– self-certification based compliance to reduce the regulatory burden on
startups,
– a faster exit mechanism,
– tax exemption on profits,
– relaxed norms for public procurement,
– easier patent filing,
– setting up of a INR 100-billion corpus fund that will invest in SEBI
registered VC funds over a period of four years,
– setting up of incubation and R&D centres across the country,
– promotion of biotechnology sector, etc.
• http://startupindia.gov.in/actionplan.php

26. Queries and discussion…