This document summarizes an online lecture on India's industrial policies and structures. It discusses key topics including planning in India's economy, problems in industrial development, classification of industries, historical industrial policies from 1948 to 1991, public and private enterprises, the role of public sector units and their performance issues, the growth of the private sector, the importance of small-scale industries and startups, privatization, and disinvestment in public sector units since 1991.

1. Legal and Business Environment
18MBA24
UNIT-5
INDUSTRIAL POLICIES AND STRUCTURE
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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ONLINE LEARNING SESSION - 7

2. Learning Outcome
 Understanding Planning
 Understanding Problems in Industrial Development
 Learning Classification of Industries
 Understanding Industrial Policies and Strategy
 Learning New Industrial Policy 1991
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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3. Planning
 India is described as a planned economy as it adopted the 5 year Economic
Planning as a means to achieve rapid growth.
 The Planning Commission from 1950 to 2014 formulated twelve five year plans.
 The NITI Aayog, established in 2015, is one of Indian democracy’s youngest
institutions.
 It has been entrusted with the mandate of re-imagining the development
agenda by dismantling old-style central planning. As the Indian economy
rapidly integrated with the global economy contradictions arose between
central planning and increasing private capital flows.
 The NITI Aayog was mandated to foster cooperative federalism, evolve a
national consensus on developmental goals, redefine the reforms agenda, act
as a platform for resolution of cross-sectoral issues between Center and State
Governments, capacity building and to act as a Knowledge and Innovation
hub.
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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4. Problems in Industrial Development
 Inadequate infrastructure
 Restrictive labour laws
 Complicated business environment
 Slow technology adoption
 Low productivity
 Challenges for trade
 Inadequate expenditure on R&D and Innovation
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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5. Classification Of Industries Based On
Ownership:
 (i) Public Sector: These industries are aimed and operated by the government
agencies.
 (ii) Private Sector: These industries are owned and operated by private
entrepreneurs, e.g., TISCO, Bajaj Auto Ltd., Reliance Industries and Dabur
Industries, etc.
 (iii) Joint Sector: These industries are jointly run by the state and individual or a
group of individuals. Oil India Ltd (OIL) is jointly owned by public and private
sectors.
 (iv) Cooperative Sector: These industries are owned and operated by the
producers or suppliers of raw materials, workers or both. They pool in the
resources and share the profits or losses proportionately such as the sugar
industry in Maharashtra, the coir industry in Kerala.
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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6. Industrial Policies
 Industrial policy is a document that sets the tone in implementing,
promoting the regulatory roles of the government. It was an effort to
expand the industrialization and uplift the economy to its deserved heights.
It signified the involvement of Indian government in the development of
industrial sector.
 I. Industrial Policy of 1948
 II. Industrial Policy Resolution, 1956
 III. Indian Policy Statement, 1973
 IV. Indian Policy Statement 1977
 V. Industrial Policy, 1980
 VI. New Industrial Policy 1991
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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7. Industrial Policy of 1948
 The first industrial policy after independence was announced on 6th April
1948.
 The main goal of this policy was to accelerate the industrial development
by introducing a mixed economy where the private and public sector was
accepted as important in the development of the economy.
 Industries with exclusive State Monopoly/Strategic industries
 Industries with Government control
 Industries with Mixed sector
 Industry in the Private sector
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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8. Industrial Policy Resolution, 1956
 This second industrial policy was announced on April 20, 1956, which
replaced the policy of 1948. The features of this policy were:
 A new classification of Industries.
 Non-discriminatory and fair treatment for the private sector. Promotion of
village and small-scale industries.
 To achieve development by removing regional disparity.
 Labour welfare.
 Schedule A industries:
 Schedule B industries:
 Schedule C industries:
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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9. Indian Policy Statement, 1973
 Indian Policy Statement of 1973 identified high priority industries with investment
from large industrial houses and foreign companies were permitted.
 Large industries were permitted to start operations in rural and backward areas
with a view to developing those areas and enabling the growth of small
industries around. And so the basic features of Indian Policy Statement were:
 The policy was directed towards removing the distortions, it provided for closer
interaction between agriculture and industrial sector.
 Priority was given towards generation and transmission of power.
 The list of industries reserved for the small-scale sector was expanded.
 Special legislation was made to protect cottage and household industries were
introduced.
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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10. Indian Policy Statement 1977
 Indian Policy Statement was announced by George Fernandes then union
industry minister of the parliament. The highlights of this policy are:
 Target on the development of small-scale and cottage industries.
 Large-scale sector.
 Restrict the control of big business houses.
 Role of the public sector.
 Revival and rehabilitation of sick units.
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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11. Industrial Policy, 1980
 The Congress government announced this policy on July 23rd, 1980. The
features of this policy are:
 Promotion of balanced growth.
 Extension and simplification of automatic expansion.
 Taking over industrial sick units.
 Regulation and control of unauthorized excess production capabilities
installed for industrial houses.
 Redefining the role of small-scale units.
 Improving the performance of the public sector.
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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12. Industrial Policy 1991
 Industrial policy 1991 set out directions for industrialisation in an economy that
began its journey in liberalisation. It dealt with liberalizing licensing and measures
to encourage foreign investments. A policy for public sector enterprises and the
Monopolies and Restrictive Trade Practices Act were introduced.
 Public sector de-reservation and privatization of public sector through
disinvestment.
 Industrial licensing.
 Amendments to Monopolies and Restrictive Trade Practices (MRTP) Act, 1969.
 Liberalised Foreign Investment Policy.
 Foreign Technology Agreements (FTA).
 Dilution of protection to SSI and emphasis on competitiveness enhancement.
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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13. Industrial Strategy for the future
 Classifying and reclassifying Industries.
 Employment Generation.
 Licensing.
 Expanding role to PSUs.
 Restriction o large business houses.
 Reduction of disparities
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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14. Summary
 Understood Planning
 Understood Problems in Industrial Development
 Learnt Classification of Industries
 Understood Industrial Policies and Strategy
 Learnt New Industrial Policy 1991
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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15. Legal and Business Environment
18MBA24
UNIT-5
INDUSTRIAL POLICIES AND STRUCTURE
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
15
ONLINE LEARNING SESSION - 8

16. Learning Outcome
 Understanding Public and Private Enterprises.
 Understanding PSUs-Objectives, Performance and Shortcomings.
 Learning Private Sector- Growth, Problems and Prospects.
 Understanding SSI- Role in Indian Economy.
 Understanding Startups and their contribution current state in India.
 Learning Privatization- Problems and Prospects.
 Understanding Disinvestments in Indian public sector units since 1991.
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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17. Public and Private Enterprises
 All types of business regardless of its being large or small, manufacturing or
trading, privately or government-owned exists in India and across the globe
that affects a country’s economy. Indian economy is an amalgamation of
both private and government business enterprises, popularly known as the
mixed economy.
 Public Enterprise: The sector or enterprises are the businesses that are
owned and controlled by the government. Here, a company can be
partially or completely managed by the central or state government and
participate in many economic activities of a nation.
 Private Enterprise: The private sector or enterprise are the businesses that
are owned by a private group or an individual. Different types of businesses
under private enterprises are a partnership, sole proprietorship,
cooperative, and company.
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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18. Private Sector Enterprises
 It refers to the business enterprises which are owned, managed and
controlled by an individual or a group of individuals.
 The government cannot interfere in the functions of private enterprises as it
has no control over it.
 It is that type of business units which are carried on with the motive of
earning profits.
 It can be small in size or large in size.
 Example: ICICI Bank Limited, ITC Limited, HDFC Bank Limited, Wipro etc.
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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19. Public Sector Enterprises
 The public sector consists of various organizations owned and managed by
the government.
 These organizations may be either partly or wholly owned by the central or
state government.
 The government can participate in economic activities through these
enterprises of the country.
 The forms of organization which a public enterprise may take are as follows:
 Departmental undertaking
 Statutory corporation
 Government company
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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20. Objectives of Public sector Unit
 To create an industrial base in the country
 To generate a better quality of employment
 To develop basic infrastructure in the country
 To provide resources to the government
 To promote exports and reduce imports
 To reduce inequalities and accelerate the economic growth and
development of a country.
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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21. Performance & Short Comings of the
Public Sector:
 Financial and physical performance
 Non-monetary objectives
 Pricing strategy
 Problems in Planning as well as Construction of Projects
 Underutilization of Capacity
 Problems of Labour, Management and Personnel
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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22. Private Sector and Its Growth
 Industrial undertakings in the private sector have necessarily to fit into the
framework of social as well as economic policy of the state and will be
subject to control and regulation in terms of Industries (Development and
Regulation) Act and other relevant legislation.
 The dominant sector
 Extensive modern industrial sector
 Potentialities due to personal incentive in smaller and cottage industries
 Importance for development
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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23. Problems
 Profit generation is sole motive
• Attention on consumer durable sector
 Declining share of net value added in
total output
 Infrastructural bottlenecks
 Contribution to trade deficit
 Monopoly and concentration of wealth
 Industrial sickness
 Industrial disputes
 Problems of finance and credit
 Threat from global competitions
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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Prospects
• Performance of the corporate
sector
• Private sector corporate giants
(in terms of net sales)
• Private sector corporate giants
(in terms of market
capitalisation)

24. Small-scale Industries (SSI) & Role In
Indian Economy
 Manufacturing Enterprises
 Service Enterprises
 Small Scale Industries Provides Employment
 SSI Facilitates Women Growth
 SSI Brings Balanced Regional Development
 SSI Helps in Mobilization of Local Resources
 SSI Paves for Optimization of Capital
 SSI Promotes Exports
 SSI Complements Large Scale Industries
 SSI Meets Consumer Demands
 SSI Ensures Social Advantage
 Develops Entrepreneurship
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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25. Startups and their current state in India
 Startups, in India as in many other parts of the world, have received increased
attention in recent years.
 Their numbers are on the rise and they are now being widely recognized as
important engines for growth and jobs generation.
 Through innovation and scalable technology, startupss can generate impactful
solutions, and thereby act as vehicles for socio-economic development and
transformation.
 Startups do not exist in a vacuum but are part of a broader business
environment.
 Thus, the growth drivers of the Indian startup ecosystem need to be understood
in the context of various factors: earlier economic reforms and current market
trends, as well as the impact of technological change and changing attitudes
on the part of government, large companies, and society overall.
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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26. 4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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27. Privatization and Problems
 According to the World Bank, privatization “is the transfer of transfer of
ownership of state-owned enterprises (SOEs) to the private sector by sale
(full or partial) of going concerns or by sale of assets following the
liquidation”.
 Ownership to a privileged few
 Labourers would be at the mercy of the owner
 Price and Ignorance factors
 Lack of social responsibility
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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28. Prospects of privatization
 To reduce the burden on government
 To strengthen competition and efficiency
 To fund infrastructure growth
 To improve public finances
 Accountability to shareholders
 To reduce unnecessary interference
 More disciplined labour forces
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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29. Disinvestment In Indian Public Sector
Since 1991
 The term Disinvestment is the opposite of the term Investment. Investment is
acquisition of earning asset with the help of money.
 Interim Budget and Budget Speech, 1991-92:
 Report of Rangarajan Committee on Disinvestment of Shares, 1993
 Divestment Commission Recommendation (February 1997—October 1999):
 Budget Speech, 1998-99
 Strategic and Non-strategic Classification, 1999
 Address by President to Joint Session of Parliament February, 2001
 National Common Minimum Programme (NCMP), 2004
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
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30. Summary
 Understood Public and Private Enterprises.
 Understood PSUs-Objectives, Performance and Shortcomings.
 Learnt Private Sector- Growth, Problems and Prospects.
 Understood SSI- Role in Indian Economy.
 Understood Startups and their contribution current state in India.
 Learnt Privatization- Problems and Prospects.
 Understood Disinvestments in Indian public sector units since 1991.
4/27/2020Prof. Kiran Kumar M., East West Institute of Technology., Dept. of MBA.,
30
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