Industrialpolicy fdi

1. TTHHEE NNEEWW IINNDDUUSSTTRRIIAALL
PPOOLLIICCYY

2. Sop 6

3. IInndduussttrriiaall PPoolliiccyy
 IP Indicate the respective roles of the public, private, joint and
cooperative sectors
 It emphasizes upon the small, medium and large scale industries and
underline the national priorities and the economic development
strategy
 It also states Govt's policy towards foreign capital and technology,
labor and tariff policy.
 In fact industrial and economic development to a very extent remain
guided, regulated and fostered by the industrial policy

4. Industrial PPoolliiccyy RReevvoolluuttiioonn
 IInndduussttrriiaall PPoolliiccyy RReessoolluuttiioonn ooff 11994488
 IInndduussttrriiaall PPoolliiccyy RReessoolluuttiioonn ooff 11995566
 IInndduussttrriiaall PPoolliiccyy RReessoolluuttiioonn ooff 11997733
 IInndduussttrriiaall PPoolliiccyy RReessoolluuttiioonn ooff 11997777
 IInndduussttrriiaall PPoolliiccyy RReessoolluuttiioonn ooff 11998800

5. IPR 1948 – Main Features
 This policy contemplated Indian economy a mixed economy reserving a
sphere for the private sector and another for public sector.
 The industries were divided into four categories:
a) The manufacturing of arms and ammunitions, atomic energy and
railways were to be in the exclusive control of Central Government
b) The second category covered coal, iron and steel, aircraft
manufacturing, ship building, manufacturing telephones, telegraphs
and wireless apparatus excluding radio receiving sets and mineral oils.
(New undertakings in these industries could henceforth be undertaken
by the State)

6. c) The third category was made up of industries of such basic
importance that the Central Govt. would feel it necessary to
plan and regulate them – It included basic industries like salt,
automobiles, tractors, prime movers, electric engineering,
heavy machinery, machine tools, heavy chemicals, fertilizers,
electrochemical industries, non ferrous metals, rubber,
manufactures, power and industrial alcohol, cotton and
woolen textiles, cement, sugar, paper and news print, air and
sea transport, minerals and industries relating to defense.
d) A fourth category comprising the remainder of the
industrial field was left open to the private enterprises,
Individuals as well as co-operatives

7. IPR 1956 – Main Objectives
 To accelerate the rate of growth and speed up industrialization
 To develop heavy industries and machine making units
 To expand public sector
 To reduce disparities in income and wealth
 To build up a large growing cooperative sector
 To prevent monopolies and concentration of the wealth and income
in a few hands

8. IPR 1956 –– SSaalliieenntt FFeeaattuurreess
 New classification of industries
-Monopoly of the State
-Mixed sector of public and private enterprise
-Industries left for private sector
 Mutual dependence of public and private sectors
 Assistant and control of private sector
 Encouragement of Small scale and Cottage industries
 Reduction of Regional disparities
 Development of technical and managerial personal
 Industrial Peace

9. IPR 1956 - Critical Assessment
 Socialistic pattern and Mixed economy as expression of industrial
development;
 IPR 1956 stated clearly the inherent right of the State to acquire
any industrial undertaking;
 Economic development was more explicitly equated with State
enterprise

10. IPR -1977
 In December, 1977 the new IPR was announced
 An instrument to do away with the so-called shortcomings of IPR 1956;
 Major Listed shortcomings:
Increased unemployment, increased urban rural disparities, Stagnation of
Investment, Very industrial output and Widespread industrial sickness.

11. IPR - 1980
objectives:
(i) Optimum utilization of installed capacity;
(ii) Maximum production and achieving higher productivity;
(iii) Higher employment generation;
(iv) Correction of regional imbalances;
(v) Strengthening of the agricultural base through agro based
industries and promotion of optimum inter- sectoral relationship;
(vi) Promotion of export-oriented industries;
(vii) Promotion of economic federalism through equitable spread of
investment and dispersal of returns; and
(viii) Consumer protection against high prices and bad quality

12. Why new economic policy
1991?
 Rapid agricultural and industrial development
of India
 Rapid expansion of opportunities for gainful
employment
 Progressive reduction of social and economic
disparities
 Removal of poverty
 Attainment of self-reliance.

13. De-reservation of Public Sector: The number of industries reserved for public sector
was reduced to 8 industries. At present, there are only three industries reserved for
public sector which include.
(a)Atomic energy
(b) Railways
(c)specified Minerals.
De-licensing: -abolition of industrial licensing of all industries except six industries.
The six industries are of social and strategic concern. The six industries are
1. Hazardous Chemicals.
2. Alcohol
3. Cigarettes
4. Industrial Explosives
5. Defense Products,
6. Drug and pharmaceuticals.

14. Disinvestment of public sector: Disinvestment is a process
of selling government equity in PSUs in favors of private
parties.
Foreign technology agreement
 Foreign Investment: Approval will be given for direct
foreign investment up to 51 percent foreign equity in high
priority industries
 MRTP Act: Emphasis will be placed on controlling and
regulating monopolistic, restrictive and unfair trade
practices.

18. Decisions of the Government
 In view of the considerations outlined above the Government decided to
take a series of measures to unshackle the Indian industrial economy from
the cobwebs of unnecessary bureaucratic control.
 These measures complement the other series of measures being taken by
Government in the areas of trade policy, exchange rate management, fiscal
policy, financial sector reform and overall macro economic management.

19. Public Sector
 Public sector investments will be reviewed with a focus on the sector on
high-tech and essential infrastructure. Where as some reservation for the
public sector and private sector selectively. Similarly the public sector will
also be allowed entry in areas not reserved for it.
 Public enterprises which are chronically sick and which are unlikely to be
turned around will, for them formulation of new schemes, be referred to
the Board for Industrial and Financial Reconstruction (BIFR), or other
similar high level institutions created for the up liftment's.
 A social security mechanism created to protect the interests of workers
likely to be affected by such rehabilitation packages.
 Industrial area, industrial estate, semi urban industrial estate / rural
work-shed, industrial growth centre, industrial area established under
joint sector, integrated infrastructure development centre, industrial
park, Special Economic Zone, Various Industrial Area, Industrial park to
growth of the nation.

20.  In order to raise resources and encourage wider public
participation, a part of the government's shareholding in
the public sector would be offered to general public .
 Boards of public sector companies would be made more
professional and given greater powers.
 There will be a greater trust on performance improvement
 Technical expertise on the part of the Government would
be upgraded
 Public enterprises producing a very low rate of return on
the capital invested resulting in a burden rather than
being an asset to the government
 Implementing new technology for sustain good position
with high competitive market .

21. Measures
 Portfolio of public sector investments reviewed with a
view to focus the public sector on strategic, high tech
and essential infrastructure
 Public Enterprises which are chronically sick and which
are unlikely to be turned around referred to the Board
for Industrial and Financial Reconstruction (BIFR) for
revival/rehabilitation schemes
 Part of the government’s shareholdings in the public
sector would be offered to mutual funds, financial
institutions, the general public and workers to raise
resources and encourage wider public participation

22. Essential infrastructure goods and services
Exploration and exploitation of oil and mineral
resources
Technology development and building of
manufacturing capabilities in areas, which are
crucial in the long term development of the
economy and where private sector investment is
inadequate
Installing professionalism in board of public
sector companies
Greater thrust on performance improvement and
greater autonomy to management

23. PROPOSED LIST OF INDUSTRIES TO BE RESERVED
FOR THE PUBLIC SECTOR
 Arms and ammunition and allied items of defense
equipment, Defiance aircraft and warships.
 Atomic Energy.
 Coal and lignite.
 Mineral oils.
 Mining if iron ore, manganese ore, chrome ore, gypsum,
sulphur, gold and diamond.
 Mining of copper, lead, zinc, tin, molybdenum and wolfram.
 Minerals specified in the Schedule to the Atomic Energy
(Control of Production and Use) Order, 1953.
 Railway transport.

24.  Stone crusher / manufacturing of ballast
 Coal and Coke briquette, coal screening
 Lime powder, lime chips, dolomite powder and all types of mineral
powder
 Crushing, grinding and pulverizing of all type of minerals
 Manufacturing of Lime
 Motor cars.
 Paper and Newsprint except biogases-based units.
 Electronic aerospace and defense equipment
 Industrial explosives, including detonating fuse, safety fuse, gun
powder, nitrocellulose and matches.
 Hazardous chemicals
 Drugs and Pharmaceuticals (according to Drug Policy).
 Entertainment electronics (DVD, L CDs, C.D. Players, Tape Recorders).

25. LIST OF INDUSTRIES IN RESPECT OF WHICH INDUSTRIAL
LICENSING WILL BE COMPULSORY
 Coal and Lignite.
 Petroleum (other than crude) and its distillation products.
 Distillation and brewing of alcoholic drinks.
 Sugar.
 Cigars and cigarettes of tobacco and manufactured tobacco
substitute
 Plywood
 Raw hides and skins, leather, chamois leather and patent leather
 Motor cars.
 Paper and Newsprint except biogases-based units.
 Electronic aerospace and defense equipment;
 Hazardous chemicals.
 Drugs and Pharmaceuticals (according to Drug Policy).
 Entertainment electronics

26. Processing of Herbal and medicinal plant
Automobile / auto components
Cycle and product/accessories/spares used for manufacturing of cycle
Plant/machineries/engineering products and its spares
Branded dairy product (Including milk chilling)
Pharmaceutical industry
White goods, electronic and electrical consumer goods
Industries falling under Information technology and IT enabled Services, Bio-
Technology and industries falling under Nano Technology
Industries relating to Seri culture, horti culture, flouri culture, bio fertilizer
culture
Textile Industry (Spinning, weaving, power loom and Fabrics & other process)
Processing industry based on minor forest products

27. IInndduussttrriiaall ppoolliiccyy rreessoolluuttiioonn
The Government of India have given careful thought to the economic
problems facing the country. The nation has now set itself to establish a
social order
 Justice and equality
 Opportunity shall be secured to all the people.
 Provide educational facilities and health services on a wider scale
 Promote a rapid rise in the standard of living of the people
 Exploiting the resources of the country
 Increasing production and offering opportunities to all for employment
Important Issues
 Industrial Licensing
 Location Policy
 Environmental Clearances

28. Location Policy
 Industrial undertakings are free to select the location of a project.
 In the case of cities with population of more than a million (as per the
2001 census), however, the proposed location should be at least 25 KM
away from the Standard Urban Area limits of that city unless, it is to be
located in an area designated as an "industrial area" before the 25th July,
2001.(List of cities with population of 1 million and above is given at
Annexure-V).
 Electronics, Computer software and Printing (and any other industry
which may be notified in future as "non polluting industry) are exempt
from such location restriction. Relaxation in the aforesaid location
restriction is possible if an industrial license is obtained as per the notified
procedure.

29. Environmental Clearances
 Entrepreneurs are required to obtain Statutory clearances
relating to Pollution Control and Environment for setting up
an industrial project.
 A Notification dated issued under The Environment Protection
Act 1986 has listed 29 projects in respect of which
environmental clearance needs to be obtained from the
Ministry of Environment, Government of India.
 This list includes industries like petro-chemical complexes,
petroleum refineries, cement, thermal power plants, bulk
drugs, fertilizers, dyes, paper.
 However if investment is less than Rs. 500 million, such
clearance is not necessary, unless it is for pesticides,
bulk drugs and pharmaceuticals, asbestos and asbestos
products, integrated paint complexes, mining projects,
tourism projects of certain parameters, tarred roads in
Himalayan areas, distilleries, dyes, foundries and
electroplating industries.

30.  Further, any item reserved for the small scale sector with investment of
less than Rs 10 million is also exempted from obtaining environmental
clearance from the Central Government under the Notification.
 Powers have been delegated to the State Governments for grant of
environmental clearance for certain categories of thermal power plants.
 Setting up industries in certain locations considered ecologically fragile
(eg Aravalli Range, coastal areas, Doon valley, Dahanu, etc.) are guided by
separate guidelines issued by the Ministry of Environment of the
Government of India

31. Industrial Licensing Policy
• Role of the government changed from that of only exercising control to one of
providing help and guidance by making essential procedures fully transparent and
by eliminating delays
• Industrial licensing to be abolished for all projects except for a short list of
industries related to securities and strategic concerns
• In projects where imported capital goods are required, automatic clearance will be
given in cases where foreign exchange availability is ensured through foreign
equity
• The exemption from licensing will apply to all substantial expansions of existing
units.

32.  Industrial licensing was abolished for all projects except for a short list of industries
related to security and strategic concerns, social reasons, hazardous chemicals and
overriding environmental reasons, and items of elitist consumption (list attached as
Annex II). Industries reserved for the small scale sector will continue to be so
reserved.
 Areas where security and strategic concerns predominate, will continue to be
reserved for the public sector (list attached as Annex I). Existing units will be
provided a new broad banding facility to enable them to produce any article
without additional investment.
 Appropriate incentives and the design of investments in infrastructure
development will be used to promote the dispersal of industry particularly to
rural and backward areas and to reduce congestion in cities.
 All existing registration schemes (Deli censed Registration, Exempted Industries
Registration, DGTD registration) will be abolished

33.  In locations other than cities of more than 1 million population, there will be
no requirement of obtaining industrial approvals from the Central
Government except for industries subject to compulsory licensing.
 In respect of cities with population greater than 1 million, industries other
than those of a non polluting nature such as electronics, computer software
and printing will be located outside 25 kms. of the periphery, except in prior
designated industrial areas.
 Entrepreneurs will henceforth only be required to file an information
memorandum on new projects and substantial expansions.

34. Foreign Investment
 Aimed at encouraging foreign trading companies to assist Indian
exporters in export activities
 Approval would be given for direct foreign investment up to 51% foreign
equity in high priority industries
 Import of the components, raw materials and intermediate goods, and
payment of know how fees and royalties would be governed by the
general policy applicable to other domestic units.
 the payment of dividends would be monitored through the Reserve
Bank of India
 To provide access to international markets, majority foreign equity
holding up to 51% equity will be allowed for trading companies primarily
engaged in export activities.

35.  A special Empowered Board would be constituted to negotiate with a
number of large international firms and approve direct foreign investment
in select areas. This would be a special programmed to attract substantial
investment that would provide access to high technology and world
markets. The investment programmers of such firms would be considered
in totality, free from pre-determined parameters or procedures.