The document discusses India's Industrial Development and Regulation Act of 1951 and the license raj system it established. The act defined what constituted an industrial undertaking and applied to manufacturing industries. It led to a period of widespread government control over the economy from the 1950s to 1980s, where the public sector dominated and licenses were required not just for starting industries but also for production amounts and prices (restrictive). After economic reforms began in 1991, most industries were liberalized, though atomic energy and railways remain reserved for the public sector and some industries still require licenses (reformative, creative).

1. INDUSTRIAL DEVELOPMENT
AND REGULATION ACT,
1951
LICENSING SYSTEM
AN INTRODUCTION AND THEIR PROVISIONS

2. INTRODUCTION OF THE INDUSTRIAL
DEVELOPMENT AND REGULATION ACT, 1951
The industrial (development and regulation) act was passed by the parliament
in October 1951 it has been amended several times, ever since. This act
extends to the whole of India. The provision of this act apply to all those
industrial undertakings which are defined as such under this act.
Thus, the act defines an industrial which are included in the first schedule of
the act. For the purpose of this act, a factory is the place where manufacturing
process is being carried on:

3. With the aid of power, provided that 50 percent or, more workers are working or were working one
any day of he preceding twelve months or
Without the aid of power, provided that 200 or more workers are working or were working on any
day of the preceding twelve months.
Trading houses and financial institutions are outside the purview of this act. It applies only to
manufacturing undertakings.

4. INDUSTRIALACT RELATED PROVISIONS
RESTRICTIVE
PROVISION
REFORMATIVE PROVISION
CREATIVE PROVISION

5. INDIA BEFORE 1991: STORIES OF LIFE
UNDER THE LICENSE RAJ
On 15 August 1947, when India achieved independence, the country was grappling with problems
of widespread poverty and crisis in agriculture as well as industries. The first five years plan was
launched in 1951 which mainly focused on the development of the primary sector.
First years later, on 14 May1956, the second five years plan famously known as the
MAHALANOBIS MODEL was announced. The emphasis of this plan was on government outlined
the central role of government when he said, “the public sector must grow not only absolutely but
also relatively to the private sector.”

7. Thus started the license- permit- Quota raj in India wherein government control was so strong that it
not only decided which company would produce what but also the amount of production as well as
the price of commodities. With the nationalization of banks in 1969 and the monopolies and
restrictive trade practices( MRTP) ACT of 1970 the license raj was characterized by scarcity of
resources. The choices people had available to them in their day-to-day life were very limited.
So we can say that license raj created a ‘scarcity economy’ and this scarcity also applied to foreign
reserves since we practiced ‘swadeshi’.

8. On 24 July 1991, the finance minister of India, Dr. Manmohan Singh presented the budget. He
ended his speech with the historic lines: “ no power on earth can stop an idea whose time has
come.” There are many factors that led us to these achievement, but no one can dispute the fact
that fact that economic reforms , which started in 1991 are one of the most important factors in the
present success.

9. INDUSTRIES RESERVED FOR THE PUBLIC
SECTOR
Currently, atomic energy and railway transport are the only industries reserved for the public sector.
Although post-1991, the Indian government has liberalized most industries, if it subsequently
reserves any industry for the public sector, a business entering such industry would require an
industrial license.
In India, industrial licenses are regulated by the IRDA act, 1951 and are approved by the secretarial
of industrial assistance(SIA) on the recommendation of the licensing committee. The provision of
the act restrict a licensed industrial undertaking from manufacturing a new article unless the license
has been renewed or a new license has been obtained to include the new article.

10. LICENSE REGISTRATION FOR INDUSTRIES
The application for registration must be made to the SIA, department of industrial policy and
promotion (DIPP) along with a fee. The government issues the certificate only after due
consideration. Once the license is obtained, an industrial undertakings is eligible for the allotment of
controlled commodities and for the issuance of an import license for goods required for its
construction and operation.

11. LOCATIONAL RESTRICTIONS FOR
INDUSTRIES IN INDIA
Under this provision, industries located within 25 kilometers of the periphery of cities having a
population of at least one million, must obtain an industrial license from the federal government.
This locational restriction does not apply in the following cases:
---industries manufacturing electronics, computer software and printing or any other industry that
many be classified as a ‘non-polluting industry’ or
---industries located in an area designated as an industrial area before July 25, 1991.
The location of industrial units is subject to appropriate local zoning, land use regulations as well as
environment regulations in order to maintain ecological discipline.

12. INDUSTRIES SUBJECT TO COMPULSORY
LICENSING IN INDIA
And the industries are:
 Distillation and brewing of alcoholic drinks,
 Cigars and cigarettes of tobacco and manufactured tobacco substitutes
 Electronics and aerospace and defense equipment
 Industrial explosives including detonating fuses, safety fuses, gun powder, nitrocellulose and
matches and
 Hazardous chemicals including items hazardous to human safety and health and thus fall for
mandatory licensing.

13. THANK
YOU