This document provides an overview of India's industrial regulatory perspective and policies over time. It discusses the importance of industrial policy in guiding a nation's industrial growth. It outlines some of India's major industrial policies from 1948 to 1991, including increasing emphasis on basic industries in 1951-1961, and the revolutionary 1991 policy that liberalized imports, exports, and foreign investment. The roles of public sector enterprises, privatization, and the impact of the political environment on business are also examined at a high level.

1. Industrial Regulatory perspective of
business
• Introduction
• Industrial and Regulatory Perspectives
• Role of government
• Impact of political environment
• Industrial Policy and Performance
• Public sector and Private Sector
• Privatization

2. Introduction
• It is one of the important factor contributing
for GNP. We have various types of
industries like Large, Medium, small and
tiny industries.
• Growth has been slow before 1960’s due
to rule of foreigners.
• It is TATA who started industries in India
and accompanied by Krishnadevaraya-IV

3. Importance of Industrial Policy
• A nations industrial growth pattern gets
guided by the policy I t makes and
implements.
• “Industrial policy of a nation is a document
to guideline the type of growth expected in
a certain period.”
• Usually the industrial policy gets updated
once in 3 to 5 years
• Policies are cover all category of industries
along with foreign capital investment.

4. Continued……
• During 1951-1961 more emphasis was
given to starting of basic industries. Eg-
Bhilai, Durgapur, Rourkela, copper plant at
Udaipur
• Around 1965-1990 many private
entrepreneurs would take up big industries
with the help of skilled and trained
executives. – Bajaj, Modi, Herogroups etc

5. • Government Interface in Business
• Industrial Production Trends
• SMEs Policy and Development
• Incentives for SSI-types, Provisions and
Institutions
• Industrial Sickness
• Role of BIFR(Board of Industrial Finance
and Re-constructions)
• Status of Entrepreneurship in India

6. • IT(Information Technology),
ITES(Information Technology Enabled
Services), and New Business Sector India.

7. Reasons for Policies and changes
in policies
To avoid Monopoly
To have a proper growth(to Avoid uneven
growth)
To Utilize the national resources judiciously
Invest on priority area- To develop
infrastructure
To provide guidelines for importing
machinery, technology, and services to
improve the quiality

8. Continued……..
• To restrict monopoly
• To restrict Unfair trade practices
• To facilitate flow of funds in the areas
where there is more demand
• To have a balanced growth of regions

9. Role of Government in
regulation
To facilitate liberalization policies of the
following area were drastically revised
A) Industrial Licensing
B) Foreign Investment
C) Foreign Technology
D) Public sector policy
E) MRTP Act

10. Continued…..
The present rustications are on pollution
control, safety, and security matters
Now most of the industries whether small or
medium are free from licensing matters
except Atomic industries which are still in
the hands of government.
These measures are taken mainly to
increase entrepreneurial activities and
create healthy competition amongst
various industries.

11. Industrial Licensing Policy
• The industrial polices were formulated in
1951, and it continued till 1991 with series
of changes.
• Till 1991 the polices were more concerned
about guiding the industries about the
directions and focus on industrial growth.
• In 1991 the regulations were made to
liberalize the rules allowing entrepreneurs
to start ay business with domestic or
foreign investor’s contribution

12. Foreign investment
• Foreign collaborations gives easy access
to export market.
• Foreign investment was allowed up to
51%.
• Indian industries were able to develop
expertise skills due to foreign investment
• Indians export share in the world is too
meager, so still we need qualitative and
improved acts for improvement

13. Foreign Technology
• India suffered with outdated technology
due to protected market(between 1950-
1980)
• Liberalization helped in adoption of latest
technology and knowledge.
• Before liberalization technology agreement
was necessary to transfer the technology
• Indian industries had a very less
importance for research and development
this problem was also overcome by

14. Public sector policy
For more than decades PSE played great
role in India. There were 242 big and
medium PSE in India
But after 1980 it was realized that many
PSE suffered from outdated technology,
excess employment, low efficiency,
unionism, poor R and D
Bcz of above factors and gap in the top level
positions many PSE’s were undergoing
loss

15. FERA Act
• Foreign Exchange Regulation Act had to
clear projects involving foreign
participation, plant import, Machineries,
raw material etc.
• BCz of amendments FERA was replaced
by FEMA ie Foreign exchange
Management Act,
• FEMA concentrates mainly on guiding on
type of proportion of foreign investment,
and no of foreign directors in the board etc

16. MRTP Act
• Before amendments govt used to control
monopolies and trade practices through
this act.
• Prior to liberalizations the clearance of
MRTP was very much necessary for
investment decisions.
• This was removed by govt in the industrial
policy act of 1991.

17. Continued…………
• The act came in to force from 1st June,
1970,and has been amended in 1974,
1980, 1984, 1991.
• The act is applicable to whole of India
except Jammu and Kashmir.

18. Regulations..
• As per Section 31 of the MRTP Act, the
owners of one or more undertakings are
including in any monopolistic trade
practices, the central government may
refer the matter to the MRTP commission
for enquiry.
• The central government has authority to
pass an appropriate order for

19. Continued….
• Regulating the production, storage, supply
and distribution
• Fixing standards for the goods used or
produced by the undertaking
• Declaring unlawful

20. Scope and Application of MRTP
• This act applies to whole of India except
the state of Jammu and Kashmir.
• The act shall be applicable to all the
companies registered and operating with
India only under the Companies Act of
1956.

21. Removal of MRTP ACT
• The removal of restriction would result
export and others adversely
• The restriction would not affect the
competition directly or indirectly.
• Some restrictions are necessary to meet
the requirements of the defense.
• Restrictions are necessary to ensure the
maintenance of essential goods and
services.

22. Enforcement
MRTP commission may enquire into any
monopolistic trade practices based on
A) Directions of central government
B) With its own knowledge and information
C) An application made tit by central
government

23. Related issues
• Similar to this we have Restrictive Trade
Practices
• Unfair trade practices.
• In January 2003, MRTP act was replaced
by Compensation act and competition
commission of India was established in
october @))# to implement the provisions
of the act

24. Impact of political environment.
• A system where there is combination of system
of politics and government is called as political
system.
• Indian political system are still evolving and yet
to take a proper shape and it needs to be strong
and reliable.
• The government of developed countries are very
stable and reliable.

25. Definitions…
“The political system can be defined as “ A
political system is a complete set of
institutions, political organizations, interest
groups the relationship between those
institutions and the political norms and
rules that govern their functions”
“ A political system is composed of the
members of a social organization who are
in power”

26. Impact of political environment
on business.
In India we have three wins:
A) Legislative organ
B) Executive Organ
C) Judicial Organ

27. Legislative Organ
• The legislative organ of India is
parliament. This organ makes laws for
governance of the country. It has absolute
control over the country.
• No new taxes can be collected with out the
consent of legislative organ, and no extra
expenditure can be done with out taking
approval

28. Executive Organ
• A council of ministers looks after the
matters of administration in the country.
• The union cabinet formulates the general
policy of the country.
• The cabinet also prepare the drafts of all
important bills and presents if before the
parliament for approval

29. Judicial Organ
• In Indian constitution an independent
judiciary is provided with wide powers.
• In India we have two levels for judiciary, ie
High court and Supreme Court.
• The Supreme court had the highest
powers of law in the country.

30. Industrial Policy
• The Industrial policy can be understood as
the government policy towards industries,
their establishment, function, growth and
management.
• Industrial policy is the most important
document, which indicates the relationship
between government and business.
• This gives clear guidelines for promoting
and regulating industries.

31. Phases of Industrial Policy
• The Industrial olicy can be studied under
phases
• Industrial Policy of 1948
• Industrial Policy of 1956
• Industrial policy of 1991.

32. Industrial policy of 1948
• The thinking of India started with Ago Industries,
which were present to support the other
agricultural production.
• On April 1949 a new Industrial policy was
formulated with the below mentioned objectives
• A) Mixed economy,
• B) Categorizing Industries- State monopoly
enterprises, Government regulated area, Mixed
Category, Privae Enterprises

33. Continued………
• Resolution stresses importance of harmonious
relations between the management and union .
• Fair wages to labor
• Labor participation in management was also
encouraged.
• Foreign capital accepted only Indian’s role and
Importance is protected
• Scope should be given to develop small
industries and cottage industries.
• Indian Constituion also had big impac on
industrial policy

34. Industrial Policy of 1956.
Formulated in 1956, after the first five years
plan. This was also drafted on the bases
of industrial policy of 1948.
At the time many suggestions were
accepted from economists.
PSE’s were considered as the main
industrial units to develop SSI and MSE.

35. Objectives of Industrial policy of
1956.
• To increase Economic condition of the country
• To increase the economic role of PSE’s by
establishing new units in various need based
industries
• To improve employment opportunity, working
conditions and living standards.
• To extend support to private sector enterprises.
• To restrict and control monopoly
• Encourage small enterprise, cottage industries
and rural development oriented industries.

36. Continued
• The policy divided industries into three
categories. But majority was in the hands
of PSE’s, and entrepreneurs have to get
license for opening any industry.
• Schedule A -17 Industries( Atomic energy,
Iron and Steel, Heavy industries, plant and
machineries, coal, lignite Etc)
• In this category government role is very
big and the said sectors started a trend in
the industrial sectors

37. Continued
• Schedule B Industries – 12 Industries were
listed in this schedule. They are not covered in A
Category they are Aluminum, Machine tool,
fertilizers, drugs, synthetic rubber, coke, paper
pulp, road transport and sea transport.
• Schedule C Industries – All other
industries not covered in schedule A and B
will come under this sector
• And this is open to private sectors.

38. Objectives of Industrial Policy
• To provide guidelines for importing foreign capital in
cash and kind and their role
• To clearly divide the areas of product in under public
sector and private sectors
• To help for optimum utilization of resources for optimum
production
• To have a proper balance of industrial growth in the
country
• To prevent and cut the monopoly in any sector
• To solve unemployment problem
• To bring about diversification of industries to avoid
economic growth

39. Advantages of Industrail Policy
A. Initiative to develop basic Industries
B. Steps taken for the spreading of PSE’s at various
places across the country
C. An effort was taken to stop the concentration of
industries in one hand.
D. Many SSI’s came up to help PSE’s
E. Public got the information about the country's growth
bcz of five years plan.
F. Leading Industrialists, economists, and scientists were
involved in policy making.
G. Public safety was ensured by keeping arms ammunition
and atomic energy under exclusive control of
government.

40. Disadvantages of the Policy
• Too much interference of government.
• Bcz of too much of government intervention and
management gave a way for corruption.
• PSE’s were too organization for which Indian
managers were not trained, bcz of this
inefficiency and failure increased.
• Leaders felt that state was concentrating less on
governance and more on industrialization

41. Industrial Policy 1991.
• A revolutionary policy enacted on 24th July 1991
Under the guidance of Finance mister
Mr.Manmohan Singh.
• The policy was under pressure from IMF and
World Bank as India had heavy debt
• The important initiative was to liberalize import
and export by removing MRTP, trade barriers

42. Objectives of the industrial
policy
• Govt is only a facilitator, not the regulator
• Helps to improve technology and competitiveness
• Incentives for backward areas.
• Encourage modernization and technology transfer to
enhance quality and reliability of Indian products.
• Reduce import barriers for all the products
• Allow foreign tie ups and FDI
• To raise Indian business to global market level of
competition.
• Protect interest of employees by strengthening existing
corporates

43. PUBLIC Sector Enterprises
The state owned or Government owned
owned public enterprises are referred as
PSE’s
• A PSE can be defined as “A Public sector
enterprise is an organization which is
owned by public authorities like central
government, state government, local
authorities separately or jointly with 50%
or more capital investment”

44. The definition defines
• The investing authorities control the
management by appointing professionals
to manage the functioning
• The purpose of forming PSE’sis to serve
the society.
• It is accountable to the business

45. Objectives of PSE’s
• To Develop the industry in the country
• To start more of basic industries
• To generate employment opportunity
• To reduce imports by increasing Research and
Development
• To invest in areas where private investment is not there
or less
• Make use of natural resources and develop all regions
• Create a competitive atmosphere among PSE’s
• The are expected to be an ideal employer by giving
facilities to employees like, ideal jobs, housing, health,
social benefits

46. Types of PSE’s
Many of the British units like railways, coal mines,
iron, aluminum, gold, post and telegraph are
converted into public sector
The other area which covers public sectors are:-
Irrigation projects, Power Projects, Railways, post
and telegraphs, coin mint, and departmental
undertakings, banking, insurance and financial
services
Statutory corporations – Air India, Indian airlines,
Food corporation of India,

47. How a public sector was formed
• Many industries which were acquire by central
and state government by it self became a PSE’s.
• By parliament resolution some large banks were
nationalized.
• Some public units automatically transferred from
British government to Indian government, and
they became PSE’s
• During five year plans, government started many
new units for industrialization of the country
• Government acquired some key industries like
petroleum, and petroleum products

48. Advantages of PSE’s
• National Income
• Employment
• Exports
• Regional Income
• SEM’s Growth
• Resource Utilization

49. Limitations of PSE’s
• Many PSE’s were doing good only in the
beginning, later they started incurring loss
due to outdated technology.
• PSE’s failed in updating knowledge, skill,
technology and machinery in the unit.
• PSE’s failed in facing competition from
private enterprises.
• As it was managed by politicians more
importance was not given for development

50. Continued……….
• The guest houses and facilities of PSE’s
have been rapidly being used by politician
and bureaucrats.
• Cost of Manufacturing of the PSE’s were
increasing day by day and their products
were loosing order in the market due to
competition

51. Reasons for failure in PSE’s
• Project Delay
• Too much of interference from political and bureaucratic
• Answering Queries on Unfair trade practices, public
issues, industrial problems etc
• Selection problems in employees, and managers
• Too many unions and unionism
• Too much of in efficiency
• Les utilization capacity
• High costs and less profits – Wrong selection, too much
of employees, unmaintained machineries.

52. Categories of PSE’s
• Profit Making
• Poor Performing
• Loss Making

53. Reforms
• Vision, Mission, and polices of the company were
rewritten
• Change the ownership patters
• introduce corporate culture
• Make changes in composition of board of directors.
• Create accountability
• Upgrade Product, Marketing strategies, and marketing
processes.
• Introduce training and development programmes
• Encourage R&D, Innovations and creativity

54. Privatizations
• Measures for Privatizations
• A) Reducing Subsidies
• B) Stop government investment in PSE’s
• C) Stopping of control and license system
on trade and industry.
• D) To have control on interest rates,
exchange rates
• E) Disinvestment in PSE’s phase wise

55. Process of Disinvestment
UK has set a trend in 1979 in case of
privatization.
During 1980’s to 1990’s many developing
countries and socialist countries started
thinking deliberating and implementing the
process of privatization

56. Reasons for privatization
A) Internal Problems – Financial crunch,
Deficit balance of payment etc
B) External Pressures – Pressure from IMF,
World Bank, etc.,
C) Uncontrollable environmental problems –
Declining industries, competition, market
expectations etc

57. Mode of disinvestment
• Transfer of Ownership
• Management Transfer
• Commercialization

58. Transfer of Ownership
• In medium and small sized organizations it
is possible to go for transfer the ownership
completely. But in large scale enterprises
it is possible go for partial disinvestment
• Methods 1) Total Disinvestment
»2) Partial Disinvestment
»3) Joint Ventures
»4) Liquidation

59. Methods of disinvestment
• Introduction of MF for investment in PSE’s
• Shares were also purchased by Financial
Institutions
• Public issues.

60. Management Transfer
Management transfer is the transfer of
management through contract with out
transferring the ownership.
The methods followed for this type of
privatization is licensing, franchising, and
subcontracting
The work is executed by private owners.

61. Commercialization
• It aims to mobilize efficiency, participative
management, accountability, autonomy and
profit oriented thinking.
• It can also be done by a particular CEO who is
well focused and also to lead others on
commercialized way of working.
• But this is not possible to apply in every unit and
cannot be effective in every unit.

62. Impact of disinvestment
Strategies
• Reservations for PSE’s were reduced
• Import policy were liberalized and duties
drastically reduced .
• Competitive edge of Indian industries has
improved
• The medium and SSI who depend mainly
on SSI’s PSE’s and who could not
modernize started suffering.
• The growth of FDI increased

63. continued
• Joint ventures thus enabling India to
absorb latest technology and able to
produce products of global standards
• Public sector will participate in
infrasatructure development areas where
private enterprises were not entering
• Exiting PSE’s should accept the
competition and improve them self in
commercial way of working

64. Continued….
Since government stops investment in
PSE’s govt can invest on more procesing
areas such as education, health and
infrastructure

65. Disinvestment Ministry
• During National Democratic Alliance a
special ministry called “Ministry for
Disinvestment” was created.
• Popular journalist Mr.Arun Shourie was in
charge of the ministry
• The process of disinvestment started
during July 1991 slowly and picked up
during 1998 onwards.

66. Benefits of Disinvestment
Process
The capable SME’s having growth potential
will grow faster due to mobilized funds
It Is possible to attract public capital by way
of good performance
Government will be able to allocate the
funds to more needy areas if PSE’s.
It becomes mandatory for the PSE’s to
compete with Private enterprises

67. Possibilities of Disinvestment
A) Offer for Sale-A type of measure involves
a total or partial change in equity
ownership through a direct sale of share
by book-building process.
B) Leasing – This involves leasing out to
certain assets of a company to the best
bidders, But the ownership lies with the
governement

68. • Buy-out – This type of disinvestment
involves the sale of assets either to
employees or management who take over
the leadership. It includes handing over of
assets to professionals for restructuring of
the organization.
• Liquidation – This is the last option for
national Democratic Alliance which can be
executed after all the options are
exhausted

69. Sales Modalities
• A. Selection and Role of Intermediaries.
• B. Methods of Sale
• C.Pricing the Sale
• D. Target group for Sale.

70. Disinvestment Plans
A committee of five members were formed on 23rd August
1996 under Mr.G.V.Ramakrishnan
Tasks for the commission-
To plan for long term disinvestment plan.
To decide the extent of disinvestment plan.
To supervise sales process
To monitor disinvestment plan

71. Program for removing PSU’s
• Power of creating joint venture
• Removing investment permission from
public enterprise board.
• Power to fix salaries of top management.
• Give accountability to top management.
• Protecting interest of the employees.

72. Assignment
To write about the arguments for and
against Disinvestment or privitization

73. Trends in Industrial Production
• There is a faster and better development
in industrial production after liberalization.
• The growth directly helps for employment
opportunity.
• There was also development in the area of
quality, quantity and products.
• Indian population got an opportunity to use
imported goods.

74. Advantages of Industrial
Production
A) MNC’s
B) Transfer of technology
C) Products
D) Service Sector
E) Specialization
F) Outsourcing
G) Flow of capital

75. Disadvantages
Unnecessary product
MRTP practice of MNC’s
Un necessary competition
Economic Factors

76. Industrial Diversification
• Diversification is adopted to enjoy the
fruits of synergy and to enjoy the benefits
of expansion activities.
• How expansion:-
• It can be achieved by Adding more
capacity
• Using outside capacity
• Diversifying activites

77. Advantages of Diversification
1. For different products
2. To have units in more than one location
3. To utilize the resources and facilities in a
better way.
4. Types of Diversification – Concentric
Diversification, Conglomerate
diversification.

78. SME policy and Development
• Government of India has announced
special credit facilities to SME.
• Government has encouraged bank and
financial institutions to lend money to SME
segment.

79. SSI and Its incentives
• Financial assistance, tax concessions for backward
areas,
• Subsidy Payments
• Infrastructure facilities
• Lands at concessional rates
• Assistance for modernizing of plant
• Development of testing laboratories in leading industrial
cities and towns to help tiny and small industries.
• Organizing training programs at various places and for
various levels.
• SIDO was established to help SSI’s for export
development activites.

80. Continued
• Help for marketing activities. (National
Small Industries Corporations and Co-
Operatives)
• Bureau of Indian Standards has
established its officers and laboratories to
help SSI’s on small industry service
institutes in important industrial towns.
• SIDBI has also come in to existence to
help SSI’s

81. Continued……..
• SFC, SIDC, and IDB are also there for
giving financial assistance and
rehabilitation loans.
• Taxation Benefits to small unites like
Excise Duty, Sales Tax, Octroi, Income
Tax, electricity tariffs etc.,

82. Industrial Sickness
• An industry is said to be sick if it has at the end
of any accounting year, accumulated losses
equal or exceeding 50% of its peak net worth in
the immediately proceeding five accounting
years.
• RBI “ A sick small scale unit is one which fails to
generate internal surplus on continual basis and
depends for its survival upon frequent infusion of
external funds”

83. Symptoms of sickness
• Frequent closure of unit due to workers strikes, less
workload, powers shutdown and natural causes.
• Frequent break down of machinery.
• Heavy rejection of goods due to quality issues and
blockage of funds.
• Unsold Inventory.
• Decline in the capacity utilization.
• Shortage of funds – inability to pay taxes, provident fund,
rent water etc.
• Frequent turnover of personnel at various levels.
• Cash problems and fraudulent accounts
• Decreasing financial ratios

84. Continued…………
• Low morale of employees
• Reasons for Sickness-
• Internal Reasons:- A) Improper selection of product,
process and layout
• B) Poor quality machinery
• C) Excess investment on building
• D) Underutilization of capacity
• E) Poor skill amongst workmen
• F) Marketing problems
• G) Inability to meet the competition

85. External Reasons for Sickness
• Infrastructure like power, water
communication and location
• Financial issues
• The partiality of big industries
• Low technology.

86. Measures of Industrial
Sickness.
• Internal problems should be solved first
• Additional products, diversification, etc
• Strict documentation of salaries and record maintenance
• A good relation with government officials, banks financial
institutions, vendors.
• Allotment of resources and funds on priority basis
• Avoiding of workers non-co operation.
• The industrial sickness is not resolved should be
informed to Board of Industrial and Financial Corporation
• Any rehabilitation program has to be finalized and
attended at a faster rate
• Auditing of resources put for rehabilitation.

87. Consequences of Industrial
Sickness
• Unemployment
• The loss of jobs will have social causes
• National waste
• Idling of Machinery
• Loss to financial institution
• Employees loose their bargaining powers
• The owners may close their business

88. BIFR
• Role of BIFR: - Board of Industrial Finance and Re-
construction came in to existence with an aim to provide
remedial measure to industrial sickness.
• Financial Bankruptcy
• 1. Creditors issuing law suits.
• 2. Difficult to buy raw materials
• 3. Inability to complete pending orders
• 4. Company failing to pay salary
• 5. Burdon of financial institutions
• 6. Inability to get further finance

89. Entrepreneurship
• Entrepreneurship is a process of crating
something different with value by devoting
the necessary time and effort, assuming
the accompanying financial, psychological
and social risk and receiving the result-
rewards of monitory and personal
satisfaction .

90. ENTREPRENEUR
• Entrepreneur is a person who takes initiative to
bring new ideas, innovation, starts new venture
and acts as an analyst agent for new project
which can create wealth.
• With this activity we can understand that he acts
as a chain agent between society and economic
activity.

91. Entrepreneurship development
in India
• Industrial Period
• Modern Period

92. Importance of Entrepreneurship
in India
• Important for the development of the country
• Higher rate of economic growth by creating values
• Speedy industrial development
• Employment opportunity
• Development of backward and tribal areas
• Sectoral Development
• Improving standard of living
• Socio economic change in the country
• Develop technological change
• Improve business culture
• Improved commercial activities.
• It acts as a change agent

93. It sector in India
• Many services carried out by Indian information
technology business is the form of technology
development, software BPO’s, KPO;s etc.,
• Benefits of BPO:-
• Productivity Improvements
• Expertise knowledge
• Cost effective
• Accountability
• Improved HR
• Concentrate on core business.

94. ITES (Information Technology
Enabled Services)
• Existing Services: Telemarketing, Support work,
Data entry process, payroll management, billing
services, Insurance Processing.
• Emerging Services: Risk Analysis, Market
research, Healthcare etc
• Future expected : R&D Outsourcing, Biotech
Research, Defense related services.