INDUSTRIAL POLICY IN INDIA by : DR. T.K. JAIN AFTERSCHO ☺ OL centre for social entrepreneurship sivakamu veterinary hospital road bikaner 334001 rajasthan, india www.afterschoool.tk mobile : 91+9414430763
WHAT IS INDUSTRIAL POLICY ? The overall policy framework by the government towards industry. The Industrial policies were announced in 1948, 56, & 91. The basic structure of today is that of 1956 and 1991. It defines the scope of industries an the level of involvement of the government in industrial regulation and promotion.
What is an industry ? Section 3(d) of I.D.R. Act defines industrial undertaking to include any undertaking pertaining to a scheduled industry carried on in one or more factories by any person or authority including Government. What is not a factory : where the number of workers employed is less than 50 where power is used or, less than 100 where no power is used, it would not be considered to be factory under the Act and consequently, it would not be an ‘industrial undertaking’ for the purposes of this Act. Though the word ‘undertaking’ is not separately defined in the Act, the basic feature expected to be present to constitute an undertaking is the existence of a factory as defined in the Act where some manufacturing process is carried on.
Owner The term owner under Section 3(f) of IDRA has been defined to mean the person who, or the authority which, has the ultimate control over the affairs of the undertaking and where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent shall be deemed to be the owner of the undertaking. He has the responsiblity to obtain licence and take permission from the government.
Set up under IDRA There was schedule I to IDRA, which contained list of industries for which prior licence was necessary. Every indutrial undertaking had to take prior licence and get itself registered. Small scale industries and anciliary industry were exempted. There was a development council and an advisory council to advise the government.
What is small scale industry ? When investment in plant and machinary is less than 5 crore rupees (earlier this limit was Rs. 1 crore), it is called small scale industry. It can be set up by registration with DIC (district industry centre)
What is ancillary industry ? ? These units are to help large industry. They make spare parts / components for large industry. They are located near large industries. There is also investment limit for ancilliary industry. Example of ancilliary industry : companies which make steerings, spare parts for Automobile companies.
Location of industry Industrial undertakings are free to select the location of a project. However, in the case of cities with population of more than one million (as per the 1991 census), the proposed location should be at least 25 KM away from the Standard Urban Area limits
Environmental clearances Industries have to obtain Statutory clearances relating to Pollution Control and Environment for setting up an industrial project and expansion/ modernisation of existing projects. Environment Protection Act, 1986 has listed 32 projects for which these clearances are compulsory.
Micro and small companies Micro means investment upto 25 lakhs in plant and machinery. Now MSME act is there under which large companies have to make timely payments to MSME (micro,small,medium enterprises). Section 20 of IRDA asks the State Government to establish by notification, one or more Micro and Small Enterprises Facilitation Councils
Agriculture industry – export focus 1. A new scheme called the Vishesh Krishi and Gram Udyog Yojna (Special Agricultural and Village Industry Scheme) has been introduced for promoting the export of fruits, vegetables, flowers, minor forest produce, and their value added products and gram Udyog products; 2. Funds have been earmarked under Assistance to States for Infrastructure Development of Exports (ASIDE) for development of Agri Export Zones (AEZ) 3. Capital goods imported under EPCG have been permitted to be installed anywhere in the AEZ; 4. Import of restricted items, such as panels, have been allowed under the various export promotion schemes 5. Import of inputs such as pesticides have been permitted under the Advance Authorisation for agro exports; 6. New towns of export excellence with a threshold limit of Rs 250 crore have been notified.
Handloom Industry Export 1. Specific funds have been earmarked under Market Access Initiatives (MAI)/ Marketing Development Assistance (MDA) Scheme for promoting handloom exports 2. Duty free import entitlement of specified trimmings and embellishments has been fixed as 5% of FOB value of exports during the previous financial year; 3. Duty free import entitlement of hand knotted carpet samples has been fixed as 1% of FOB value of exports during the previous financial year; 4. Duty free import of old pieces of hand knotted carpets on consignment basis for re-export after repair has been permitted 5. New towns of export excellence with a threshold limit of Rs 250 crore have been notified 6. A trade mark for handloom on lines similar to woolmark to be introduced to enable handloom products to develop a niche market with a distinct identity.
Handicraft exports 1. New Handicraft SEZs have been established to procure products from the cottage sector and do the finishing for exports; 2. Duty free import entitlement of trimmings and embellishments has been fixed as 5% of the FOB value of exports during the previous financial year. The entitlement is broad banded, and extends also to merchant exporters tied up with supporting manufacturers; 3. The Handicraft Export Promotion Council has been authorized to import trimmings, embellishments and consumables on behalf of those exporters for whom direct import may not be viable; 4. Specific funds have been earmarked under MAI and MDA Schemes for promoting Handicraft exports; 5. The duty free import of trimmings, embellishments and consumables have been exempted from Countervailing Duties; 6. New towns of export excellence with a reduced threshold limit of Rs 250 crore have been notified.
JEMS AND JEWELLERY EXPORT 1. Import of gold of 8 carat and above has been allowed under the replenishment scheme subject to certain conditions. 2. Duty free import entitlement of consumables for metals other than Gold and Platinum has been fixed as 2% of FOB value of exports during the previous financial year; 3. Duty free import entitlement of commercial samples has been fixed as Rs. 3,00,000; 4. Duty free re-import entitlement for rejected jewellery has been fixed as 2% of the FOB value of exports; 5. Cutting and polishing of gems and jewellery, is treated as manufacturing for the purposes of exemption under Section 10A of the Income Tax Act.
LEATHER GOODS EXPORTS 1. Duty free import entitlement of specified items has been fixed as 5% of FOB value of exports during the preceding financial year; 2. The duty free entitlement for the import of trimmings, embellishments and footwear components for footwear (leather as well as synthetic), gloves, travel bags and handbags has been fixed as 3% of FOB value of exports of the previous financial year. The entitlement also covers packing material, such as printed and non printed shoeboxes, small cartons made of wood, tin or plastic materials for packing footwear; 3. Machinery and equipment for Effluent Treatment Plants have been exempted from basic customs duty; 4. Re-export of unsuitable imported materials such as raw hides and skins and wet blue leathers is permitted; 5. CVD is exempted on specified lining and interlining material; 6. CVD is exempted on raw, tanned and dressed fur skins falling under Chapter 43 of ITC(HS).
What is an SBU? Strategic business unit – a unit which has independent decision making power withing overall corporate strategy of the corporation. It can take strategic decisions like product, market, technology, etc. An SBU is an independent unit within the corporate umbrella.
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