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PRESENTATIO
N
ON
INDUSTRIAL
POLICY, 1991BY: YAMAN
KAUSHIK
SYNOPSIS
•MEANING: INDUSTRIAL POLICY
•OBJECTIVES OF NEW INDUSTRIAL POLICY 1991
•FEATURES OF NIP 1991
•CRITICAL EVALUATION ...
MEANING: INDUSTRIAL POLICY
Industrial policy means rules, regulations ,
principles , policies , and procedures laid down
b...
OBJECTIVES OF INDUSTRIAL POLICY
Accelerating the overall rate of
growth through industrialization.
Expanding the industria...
OBJECTIVES OF NEW INDUSTRIAL POLICY
Attainment of
international
competitiveness.
Development of
backward areas.
Encouragin...
FEATURES OF NIP
• DE-RESERVATION OF PUBLIC SECTOR: THE NUMBER OF INDUSTRIES RESERVED FOR
PUBLIC SECTOR WAS REDUCED TO 8 IN...
FEATURES OF NIP,1991 (CONT…..)
• FOREIGN INVESTMENT: APPROVAL WILL BE GIVEN FOR DIRECT FOREIGN
INVESTMENT UP TO 51 PERCENT...
(FEATURES OF NIP,1991 CONT…..)
• PUBLIC SECTOR POLICY : THE PRIORITYAREAS FOR GROWTH
OF PUBLIC ENTERPRISES IN Y: THE FUTUR...
FEATURES OF NIP,1991 (CONT…..)
• PROMOTING SMALL SCALE INDUSTRIES: THE NEW INDUSTRIES POLICY FOR
THE SMALL SECTOR INDUSTRI...
(FEATURES OF NIP,1991 CONT…..)
THE INVESTMENT LIMIT IN ANY PLANT OR INDUSTRY IN A UNIT HAS BEEN
RAISED FROM RS. 5 LAKH TO...
CRITICAL EVALUATION OF NEW
INDUSTRIAL POLICY 1991
• POSITIVE EFFECTS ON THE ECONOMY:
 INCREASE PRODUCTION: FOREIGN INVEST...
[CRITICAL EVALUATION OF NEW
INDUSTRIAL POLICY 1991 CONT…..]
INCREASE EFFICIENCY OF PUBLIC SECTOR: THE REDUCTION
IN NUMBER...
[CRITICAL EVALUATION OF NEW
INDUSTRIAL POLICY 1991 CONT…..]
REDUCE ECONOMIC BURDEN ON GOVERNMENT: AREA OF
PUBLIC SECTOR H...
[CRITICAL EVALUATION OF NEW
INDUSTRIAL POLICY 1991 CONT…..]
GIVE MORE SIGNIFICANCE TO SMALL SCALE
INDUSTRIES: THE NEW IND...
[CRITICAL EVALUATION OF NEW
INDUSTRIAL POLICY 1991 CONT…..]
• MAIN POINTS OF CRITICISM OF NIP 1991:-
LEADS TO MORE CONCEN...
[CRITICAL EVALUATION OF NEW
INDUSTRIAL POLICY 1991 CONT…..]
• LEAD TO EXCESSIVE COMPETITION FOR SMALL SECTOR:
IN NIP, THE ...
[CRITICAL EVALUATION OF NEW
INDUSTRIAL POLICY 1991 CONT…..]
• RAISE THREAT FROM FOREIGN COMPANIES: IN THE NEW
LIBERALIZED ...
[CRITICAL EVALUATION OF NEW
INDUSTRIAL POLICY 1991 CONT…..]
• LEAD TO LITTLE RESEARCH AND DEVELOPMENT: VARIOUS
POLICY PRON...
INDUSTRIAL POLICIES
Industrial
policy
resolution
of 1948
Industrial
policy
resolution
of 1956
Industrial
policy
resolution...
SUMMARY:
oMAJOR FEATURES OF NIP 1991:
1. INDUSTRIAL LICENCING: IT IS NOW COMPULSARY IN ONLY 5
INDUSTRIES- ALCHOHOL, CIGRET...
SUMMARY:
5. SMALL SCALE SECTOR HAS BEEN PROMOTED.
oCRITICAL EVALUATION OF NIP[ 1991
SOME MERITS OF NIP 1991 ARE:
1. INCRE...
SUMMARY:
SOME CRITICISM OF NIP 1991 ARE:
1. IT WILL LEADS TO MORE CONCERNTRATION OF ECONOMIC POWER
2. IT WILL LEAD TO LES...
THANK
YOU
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New industrial policy 1991

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new industrial policy 1991 is about the changes made in the policy in 1991. this policy is devided into two parts 1 is announced on 24 july 1991 which is concernd with the large scale industres including the middle scale and the second part is announced on 6 august 1991 and concerned with small scale sector............

Published in: Economy & Finance
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New industrial policy 1991

  1. 1. PRESENTATIO N ON INDUSTRIAL POLICY, 1991BY: YAMAN KAUSHIK
  2. 2. SYNOPSIS •MEANING: INDUSTRIAL POLICY •OBJECTIVES OF NEW INDUSTRIAL POLICY 1991 •FEATURES OF NIP 1991 •CRITICAL EVALUATION OF INDUSTRIAL POLICIES 1991 •SUMMARY
  3. 3. MEANING: INDUSTRIAL POLICY Industrial policy means rules, regulations , principles , policies , and procedures laid down by government for regulating , developing and controlling industrial undertakings in the country. It prescribes the respective roles of the public, private joint and cooperative sectors for the development of industries. It also indicates the role of the large , medium , and small sector . It incorporates fiscal and monetary policies, tariff policy , labour policy and the government attitude towards foreign capital, and role to be played by multinational corporations in the development of the industrial sector.
  4. 4. OBJECTIVES OF INDUSTRIAL POLICY Accelerating the overall rate of growth through industrialization. Expanding the industrial base in relation to industrialization needs of the country. Generating employment and reducing poverty. Preventing monopolies and concentration of industrial power. Creating competitive conditions and encouraging the growth of entrepreneurship Promoting balanced industrial development. Promoting linkages with others sectors of the economy. Assisting small enterprises Encouraging the growth of industrial research and development
  5. 5. OBJECTIVES OF NEW INDUSTRIAL POLICY Attainment of international competitiveness. Development of backward areas. Encouraging competition within Indian industry. Efficient use of productive resources. Full utilization of plant capacities to generate employment. Revival of weak units.
  6. 6. FEATURES OF NIP • 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, AND (C) SPECIFIED MINERALS. • DE-LICENSING: -THE MOST IMPORTANT FEATURES OF NIP, 1991 WAS THE ABOLITION OF INDUSTRIAL LICENSING OF ALL INDUSTRIES EXCEPT SIX INDUSTRIES. THE SIX INDUSTRIES ARE OF SOCIALAND STRATEGIC CONCERN. THE SIX INDUSTRIES ARE 1. HAZARDOUS CHEMICALS. 2. ALCOHOL 3. CIGARETTES 4. INDUSTRIAL EXPLOSIVES 5. DEFENSE PRODUCTS, AND 6. DRUGS. • DISINVESTMENT OF PUBLIC SECTOR: -THE NIP 1991 PERMITTED DISINVESTMENT OF PUBLIC SECTOR UNITS. DISINVESTMENT IS A PROCESS OF SELLING GOVERNMENT EQUITY IN PSUS IN FAVOUR OF PRIVATE PARTIES. DISINVESTMENTS AIM AT CERTAIN OBJECTIVES. (1) TO PROVIDE BETTER CUSTOMER SERVICE. (2) TO MAKE EFFECTIVE USE OF DISINVESTMENT FUNDS. (3) TO OVERCOME THE PROBLEM OF POLITICAL INTERFERENCE. (4) TO ENABLE THE GOVERNMENT TO CONCENTRATE ON SOCIAL DEVELOPMENT.
  7. 7. FEATURES OF NIP,1991 (CONT…..) • FOREIGN INVESTMENT: APPROVAL WILL BE GIVEN FOR DIRECT FOREIGN INVESTMENT UP TO 51 PERCENT FOREIGN EQUITY IN HIGH PRIORITY INDUSTRIES . THERE SHALL BE NO BOTTLENECKS OF ANY KIND IN THIS PROCESS • FOREIGN TECHNOLOGY AGREEMENTS: AUTOMATIC PERMISSION WILL BE GIVEN FOR FOREIGN TECHNOLOGYAGREEMENTS IN HIGH PRIORITY INDUSTRIES UP TO A LUMP SUM PAYMENT OF RS. 1 CRORE, 5% ROYALTY FOR DOMESTIC SALES AND 8% FOR EXPORTS, SUBJECT TO TOTAL PAYMENT OF 8% OF SALES OVER A 10 YEAR PERIOD FROM DATE OF AGREEMENT OR 7 YEARS FROM COMMENCEMENT OF PRODUCTION. NO PERMISSION WILL BE NECESSARY FOR HIRING OF FOREIGN TECHNICIANS, FOREIGN TESTING OF INDIGENOUSLY DEVELOPED TECHNOLOGIES. • MRTP ACT: EMPHASIS WILL BE PLACED ON CONTROLLING AND REGULATING MONOPOLISTIC, RESTRICTIVE AND UNFAIR TRADE PRACTICES. SIMULTANEOUSLY, THE NEWLY EMPOWERED MRTP COMMISSION WILL BE AUTHORIZED TO INITIATIVE INVESTIGATIONS ON COMPLAINTS RECEIVED FROM INDIVIDUAL CONSUMERS OR CLASSES OF CONSUMERS IN REGARD TO MONOPOLISTIC, RESTRICTIVE AND UNFAIR TRADE PRACTICES.
  8. 8. (FEATURES OF NIP,1991 CONT…..) • PUBLIC SECTOR POLICY : THE PRIORITYAREAS FOR GROWTH OF PUBLIC ENTERPRISES IN Y: THE FUTURE WILL BE THE FOLLOWING: 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. MANUFACTURE OF PRODUCTS WHERE STRATEGIC CONSIDERATIONS PREDOMINATE SUCH AS DEFENSE EQUIPMENT.
  9. 9. FEATURES OF NIP,1991 (CONT…..) • PROMOTING SMALL SCALE INDUSTRIES: THE NEW INDUSTRIES POLICY FOR THE SMALL SECTOR INDUSTRIES WAS ANNOUNCED ON 6TH AUGUST, 1991.THE MOST IMPORTANT FEATURES ARE:  THE NEW POLICY PROVIDES FOR THE SUPPLY OF RAW MATERIALS AND MARKETING FACILITIES TO THE SSI UNITS. AS FOR MARKETING , THE POLICY ENVISAGES MARKET PROMOTION OF THEIR PRODUCTS BE UNDERTAKEN BY CO-OPRATIVES, PUBLIC SECTOR INSTITUTIONS AND OTHER PROFESSIONAL AGENCIES WIDENING AND DEEPENING THE COMPLEMENTARITY IN THE PRODUCTION PROGRAMMES OF LARGE, MEDIUM AND SMALL SECTORS. THIS WILL BE ENSURED THROUGH PRODUCTION OF PARTS , COMPONENTS, ETC. WHICH ARE REQUIRED BY THE LARGE PUBLIC AND PRIVATE INDUSTRIES.
  10. 10. (FEATURES OF NIP,1991 CONT…..) THE INVESTMENT LIMIT IN ANY PLANT OR INDUSTRY IN A UNIT HAS BEEN RAISED FROM RS. 5 LAKH TO RS. 25 LAKH TO PROVIDE FOR THE INCREASE IN THE PRICES OF CAPITAL GOODS SPECIAL MEASURES HAVE BEEN TAKEN FOR HANDLOOM, HANDICRAFTS, KHADI AND VILLAGE INDUSTRIES.
  11. 11. CRITICAL EVALUATION OF NEW INDUSTRIAL POLICY 1991 • POSITIVE EFFECTS ON THE ECONOMY:  INCREASE PRODUCTION: FOREIGN INVESTMENT AND FOREIGN TECHNOLOGYAGREEMENTS ARE DESIGNED TO ATTRACT CAPITAL, TECHNOLOGYAND MANAGERIAL EXPERTISE FROM ABROAD. THIS INFLOW OF FOREIGN INVESTMENT AND BETTER TECHNOLOGY WILL HELP TO RAISE PRODUCTION . THESE RESOURCES WILL BE MORE EFFECTIVELY ALLOCATED SO THAT INDUSTRIAL PRODUCTION WILL INCREASE. INCREASE COMPETITION: EASY ENTRY OF MULTINATIONAL COMPANIES , REMOVAL OF ASSET LIMIT ON MRTP COMPANIES, LIBERAL LICENSING WILL INCREASE COMPETITION I OUR ECONOMY. COMPETITION WILL RESULT IN MORE EFFICIENCY , BETTER QUALITY OF PRODUCTS AND LOWER PRICES.
  12. 12. [CRITICAL EVALUATION OF NEW INDUSTRIAL POLICY 1991 CONT…..] INCREASE EFFICIENCY OF PUBLIC SECTOR: THE REDUCTION IN NUMBER OF INDUSTRIES RESERVED FOR PUBLIC SECTOR FROM 17 TO 3 AND THAT THREAT OF CLOSURE OF SICK PUBLIC SECTOR ENTERPRISES WOULD RESULT BIN RAISE IN THEIR EFFICIENCY. MEASURES LIKE PROFESSIONAL MANAGEMENT AND GREATER AUTONOMYARE EXPECTED TO IMPROVE PERFORMANCE OF PUBLIC SECTOR ENTERPRISES. INCREASE EXPORTS: IN THE NIP 191, EXPORT-ORIENTED UNITS ARE GIVEN VARIOUS CONCESSIONS LIKE LIBERAL LOANS , SETTING UP OF SPECIAL ECONOMIC ZONE, LIBERAL IMPORT OF CAPITAL GOODS , RAW MATERIALS, TECHNOLOGY, ETC. ALL THIS WILL HELP TO ACHIEVE BALANCED REGIONAL DEVELOPMENT.
  13. 13. [CRITICAL EVALUATION OF NEW INDUSTRIAL POLICY 1991 CONT…..] REDUCE ECONOMIC BURDEN ON GOVERNMENT: AREA OF PUBLIC SECTOR HAS BEEN REDUCED DRASTICALLY. NOW ONLY 3 AREAS ARE RESERVED FOR PUBLIC SECTOR . ALL OTHER AREAS HAVE BEEN OPENED FOR PRIVATE SECTOR. SICK UNITS ARE EITHER CLOSED OR OPEN TO PRIVATE SECTOR S. ALL THIS HAS REDUCED THE ECONOMIC BURDEN ON THE GOVERNMENT. BRING BALANCED REGIONAL DEVELOPMENT: IN NIP 1991, SPECIAL PROVISIONS HAVE BEEN MADE TO SET UP BIG INDUSTRIES IN BACKWARD REGIONS. INDUSTRIES LOCATED IN BACKWARD REGIONS ARE GIVEN VARIOUS INCENTIVES. ALL THIS WILL HELP TO ACHIEVE BALANCED REGIONAL DEVELOPMENT.
  14. 14. [CRITICAL EVALUATION OF NEW INDUSTRIAL POLICY 1991 CONT…..] GIVE MORE SIGNIFICANCE TO SMALL SCALE INDUSTRIES: THE NEW INDUSTRIAL POLICY PROVIDED FOR THE FIRST TIME A SEPARATE STRATEGY FOR THE GROWTH OF SMALL-SCALE AND COTTAGE INDUSTRIES. THIS STRATEGY INCORPORATES SEVERAL MEASURES FOR PROMOTING AND STRENGTHENING SMALL, TINY, VILLAGE ENTERPRISES. NIP 1991, WILL PROVIDE ENHANCED SUPPORT TO THE SMALL SCALE SECTORS SO THAT THEY FLOURISH IN AN ENVIRONMENT OF ECONOMIC EFFICIENCY AND CONTINUOUS TECHNOLOGICAL UP GRADATION.
  15. 15. [CRITICAL EVALUATION OF NEW INDUSTRIAL POLICY 1991 CONT…..] • MAIN POINTS OF CRITICISM OF NIP 1991:- LEADS TO MORE CONCENTRATION OF ECONOMIC POWER: THE AMENDMENT OF THE MRTP ACT TO REMOVE THE THRESHOLD LIMIT F ASSETS IN RESPECT OF MRTP COMPANIES AND CONFINING ONLY TO THE MALPRACTICES OF THE BUSINESS HOUSES MEANS NO CONCERN FOR THE SIZE OF THE COMPANIES. THIS PROVISION IS COUNTER LEAD TO LESS REGIONAL BALANCE: THE OBJECTIVES OF REDUCING INEQUALITIES IN THE INDUSTRIAL DEVELOPMENT OF DIFFERENT REGIONS OR STATES WILL REMAIN A DISTANT DREAM. THIS IS OBVIOUS FROM THE FACT THAT WHILE LIBERALIZING OF LICENSING PROCEDURES GIVES THE FREEDOM TO SET UP ANY INDUSTRY AND THE LOCATIONAL POLICY SHOWS CONCERN ABOUT THE BIG CITIES (OVER 1 MILLION POPULATION) AND RURAL AND BACKWARD AREAS; IT IS WITHOUT LEAST REGARD FOR THE REGIONAL BALANCES. AS SUCH, THE NIP GOES AGAINST THE OBJECTIVES OF ENSURING REGIONAL BALANCE.
  16. 16. [CRITICAL EVALUATION OF NEW INDUSTRIAL POLICY 1991 CONT…..] • LEAD TO EXCESSIVE COMPETITION FOR SMALL SECTOR: IN NIP, THE MARKET FORCES FOSTERED BY DE LICENSING, UNRESTRICTED GROWTH OF MONOPOLIES, EASY ENTRY OF FOREIGN DIRECT INVESTMENT AND TECHNOLOGY ETC., IS VERY LIKELY TO AFFECT ADVERSELY. THE SMALL SECTOR. THE LARGE SECTOR, BY TURNING SMALL UNITS , MAY CORNER MOST OF THE BENEFITS. • INCREASE UNEMPLOYMENT: RATHER THAN INCREASING EMPLOYMENT, THE NIP MAY ACTUALLY WORSEN IT.FOREIGN INVESTMENT ALONG WITH FOREIGN TECHNOLOGIES THAT THE NIP ALLOWS FREELY, CAN DO LITTLE TO RAISE EMPLOYMENT BECAUSE THESE ARE CAPITAL- INTENSIVE IN NATURE
  17. 17. [CRITICAL EVALUATION OF NEW INDUSTRIAL POLICY 1991 CONT…..] • RAISE THREAT FROM FOREIGN COMPANIES: IN THE NEW LIBERALIZED SCENARIO THAT HAS EMERGED IN THE P[OST-1991 REFORM PHASE, INDIAN BUSINESSMAN ARE FACING UNEQUAL COMPETITION FROM MNC’S . UNEQUAL COMPETITION IS DUE TO NUMBER OF REASONS : a) INDIAN COMPANIES SUFFERS FROM ‘SIZE DISADVANTAGES’AS THEY ARE VERY SMALL IN COMPARISON OF MNC’S. b) THE COST OF CAPITAL TO INDIAN BUSINESS IS MUCH HIGHER THAN THE MNC. c) THE INDIAN ENTERPRISES ARE VERY WEAK FINANCIALLY IN COMPARISON WITH MNC
  18. 18. [CRITICAL EVALUATION OF NEW INDUSTRIAL POLICY 1991 CONT…..] • LEAD TO LITTLE RESEARCH AND DEVELOPMENT: VARIOUS POLICY PRONOUNCEMENTS OF THE GOVERNMENT IN RECENT YEARS INDICATE THAT IT EXPECTS FOREIGN INVESTMENT TO HELP TECHNOLOGICAL UPGRADATION OF THE INDUSTRIAL SECTOR AND PUSH UP EXPORT EARNING.HOWEVER , THIS FAITH IN FOREIGN INVESTMENT IS MISPLACED. AS POINTED BY H.K. PARANJAPE , NONE OF THE MNC OPERATING IN THIS COUNTRY HAVE ATTEMPTED TO DEVELOP INDIAAS AN IMPORTANT BSE FOR A ISGNIFICANT PART OF ITS WORLD-WIDE RESEARCH AND DEVELOPMENT WORK.
  19. 19. INDUSTRIAL POLICIES Industrial policy resolution of 1948 Industrial policy resolution of 1956 Industrial policy resolution of 1973 Industrial policy resolution of 1977 Industrial policy resolution of 1980 Industrial policy resolution of 1991
  20. 20. SUMMARY: oMAJOR FEATURES OF NIP 1991: 1. INDUSTRIAL LICENCING: IT IS NOW COMPULSARY IN ONLY 5 INDUSTRIES- ALCHOHOL, CIGRETTES, HAZARDOUS CHEMICALS, ELECTRONICS, AEROSCAPE AND DEFENCE EQUIPMENTS. 2. PUBLIC SECTOR POLICY: NOW ONLY 3 INDUSTRIES ARE RESERVED FOR PUBLIC SECTOR-ATOMIC ENERGY, MINERALS SPECIFIED IN THE SCHEDULE OF THE ATOMIC ENERGY (CONTROL OF PRODUCTION AND USE) ORDER 1953, AND RAIL TRANSPORT. 3. MRTP: LIMIT HAS BEEN ABOLISHED. 4. MANY STEPS HAS BEEN ANNOUNCED TO PROMOTE FOREIGN INVESTMENT AND TECHNOLOGY. 100 PERCENT FOREIGN INVESTMENT IS NOW ALLOWED. FDI IS PROHIBITED ONLY IN THE FOLLOWING0 SECTORS: (1). RETAIL SECTOR(EXCEPT SINGLE BRAND PRODUCT RETAILING);(2) ATOMIC ENERGY;(#) LOTTERY BUSINESSAND ($) GAMBLING AND BETTING.
  21. 21. SUMMARY: 5. SMALL SCALE SECTOR HAS BEEN PROMOTED. oCRITICAL EVALUATION OF NIP[ 1991 SOME MERITS OF NIP 1991 ARE: 1. INCREASE IN PRODUCTION 2. INCREASE IN COMPETITION 3. INCREASE IN EFFICIENCY OF PUBLIC SECTOR 4. INCREASE IN EXPORTS 5. REDUCTION IN ECONOMIC BURDUN ON GOVERNMENT 6. BALANCED REGIONAL DEVELOPMENT 7. MORE SIGNIFICANCE GIVEN TO SMALL SCALE INDUSTRIES
  22. 22. SUMMARY: SOME CRITICISM OF NIP 1991 ARE: 1. IT WILL LEADS TO MORE CONCERNTRATION OF ECONOMIC POWER 2. IT WILL LEAD TO LESS REGIONAL BALANCE 3. IT WILL LEAD TO EXCESSIVE COMPETITION FOR SMALL SECTOR 4. IT WILL INCREASE UNEMPLOYMENT 5. IT WILL THREAT FROM FOREIGN COMPANIES 6. IT WILL LEAD TO LITTLE RESEARCH AND DEVELOPMENT.
  23. 23. THANK YOU

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