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Thursday, July 14, 2011

New Industrial Policy of India



  • After independence, the first Industrial Policy was declared on April 6, 1948 by the Union Industry Minister Mr. Shyama Prasad Mukherjee. This policy established a base for Mixed and Controlled Economy in India and clearly divided the industrial sectors in to private and public sectors.
    Later on, 1948 Industrial Policy was replaced by a new Industrial Policy Resolution declared on April 30, 1956 with the basic objective of establishing ‘Socialistic Pattern of Society’ in the country.
  • Industrial Policy Resolution of 1956 categorized industries which would be the exclusive responsibility of the state or would progressively come under state control. Earmarking the pre – eminent position of the public sector, it envisaged private sector coexisting with the state and thus attempted to give flexibility to the policy framework.
  • Though the Government had declared a number of new industrial policies after 1956, but every new policy accepted the 1956 Industrial Policy Resolution as its base. In June 1991, Narsimha Rao Government took over charge and a wave of reforms and liberalization was observed in the economy. In this new atmosphere of economic reforms, the Government declared broad changes in Industrial Policy on July 24, 1991.
  • The Industrial Policy initiatives undertaken by the Government since July 1991 have been designed to build on the past industrial achievements and to accelerate the process of making Indian industry internationally competitive. It recognizes the strength and maturity of the industry and attempts to provide the competitive stimulus for higher growth.
  • A significant number of industries had earlier been reserved for public sector. Recently, a decision has been taken to open defence industry sector to private sector with foreign direct investment permissible up to 26 percent.
  • Now, the areas reserved for the public sector are Atomic energy, the substances specified in the schedule to the notification of the Government of India in the Department of Atomic Energy dated the 15 March, 1995 and railway transport.
List of Industries Requiring Compulsory Licence :
  • With the introduction of New Industrial Policy in 1991, a substantial program of deregulation has been undertaken. Industrial licensing has been abolished for all items except for a short list of five industries related to security, strategic or environmental concerns. These are :

  • Distillation and brewing of alcoholic drinks.
  • Cigar Cigarettes and other substitutes of prepared tobacco.
  • Electronic, Aerospace and all types of defence equipment.
  • Industrial Explosive, including match boxes.
  • Hazardous chemicals.
Distinction between Cottage, Small and Village Industries
  • In a broad sense, cottage, small and village industries are treated similar but they fundamentally differ from each other.
  • Cottage industry is run by family members on full or part time basis. It possesses negligible capital investment. There is hand made production and no wage earning person is employed in cottage industry.
  • Small industrial units employ wage earning labor and production is done by the use of modern techniques. Capital investment is also there. A few cottage industries which are export – oriented have been included in the category of small sector so that facilities provided to small units may also be given to export – oriented cottage industries.
  • The industries established in rural areas having population below 10,000 and having less than Rupee 15,000 as fixed capital investment per worker will be termed as village industries. KVIC and state village Industries Board provide economic and technical assistance in establishing and operating these industrial units.
India’s Share in Global Trade Up
India has been able to grab a significant portion of the world trade pie with its booming economy and a billion – plus markets, says a report by the World Trade Organization (WTO).
According to the World Trade Statistics report, India’s share in the global trade, including trade in merchandise and services sector has increased from 1.1 percent in 2004 to 1.5 percent in 2006.

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