1. Industrial Policy Resolution of 1948 (IPR-1948)
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- This policy laid the foundation for a mixed economy in India, balancing public and private sectors.
- Emphasis on promoting cottage and small-scale industries by giving them priority status.
- Focus on fair wages and social security for workers to ensure harmonious industrial relations.
- Development of infrastructure such as roads, railways, electricity, and irrigation.
Industries Classification under IPR-1948
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2. Industries (Development & Regulation) Act, 1951
Licensing Regime: This act empowered the government to regulate industrial development through licensing, marking the beginning of the ‘license raj’.
Major Controls
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- Licensing
- Allocation of raw materials
- Control over prices
3. Industrial Policy Resolution of 1956 (IPR-1956)
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- It is also referred to as the ‘Bible of State Capitalism’ or “Economic Constitution of India”, this policy emphasized the development of heavy industries and industrialization in backward regions.
- It was based on the Mahalanobis Model of growth, which focussed on heavy industries that would lead to long-term economic growth.
- It aimed to promote regional equality by making it easier to obtain licenses for industrial units in economically backward areas.
4. Industrial Policy Statement of 1969
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- MRTP Act: Introduced the Monopolies and Restrictive Trade Practices (MRTP) Act to prevent concentration of economic power and promote fair competition.
- Dutt Committee: Recommended the MRTP Act.
5. Industrial Policy Statement of 1973
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- Core Industries Identification: Identified six core industries: iron and steel, cement, coal, crude oil, oil refinery, and electricity.
- Public-Private Partnership (PPP): Emphasized the role of PPP in industrial development.
- FERA, 1973: Enacted the Foreign Exchange Regulation Act to regulate foreign investments.
- Foreign Investment: Allowed limited investment by Multinational Corporations (MNCs) in India.
6. Industrial Policy Statement of 1977
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- Focus on Small-Scale Industries: Criticized the 1956 policy and focused on small-scale and tiny industries.
- Tiny Unit Definition: Defined as units with investment in machinery up to ₹1 lakh, located in towns or villages with a population of less than 50,000.
- Interaction Between Industrial and Agricultural Sectors: Promoted close interaction and prioritized power generation and transmission sectors.
7. Industrial Policy Statement of 1980
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- Infrastructure Development: Aimed at raising the pillars of economic infrastructure and promoting competition in the domestic market.
- Relaxation from Licensing: Provided relaxation from licensing to improve the ease of doing business.
- Encouragement of Foreign Investment: Focused on promoting foreign investment and developing an export-based industry.
- Export Promotion: Encouraged exports by improving competitiveness.
Summary of Pre-1991 Policies
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- Protection to Local Industries: Implemented high import tariffs and other restrictions to protect domestic industries.
- Import Substitution Policy: Promoted domestic production of goods that were otherwise imported.
- Control Over Industries: Established a strict licensing regime and regulatory controls over industries.
- Restrictions on Foreign Capital: Limited foreign investments to protect domestic industries.
- Encouragement of Small-Scale and Cottage Industries: Emphasized the development of small-scale and cottage industries to boost local economies.
- Public Sector Growth: Promoted the growth of the public sector to spearhead industrial development.
8. New Industrial Policy (NIP), 1991
The New Industrial Policy (NIP) of 1991 aimed to address the distortions and weaknesses in India’s industrial structure developed over four decades. This policy marked a significant shift from regulation to development.
a) Industrial De-licensing
One of the most important features was the abolition of compulsory industrial licensing for all industries except 18. This step greatly facilitated the smooth setting up of industries by the private sector.
Current Licensing Requirements: Presently, only five industries compulsorily require industrial licensing:
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- Distillation and brewing of alcoholic drinks
- Cigars and cigarettes of tobacco and manufactured tobacco substitutes
- Electronic aerospace and defense equipment of all types
- Industrial explosives, including matchboxes and gunpowder
- Specific hazardous chemicals such as hydrocyanic acid, phosgene, isocyanates, etc.
b) De-reservation of Public Sector
The policy drastically reduced the number of industries reserved for the public sector from 17 to 8. These included arms and ammunition, atomic energy, coal, mineral oils, and mining of certain ores and minerals.
Current Reservations: Only two sectors are now reserved for the public sector:
i. Atomic Energy (Production, separation, or enrichment of special fissionable materials and substances and operation of the facilities)
ii. Railway Operations (excluding construction, operation, and maintenance of the suburban corridors and certain other specified operations through PPP)
c) Promotion of Foreign Investment
The policy promoted foreign investment in both direct and indirect forms. The Foreign Investment Promotion Board (FIPB) was established to facilitate and promote Foreign Direct Investment (FDI).
d) Foreign Technology Agreements
Industries were allowed automatic approvals for technology agreements with foreign counterparts within specified parameters, easing the process of technological upgradation and modernization.
e) Amendments in MRTP Act
The Monopolies and Restrictive Trade Practices (MRTP) Act was amended to ease the requirements for firms with assets above a specified limit, removing the need for prior government approval for investing in de-licensed industries.
Note: The MRTP Act was eventually replaced by the Competition Act, 2002.
f) Dilution of Small-Scale Industry Protections
The protections previously provided to small-scale industries (SSIs) were diluted to enhance their competitiveness in the broader market.
g) Closure of Sick Public Sector Enterprises
The policy focused on closing sick public sector enterprises to increase efficiency and revitalize weak units.
h) Liberalisation, Privatisation, and Globalisation (LPG)
The NIP, 1991, marked the beginning of the LPG strategy, which aimed at liberalizing the economy, privatizing state-owned enterprises, and integrating India’s economy with the global market.
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