Industrial Policy Faculty – Lovely School Of Business LPU
Learning Outcome… Understanding of… • Concept of Industrial Policy • Main objectives of industrial policy • Role & functions of Department of Industrial policy & promotion • Industrial Policy 1991
Industrial Policy • It covers rules, regulations, principles, policies, & procedures laid down by government for regulating & controlling industrial undertakings in the country. • It prescribes the respective roles of the public, private, joint, cooperative large, medium & small scale sectors for the development of industries.
Industrial Policy Contd... • It incorporates fiscal & monetary policies, tariff policy, labor policy. • It shows the government attitude not only towards external assistance but also toward public & private sectors.
Main Objectives • To maintain a sustained growth in productivity • To enhance gainful employment • To prevent undue concentration of economic power
Main Objectives • To achieve optimal utilization of human resources • To attain international competitiveness and • To transform India into a major partner and player in the global arena
Introduction of DIPP • The Department of Industrial Policy & Promotion was established in 1995 and has been reconstituted in the year 2000 with the merger of the Department of Industrial Development.
Role & Function of DIPP • Encouragement to foreign technology collaborations at enterprise level and formulating policy parameters for the same; • Administration of Industries (Development & Regulation) Act, 1951
Role & Function of DIPP • Formulation of policies relating to Intellectual Property Rights in the fields of Patents, Trademarks, Industrial Designs and Geographical Indications of Goods and administration of regulations, rules made there under
Role & Function of DIPP • Promoting industrial development of industrially backward areas and the North Eastern Region including International Co-operation for industrial partnerships and • Promotion of productivity, quality and technical cooperation.
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 • The New Industrial Policy of 1991
Industrial Policy 1991 • Policy focus is on – • Deregulating Indian industry; • Allowing the industry freedom and flexibility in responding to market forces and • Providing a policy regime that facilitates and fosters growth of Indian industry.
Industrial Policy 1991 • In pursuit of the industrial objectives, Government decided to take a series of initiatives in respect of the policies relating to the following areas: • Industrial Licensing • Foreign Investment • Foreign Technology Agreements • Public Sector Policy • MRTP Act
Industrial Licensing Policy • The Industrial Policy Resolution of 1956 identified the following three categories of industries: • Those that would be reserved for development in public sector. • Those that would be permitted for development through private enterprise with or without State participation. • Those in which investment initiatives would ordinarily emanate from private entrepreneurs.
Industrial Licensing Policy • Industrial Licensing is governed by the Industries (Development & Regulation) Act, 1951. • Industrial licensing was abolished for all industries, except those specified (18 industries), irrespective of levels of investment.
Foreign Investment • Limit on foreign equity holdings raised from 40% to 51% in a wide range of industries • Foreign Equity Proposals need not to be accompanied by Foreign Technology Transfer Agreement • Procedure for FDI streamlined by creating a Foreign Investment Promotion Board to consider individual application case by case
Foreign Technology Agreements • Foreign technology agreements in high-priority industries upto Rs. 1 crore were given automatic permission. • No permission was required for hiring foreign technicians and foreign testing of indigenously developed technologies.
Public Sector Policy • List of industries reserved for the public (Schedule A) reduced from 17 to 8 • List of sector reserved for dominance by public sector (Schedule B) effectively abolished • Disinvestment in selected public sector enterprise to raise finance for development, bring in greater accountability & help create a new culture in their working for improved efficiency
MRTP Act • Removed the threshold limits of assets in respect of MRTP companies and dominant undertakings • Eliminated the requirement of prior approval of Central Government for • Establishment of new undertakings • Expansion of undertakings • Merger, Amalgamation and Takeover • Appointment of Directors under certain circumstances. • The newly empowered MRTP Commission will be authorised to initiative investigations on complaints received from individual consumers or classes of consumers in regard to monopolistic, restrictive and unfair trade practices.