Industrial Policy in India from 1948 -1991

1. INDUSTRIAL POLICIES
A presentation by Avish Shah (A-64), Arpit Kawdia (A-31), Trisha Patel
(A-67), Shital Soni (A-59), Rohan Reshamwala (A-69) and Kushal Karia
(A-63).

2. Industrial Policy | Meaning
 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 co-operative sectors
for the development of industries.
 It also indicates the role of the large, medium
and small scale sector.

3. Industrial Policy | Meaning
 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. Industrial Policy | Objectives
 Industrial policy statements have been announced
from 1948 onwards.
 A number of objectives have been projected by
the Government of India while making industrial
policy declarations.
 Some of the important objectives can be identified
as follows:
1. Achieving a socialistic pattern of society.
2. Preventing undue concentration of economic power.
3. Achieving industrial development.
4. Reducing disparities in regional development.

5. Industrial Policy | Objectives
6. Providing opportunities for gainful employment.
7. Achieving a self-sustained economy.
8. Achieving faster economic growth.
9. Alleviating poverty.
10. Protecting and developing a healthy small- scale
sector.
11. Updating technology and modernization of industry.
12. Liberalization and globalization of economy.

6. Industrial Policy Resolution 1948 (6 April, 1948);
Industrial Policy Resolution (30 April, 1956);
Industrial Policy Feb 2, 1973; Industrial Policy Dec
23, 1977; Industrial Policy Statement of July, 1980;
Industrial Policy, July 24, 1991.
Industrial Policies from 1948
to1991

7. Industrial Policy Resolution 1948 (6
April, 1948)
 The Government of India announced its first
industrial policy resolution on 6 April,1948.
 The policy resolution laid stress on the role of
the state in the development of industry.
 The industrial activities were divided into four
broad areas:
1. Items under central government control –
Manufacture of arms and ammunition, The
production and control of atomic
energy, Ownership and management of railway
transport, etc.

8. Industrial Policy Resolution 1948 (6
April, 1948)
2. Items under the state government control –
Coal, Iron and Steel, Aircraft manufacture,
Shipbuilding, Manufacture of telephone,
telegraph and wireless apparatus, excluding
radio receiving sets, Mineral oils, etc.
3. Items of basic importance (planned & regulated
by central government) –
Salt, Automobiles and Tractors, Electric
Engineering, Other Heavy Machinery, Machine
Tools, Heavy Chemicals, Fertilizers and
Pharmaceuticals, Power, Cotton and Woollen
Textiles, Cement, Sugar, Paper and Newsprint,
etc.

9. Industrial Policy Resolution 1948 (6
April, 1948)
4. Items for Private Sector –
The rest of the industrial field will be open to
private enterprise.
 It also emphasised on securing a continuous
increase in production and its equitable
distribution.
 Importance was given to small scale and
cottage industries.

10. Industrial Policy Resolution (30
April, 1956)
 Industrial Policy Resolution (30 April, 1956)
was also regarded as the “Economic
Constitution of India”.
 Major Objectives of Industrial Policy
Resolution (30 April, 1956) are as follows:
1. Improving living standards and working
conditions for the mass of the people.
2. To reduce disparities in income and wealth.
3. To prevent private monopolies and
concentration of economic power.

11. Industrial Policy Resolution (30
April, 1956)
4. Development of transport facilities.
5. The State will progressively assume a
predominant and direct responsibility for setting
up new industrial undertakings and for
developing transport facilities.
6. Undertake State trading on an increasing scale.
7. Planned and rapid development.
8. Expand public sector.
9. Disparities in levels of development between
different regions should be progressively
reduced.

12. Industrial Policy Feb 2, 1973
 The Industrial Policy Resolution of 1956 still
remained valid, but certain structural
distortions had crept in the system.
 The new policies were hence directed towards
removing these distortions.
 It provided for a closer interaction between the
agricultural and industrial sectors.
 Accorded the highest priority to the generation
and transmission of power.

13. Industrial Policy Feb 2, 1973
 Special legislation to protect cottage and
household industries was also proposed to be
introduced.
 It was also decided that compulsory export
obligations, merely for ensuring the foreign
exchange balance of the project, would no
longer be insisted upon while approving new
industrial capacity.

14. Industrial Policy Dec 23, 1977
 Industrial Policy Dec 23, 1977 Highlights on
producing inputs needed by a large number of
smaller units and making adequate marketing
arrangements.
 To boost the development of small scale
industries, the investment limit in the case of
tiny units was enhanced to Rs.2 lakh, of a
small scale units to Rs.20 lakh and of
ancillaries to Rs.25 lakh.

15. Industrial Policy Dec 23, 1977
 Industrial processes and technologies aimed
at optimum utilisation of energy or the
exploitation of alternative sources of energy
would be given special assistance, including
finance on concessional terms.

16. Industrial Policy Statement of
July, 1980
 Industrial Policy Statement of July, 1980 was
based on Industrial Policy Resolution (30
April, 1956).
 The major objectives are as follows:
1. Optimum utilisation of installed capacity.
2. Maximum production and achieving higher
productivity.
3. Higher employment generation.
4. Promotion of export-oriented industries.

17. Industrial Policy Statement of July,
1980
5. Consumer protection against high prices and
bad quality.
6. Correction of regional imbalances.
7. Strengthening of the agricultural base through
agro based industries and promotion of
optimum inter-sectoral relationship.

18. Industrial Policy, July 24, 1991
 Government is pledged to launching a
reinvigorated struggle for social and economic
justice, to end poverty and unemployment and to
build a modern, democratic, socialist, prosperous
and forward-looking India.
 Such a society can be built if India grows as part
of the world economy and not in isolation.
 While Government will continue to follow the
policy of self-reliance, there would be greater
emphasis placed on building up our ability to pay
for imports through our own foreign exchange
earnings.

19. Industrial Policy, July 24, 1991
 Government is also committed to development
and utilisation of indigenous capabilities in
technology and manufacturing as well as its
upgradation to world standards.
 Government will continue to pursue a sound
policy framework encompassing encouragement
of entrepreneurship, development of indigenous
technology through investment in research and
development, bringing in new
technology, dismantling of the regulatory
system, development of the capital markets and
increasing competitiveness for the benefit of the
common man.

20. Industrial Policy, July 24, 1991
 The spread of industrialisation to backward areas
of the country will be actively promoted through
appropriate incentives, institutions and
infrastructure investments.
 Foreign investment and technology collaboration
will be welcomed to obtain higher technology, to
increase exports and to expand the production
base.
 Labour will be made an equal partner in progress
and prosperity.
 Workers’ participation in management will be
promoted.

21. Industrial Policy, July 24, 1991
 Need to preserve the environment and ensure the
efficient use of available resources.
 Maintain sustained growth in productivity and
gainful employment and attain international
competitiveness.
 In pursuit of the above objectives, Government
have decided to take a series of initiatives in
respect of the policies relating to the following
areas:
1. Industrial Licensing.
2. Foreign Investment.
3. Foreign Technology Agreements.
4. Public Sector Policy.
5. MRTP Act.