Industrial Policy

The Industrial Policy Resolution of 1956 is often called the 'Economic Constitution of India' as it laid down the basic framework for the country's industrial development and defined the role of the public sector.

The 1977 policy shift was designed to shift the focus toward small-scale and cottage industries, specifically in rural areas, to promote decentralization.

The 1980 Industrial Policy introduced 'Broad Banding', which allowed companies to manufacture a wider range of products within their existing licensed capacity.

The Mahalanobis Model, which influenced industrial policy, prioritized the rapid development of capital-intensive heavy industries.

The 1991 New Industrial Policy drastically reduced the number of industries requiring government licenses to just 18, which was later reduced further.

The Monopolies and Restrictive Trade Practices (MRTP) Act was replaced by the Competition Act, 2002, to shift the focus from curbing monopolies to promoting competition.

Maharatna status grants greater autonomy to large CPSEs to make investment decisions, facilitating global expansion.

NITI Aayog (National Institution for Transforming India) replaced the Planning Commission to provide a better collaborative approach to industrial and economic policy.

The 1991 Industrial Policy marked the most significant shift towards liberalization by virtually abolishing the licensing system for most industries.

FIPB (Foreign Investment Promotion Board) was the nodal agency responsible for processing FDI proposals until it was abolished in 2017.

The 'Licensing Raj' refers to the complex system of licenses and regulations that governed industrial growth in India between 1950 and 1990.

Atomic energy remains a restricted sector, but it was one of the few strictly kept under public control during the 1991 liberalization.

The 1948 Industrial Policy was the first to explicitly accept the 'Mixed Economy' model, dividing industries between public and private sectors.

Navratna status is given to high-performing public sector enterprises to enhance their efficiency and help them compete globally.

The S.V.S. Raghavan Committee (2000) recommended the repeal of the MRTP Act and the enactment of a new Competition Law.

The 1956 Resolution classified industries into three categories: Schedule A (exclusive state ownership), Schedule B (mixed ownership), and Schedule C (private sector).

Disinvestment refers to the government selling its stake in public sector enterprises to raise funds and increase private sector participation.

The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, redefined the classification of these industries based on investment.

Import substitution is an industrial policy that replaces foreign imports with domestic production to promote self-reliance.

The 1991 policy marked the transition to an open economy through the adoption of Liberalization, Privatization, and Globalization.

The 1956 IPR classified industries into three schedules. Schedule A consisted of 17 industries exclusively reserved for the State.

The 1977 Industrial Policy focused heavily on the promotion of small-scale, tiny, and cottage industries to generate rural employment.

The 1980 policy focused on re-endorsement of capacity and regularization of excess capacity to improve industrial productivity.

Certain industries related to security, strategic concerns, and social reasons (like health) remained under compulsory licensing even after the 1991 reforms.

The MRTP Act (1969) was replaced by the Competition Act (2002) based on recommendations from committees like the Raghavan Committee, which reviewed the MRTP framework.

The 1948 policy, while accepting a 'mixed economy' model, defined the roles of both public and private sectors for the first time.

FERA was aimed at regulating foreign exchange and managing the participation of foreign companies in the Indian industrial landscape.

The Abid Hussain Committee (1997) was specifically tasked with evaluating the SSI sector and suggesting reforms to make them globally competitive.

The IDR Act of 1951 provides the legal framework for the government to regulate, license, and develop industries in India.

Automatic approval meant that companies could enter into technology agreements without the tedious process of prior government permission.

Import substitution aims to replace foreign imports with domestic production by protecting local industries through high tariffs or quotas.

The Rangarajan Committee (1993) provided the blueprint for the disinvestment of government equity in Public Sector Undertakings.

These categories (Mini, Nav, Maha) are hierarchical statuses granted to profitable CPSEs to give them greater operational and financial autonomy.

The J.J. Irani Committee (2005) was constituted to advise on the revision of the Companies Act to modernize corporate regulation.

The 1973 policy introduced the 'Joint Sector' to dilute the concentration of economic power by involving state participation in private enterprise.

The reservation policy aimed to protect small-scale units by forbidding large industries from producing certain items exclusively reserved for the small sector.

While primarily focused on the banking sector, the reforms were a critical component of the 1991 structural adjustment program affecting industrial finance.

Disinvestment refers to the sale of part or all of the equity of a public sector enterprise by the government to private investors or the public.

The MSMED Act of 2006 was brought in to provide a legal framework for the promotion, development, and enhancing the competitiveness of MSMEs.

The 1956 IPR aligned with the Mahalanobis Model, which emphasized the development of heavy and capital-intensive industries in the public sector.

The 1980 policy allowed the re-endorsement of capacity to enable firms to utilize their installed capacity more effectively, helping to overcome stagnation.

The IDRA 1951 provides for the constitution of a Central Advisory Council to advise the government on matters concerning the development and regulation of scheduled industries.

The Tandon Committee was set up by the RBI to suggest norms for bank lending and working capital requirements for industrial units.

De-reservation refers to reducing the number of items exclusively reserved for production by the small-scale/MSME sector to encourage larger scale production and competition.

The Sodhani Committee (1995) recommended the transition from FERA to FEMA to promote orderly development and maintenance of the foreign exchange market in India.

The IDRA, 1951 served as the primary legislative framework for the 'Licensing Raj,' requiring government permission for establishing new industrial units or expanding capacity.

Schedule B industries were those which were to be progressively state-owned but in which private enterprise was expected to supplement the state's efforts.

A key objective of state control was to ensure that the growth of industry did not lead to the concentration of economic power in a few private hands.

The P.R. Nayak Committee was tasked with evaluating the credit needs of the Small Scale Industries (SSI) sector and improving their access to institutional finance.

To modernize industry, the 1991 policy introduced automatic approval for foreign technology agreements in high-priority industries, provided the royalty payments were within prescribed limits.