23333571 Industrial and Licensing Policies

8/9/2019 23333571 Industrial and Licensing Policies

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HISTORY OF INDUSTRIAL

POLICY Pandit Jawaharlal Nehru laid the foundation of

modern India.

The goals and objectives set out for the nation by

Pandit Jawaharlal Nehru were:

Rapid Agricultural and industrial development.

Rapid expansion of opportunities for gainful

employment.

Progression reduction of social and economicdisparities.

Removal of poverty and attainment of self

reliance.


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INDUSTRIAL POLICY

Industrial policy refers to government policytowards industries:

Rules, regulations, principles, policy andprocedure.

Reflects the government attitude.

Defines the respective roles of different sectors.

State must play active role in development ofindustries.

Establishment

Functioning Growth

Management


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INDUSTRIAL POLICY OF INDIA

INDUSTRIAL POLICY RESOLUTION, 6 April, 1948

INDUSTRIAL POLICY RESOLUTION, 30th April, 1956

INDUSTRIAL POLICY FEB 2, 1973

INDUSTRIAL POLICY DEC 23, 1977

INDUSTRIAL POLICY STATEMENT OF JULY, 1980

INDUSTRIAL POLICY, JULY 24, 1991


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OBJECTIVES OF INDUSTRIAL

POLICY

Proper flow of scarce resources. Correct the imbalances in the development. Enhancing gainful employment.

Reducing poverty. Prevention of concentration of wealth in few

hands. Achieving economic growth.

Liberalization and globalization. Updating technology and modernization of

industry. Attaining international competitiveness.


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INDUSTRIAL POLICY

RESOLUTION 1948(6 April, 1948)

This industrial policy was designed to

attain the following objectives: To establish a social order.

To promote standard of living

To increase both agriculturaland industrial promotion.

Full employment opportunities.


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`

MAIN FEATURES OF

INDUSTRIAL POLICY,1948 Acceptance of the importance of both private and

public sectors.

Division of industrial sector:

Industries where state had a monopoly.

- arms and ammunition

- atomic energy

- rail transport

Mixed sector- coal

- iron and steel

- aircraft manufacture

- ship building


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MAIN FEATURE CONTINUES

- manufacture of telephone, telegraph

and wireless apparatus

- mineral oils.

Field of Government control:

- automobiles, heavy machinery, heavy

chemicals, machine tools, fertilizers,

electrical engineering, sugar, paper,

cement, cotton and wooden textiles.

Field of private enterprise


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MAIN FEATURE CONTINUES.

Role of small and cottage industries.

Other important features:

The role of foreign capital in industrialdevelopment of the economy was recognized.

Harmonious relations between management

and labour.

- Proper working condition and fairwages

Labour participation in management.


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OBJECTIVES

Statetrading onaincreasingscale

Plannednationaldevelopment

To provide opportunity to the privatesectorto

growthandexpand

Labourshould participateinitenthusiasm

INDUSTRIAL POLICY

RESOLUTION 1956

(30 April, 1956)


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INDUSTRIAL POLICY

RESOLUTION

Emphasis in the continuous increase in

production and its equitable distribution

State must play progressive role in the

development of the industries

To provide justice, liberty, equality and fraternity


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DIRECTION OF POLICIES

Men and women are equal

Equal pay for both men and women

Childhood and youth are protected against the

exploitation


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To develop the heavy industries

To develop the machine making industries

To expand the public sector

And to built the large and growing co-

operative sector


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WHAT TO DO TO ACHIEVE THE

OBJECTIVES

Improve the life standard and theworking condition for the people

To prevent the private monopolies

Concentration of economic power on the

small number of individuals


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CLASSIFICATION OF THE

INDUSTRIES

First

The industries whose development will be

exclusive responsibility of the state

Second

The industries which are progressively state

owned

Third

It includes the all other industries


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FEATURES

Private sector must fit to the framework

of social and economic policy of the state

Government want to stress the role ofsmall scale industries in developing the

national economy.

{Since they provide large number of

employment }


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TO PROVIDE THE STEADILY SUPPLY

OF RESOURCES

Lack of resourses is very common due to

the lack of power supply, water , and

transport facilities .

It is one of the national aims of the

nation


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ESSENCE

Government of India trust that this statement

of the industrial policy will receive supportfrom all section of the people and promote

the rapid industrialization


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INDUSTRIAL POLICY

RESOLUTIONFEBRUARY 2, 1973

1. The Industrial Policy Resolution of 1956still remained valid, but certain structuraldistortions had crept in the system.

2. The new policies were hence directedtowards removing these distortions.

3. It provided for a closer interaction betweenthe agricultural and industrial sectors.


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4. Accorded the highest priority to the generation andtransmission of power.

5. An exhaustive analysis of industrial products was

made to identify products which are capable ofbeing produced in the small scale sector.

6. The list of industries exclusively reserved for the

small scale sector was expanded from 180 items tomore than 500 items.


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7. Within the small scale sector, a tiny

sector was also defined with investment

in machinery and equipment up to Rs.1

lakh and situated in towns with apopulation of less than 50,000 according

to 1971 census figures, and in villages.

8. Special legislation to protect cottage and

household industries was also proposed to

be introduced.


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INDUSTRIAL POLICY

RESOLUTION

23 Dec, 1977S.Industrial policyhighlights on producinginputneededbyalarge

no ofsmallerunitsand makingadequate marketingarrangement.

Thenucleus plant wouldalso workforupgradingthetechnology ofsmallunits.

Thegovernment would promotethedevelopment ofasystem of

linkagebetweennucleuslarge plantandthesatelliteancillaries.

To boostthedevelopment ofsmallscaleindustries.

Theinvestmentlimitinthecase oftinylimits wasenhancedto

Rs.2 lakh ofasmallscaleunitsto Rs.20lakhand ofancillariesto

Rs. 25lakh.


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A Scheme for building buffer stocks of essential rawmaterials for the small scale industries was

introduced for operation through the small industries

development corporation in the states.

The national small industries corporation in the

centre.

Industry process and technology amid at optimum

utilization of energy or the exploitation of alternative

sources of every would be given special assistance .

And also including finance on concessionary terms.


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INDUSTRIAL POLICY

RESOLUTION

Jul, 1980S.It was based on the industrial policy resolution of1956.

Optimum utilization of installed capacity.

Maximum production and achieving higherproductivity.

Higher employment generation.

Collection of regional imbalances.

Promotion of export oriented industries.


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Strengthen of the agriculture base through agro

based industries and promotion of optimum

intersectorol relationship.

Promotion of economic federalism throughequitable spread of investment and dispersal of

returns.

Consumer protection against high price and badquality.


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INDUSTRIAL POLICY

RESOLUTION

24 Jul, 1991 On 24th July 1991,thegovernmenthead Mr.

P.V.Narasimha Rao,announcedanew industrial policywhichsoughtto drasticallyaltertheindustrialscenario inourcountry.

Thereareseveralfundamentaldeparturesinthenewpolicy. The mostimportantinitiativesare withrespecttothevirtualscrapping ofindustriallicensingandregistration policies,anendto the monopolylaw andamore welcomingapproachto foreigninvestments,apartfrom redefiningtherole ofthe publicsector. Thesemeasures,long overdue,are welcomingasthey wouldfreetheindustryfrom regulations, most ofwhichhave outlivedtheirutility.


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OBJECTIVES

The objectives of the New Industrial Policy are:

Encouragement to Indian entrepreneurship, promotion of

productivity and employment generation.

Development of Indigenous technology through greater

investment in R&D and bringing in new technology to help

Indian manufacturing units attain worlds standards.

Removing the regulatory system and other weaknesses.

Increasing the competitiveness of industries for the benefit of

the common man.

Incentives for the industrialization of backward area.


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In pursuit of the above objectives, theGovernment has decided to take a series

of initiatives in respect of the policies

relating to the following areas:

A. Industrial Licensing

B. Foreign Investment

C. Foreign Technology AgreementsD. Public Sector Policy

E. Monopolies and Restrictive Trade

Practices


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A. INDUSTRIAL LICENSING POLICY

Industrial licensing policy and procedures have alsobeen liberalized from time to time. A full realization ofthe industrial potential of the country calls for acontinuation of this process of change.

Major policy initiatives and procedural reforms arecalled for in order to actively encourage and assistIndian entrepreneurs to exploit and meet the emergingdomestic and global opportunities and challenges.

The industrial licensing system has been graduallymoving away from the concept of capacity licensing. Thesystem of reservations for public sector undertakingshas been evolving to the ethos of greater flexibility andprivate sector enterprise has been gradually allowed toenter into many of these areas on a case by case basis.


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B. FOREIGN INVESTMENT

Foreign investment would bring attendantadvantages of technology transfer, marketingexpertise, introduction of modern managerialtechniques and new possibilities for the promotionof experts.

In order to invite foreign investment in high priorityindustries, requiring large investment andadvanced technology, it has been decided to provideapproval direct foreign investment upto 51% foreignequity in such industries

Promotion of exports of Indian products calls for asystematic exploration of world markets possibleonly through intensive and highly professionalmarketing activities.


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C. FOREIGN TECHNOLOGY AGREEMENTS

There is a great need for promoting anindustrial environment where the acquisitionof technological capability receives priority. In

the fast changing world of technology, therelationship between the suppliers and theusers of technology must be a continuous one.

With a view to injecting the desired level of technological dynamism in the Indianindustry, the Government will provideautomatic approval for technologicalagreements related to high priority industrieswithin specified parameters.


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D. PUBLIC SECTOR POLICY

The Industrial Policy Resolution of1956 gave thepublic sector a strategic role in the economy.

After the initial exuberance of the public sectorentering new areas of industrial and technicalcompetence, a number of problems have begun tomanifest themselves in many of the publicenterprises. The most striking example is thetake over of sick units from the private sector.

Public sector units accounts for almost one-thirdof the total losses of central public enterprises.


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E. MONOPOLIES AND RESTRICTIVE

TRADE PRACTICES ACT (MRTP ACT)

With the growing complexity of the industrial

structure and the need for achieving economies of

scale f or ensuring high productivity andcompetitive advantage in the international

market.

Pre-entry scrutiny of investment decision not

required.

MRTP act is restructured by eliminating the

legal requirements.


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INDUSTRIAL

LICENSING POLICY


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INDUSTRIAL LICENSING

License is a written permission issuedby the central government to anindustrial undertaking stating such

details as the location, the article to bemanufactured, production capacity andother relevant particulars.

Ours is one of the few countries in theworld where an entrepreneur isrequired to obtain an industrial licensefrom the government before venturinginto new business.


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OBJECTIVES OF

INDUSTRIAL LICENSING

Planned industrial development throughappropriate Regulations and controls.

Directing industrial investment inaccordance with plan Priorities.

Ensuring government control overindustrial activities In India.

Regulating the industrial capacity as pertargets set for Planned economy.

Preventing concentration of industrial andeconomic Power and monopoly.


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Checking unbalanced growth of industrial

establishments and ensuring economic size of

industrial units.

Utilizing full capacity of large scale industries .

Utilizing appropriate technology .

Protecting of small scale industries against

undue competition of large scale industries .

Broadening the industrial base in India through

new entrepreneurship development and

ensuring industrial dispersion.


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THE INDUSTRIES

(DEVELOPMENT &

REGULATION) ACT , 1951.

To implementtheindustrial policy.

To ensureregulationanddevelopment of

importantindustries.

To ensure planning andfuture

development ofnew undertakings .


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PROVISIONS OF INDUSTRIES (D

& R) ACT , 1951

Provisions of IDRA

Preventive Provision

Curative Provision

Creative Provision


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PREVENTIVE PROVISIONS

Threetypes ofprovisionsareincludedinthe

preventive provisions .

Registrationandlicensing policies

Investigation provisions

revocation oflicense provisions.


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CURRATIVE PROVISIONS

Taking overthe management orcontrol of

industrialenterprise.

Control ofsupply, price,anddistribution of

certaincommodities.


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CREATIVE PROVISIONS

Creative provisions are positive in nature and

involves cooperation between central government ,

industry, labor and consumers of goods produced

by scheduled industries.


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EXEMPTIONS FROM LICENSING

Items relating to an industries which is notincluded in the first schedule of the act .

Items to be manufactured in an undertakingwhich does not come under the definition of a

factory under the industries (D and R ) Act ,1951.

Expansions which does not come undersubstantial expansion ,that is ,up to 25% ofthe existing capacity.

Small scale units subject to certain conditions.

Items which do not fall under the definition of new article.


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CRITICISMS OF INDUSTRIAL

LICENSING

Issue oflicensestendsto giveanexaggerated

picture ofindustrialcapacity.

The process ofconsideration ofapplicationsat

vario

uslevels

and

at

vari

ous

ti

mes

co

ntributesto

delaysandhighercosts.

Thereisverylittlefollow up oflicensingto see

thatapproved projectsfructifyinasatisfactory

phasedschedule.

One oftheimportant purposes ofindustrial

licensing ofachievingregionaldispersal of

industrieshasnotbeenachieved.


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Industrial Licensing

PolicyThe industrial Licensing Policy in India can

be studied in the following ways

1.The Industries (Development and

Regulation) Act, 1951

2.Industrial Licensing Policy 1951-60

3.Industrial Licensing Policies for 1960-704.Industrial Licensing Policies 1970-77

5.Industrial Licensing Policy 1980-90


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INDUSTRIAL LICENSING POLICY

1951-60

Industrial Licensing prior to 1960 aimed at achieving

the following among others

1. Development of industries and encouraging

industrial activity in accordance with the planpriorities

2. Checking the concentration of economic power

3. Reduction of regional disparities

4. Proper allocation of foreign exchange

5. Development, protection, and encouragement of

small scale industries

6. Modernization of technology and achievement of

industrial growth


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1960-70

The Industrial Licensing policy came in for sharp

criticism from various committees. The main

criticism leveled against it were

promotion of large industrial houses and

Usage of some unethical practices followed by a

section of large business houses


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1970-80

Licensing policy of 1970

Government of India banned the entry of large

industrial houses and foreign companies into anyfield except core industries, heavy industries, heavy

investment projects, and export oriented projects.

Several other restrictive policies followed

Licensing policy of 1977

A new policy statement was announced by the

government on December 23, 1977


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The 1977 licensing policy provided thrust

mainly in two respects:

1. Priority to small-scale, village, and tiny

sector industries in future industrializationand

2. Geographical dispersal of industries from

metropolitan centers to rural and backwardareas.


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INDUSTRIAL POLICY STATEMENT

1980-90

In pursuance of this policy, a newlicensing policy was adopted, aiming atreviving the economic infrastructureinhibited by the infrastructural gapsand inadequacies in performance.

The basic objective was to transmit thefruit of industrialization and economicprogress to maximum number ofpeople, both in urban and rural areas.


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In order to make Indian industry more competitive,

the government felt the need for releasing the

industry from bureaucratic obstructions andreducing the number of clearances.

all new units with an investment upto Rs 75 crore

in Centrally notified backward areas and Rs 25

crore in other areas were exempted from licensing.

Import of capital good was allowed to the ttune of

30 percent of the plant and machinery.

Export oriented units and units located in Export

Processing Zones with an investment upto Rs 75

crore were de- licensed


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Conclusion

In a planned economy, adequate control

measures have to be exercised by the

government for providing necessarydirection to the industries, especially the

private sector, to contribute their best

towards the socio-economic objectives of

the nation. Hence, the governmentcontrol measures should be viewed in

this light.


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23333571 Industrial and Licensing Policies

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