BBA 4th Unit 2nd

8/6/2019 BBA 4th Unit 2nd

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Indian business environment Unit 2nd :-

Review of industrial policy developments

and pattern of industrial growth since1991, industrial licensing policy public

sector reforms privatization and

liberaliza0tion trends, growth and

problems of SMEs, industrial sickness.


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Main topics

1.Industrial policy.

2.Developments and pattern of industrial

growth since 1991.

3..Industrial licensing policy.

4.Privatization and liberaliza0tion trends,

5. Growth and problems of SMEs.6.Industrial sickness.


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INDUSTRIAL POLICY OF INDIA

Industrial policy indicates the relationshipbetween government and business and istherefore considered as the most important

documents of the country . It gives clearguidelines for promoting and regulatingindustries. Therefore it shapes guides fostersregulates and controls the industrial

development of threat country. The industrialpolicy is not an act and hence the violation ofit cannot be challenged in an court of law.


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Importance of industrial policy :-

1.Limited capacity of private sector.

2.Regulation of private sector.

3.Regulation of foreign sector.


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Industrial policy in free India

1. INDUSTRIAL POLICY RESOLUTION 1948 (6 April,

1948)

2. INDUSTRIAL POLICY RESOLUTION (30th April,

1956)

3. INDUSTRIAL POLICY FEB 2, 1973

4. INDUSTRIAL POLICY DEC 23, 1977

5. INDUSTRIAL POLICY STATEMENT OF JULY, 1980

6. INDUSTRIAL POLICY, JULY 24, 1991


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. NEW INDUSTRIAL POLICY,

JULY 24, 1991

The main objective of this policy is to the liberalize

the Indian industrial economy from

administrative and legal control.

Main features; -1.contraction of public sector.

2Delicensing .

3.Abolition of registration.

4.Foreign capital.

5.Setting up foreign investment promotion board.


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6.Technical experts.

7.Public enterprises incurring losses.

8.Facilities to labourers.9.Location of industries.

10.Encouragementto industries in backward areas.

11.Freedom from administrative control.

12.Concession from monopolies act.

13.New definition of Micro, Small and Mediumenterprises.1. Manufacturing entmiro-25lakh,small-25 to 5crore,Medium -5crore to 10crore.

2.Service sector-Micro-10lakh,Small=10lakh to2crore, Medium-2crore to 5 crore.


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Implementation of new industrial

policy:-1.Contraction of public sector.

2.Reduction in the num.of industries for

compulsory licensing.

3.Expansion of large industries.

4.Promotion of exports.

5.Reduction in duties.

6.Encouragement to foreign investment.

7.Concession loans for exporters.

8.Incease in lending limits for industries.


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9. Increase in lending limits for industries.

10.Amendment in sick industrial companies act.11.Disinvestment .

12.Setting up foreign investment promotion

board.13.Value added tax.

14.Technology upgrading.

15.Abolition of MRTP Act.16.Increase in investment limit of small

enterprises.


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Merits.1.Increase in production.

2.Promotes liberalization.

3.Increase in competition.

4.Increase in completion.

5.Increase in efficiency of public sector.6.Less economic burden on govt.

7.Increase in exports.

8.Balaced regional development.

9.Increase in foreign investment.

10. Increase in welfare of workers.


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Short coming.

1.Reduction in role of public sector.

2.Privatisation will not automatically lead toefficiency.

3.Concentration of economic power.

4.Increase in regional imbalances.

5.Advers effect on small scale industries.

6. Ignores social objectives.

7.Increase in unemployment.


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Suggestions for making industrial policy more

productive.

1.Increasing efficiency and profitability of public sector.

2. Increasing competitiveness of private sector.

3.Reducing concentration of economic empowerment.

4.Reduction in regional unbalancing.5.Reduction too much dependence on foreign capital.

6. Strengthening infrastructure.

7.Support to domestic industrial units for globalexpansion.

8.Libralisation of labour legislations.

Question.1.critically evaluate present industrial policy ofIndia?


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Competition Act, 2002{in place of

MRTP act}

With the passing of the new competition Act, 2002the MRTP Act, 1969 has been replaced and theMRTP commission dissolved.

The Act was formed with the following objectives: Control and regulation of concentration of

economic power to common detriment

Control of monopolies and monopolistic trade

practices Prohibition of restrictive and later on (1984)unfair trade practices.


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But with the new industrial policy of 1991, it wasamended and asset limit on MRTP companies

was scrapped finally, its main objective would benow controlling and regulating monopolistic andrestrictive trade practices.

The MRTP Act was replaced by the Competition

Act, 2002, on the recommendation of SVSRaghavan committee .thus, all cases related toRTPs and MTPs under the MRTP Act has beentransferred to the competition commission of

India formed under the new Act.


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The major provisions of the Act are as

follows: Coverage and applicability:

It applies to whole of India except the states of Jammu and Kashmir.

No civil court has jurisdiction to entertain. Any suit or precedingwhich the competition is empowered or emphasized.

Prohibition of anti competitive agreements:

The Act prohibits persons and enterprises from entertainment intoany agreement which has adverse effect on competition in any areaof production, supply, distribution, acquisition, control of goods andservices in the country.

Prohibition of abuse of dominant position:

An enterprise under the Act is considered to abuse its dominantposition in the market of it.

The major provisions of the Act are as follows:


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Regulations of combinations:Under the Act, combinations have been defined in terms of assets andturnover limits of enterprise after acquisition, merger andamalgamation. the Act prohibits persons or enterprise from entering

into a combination which is expected to have adverse effect oncompetition within the relevant market in India.Establishment of competition commission:The Act provides for the establishment of a competition commission ofIndia consisting of a chairman and 2-10 members to be appointed bythe central government, and having a term of five years.Criteria of dominant position:

The competition commission may consider an enterprise to command adominant position on the basis of following criteria:Market size, resources and economic power.Size and importance of the competitorDependence of consumer on the enterpriseBarrier to entry in the field of operationStructure and size of the market in which the enterprise operates

Buying powerSocial obligations an costInvestigations of combinations.


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New competition policy 2002:

Objectives:

Promotion and sustenance of competition in

markets Protection of consumer interest

Ensuring freedom of trade.


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2.Developments and pattern of

industrial growth since 1991.


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Industrial licensing policy

The Indian govt. resorted to the licensing system inorder to maintain control over industries according tothe industrial, act 1951.a license is a writtenpermission granted to enterprises by the government

according to which the product mentioned therein canbe manufactured by the enterprise. The licenseincluding many other particulars such as:

The place where the factory is to be established

The name of the product to be produced

The limit of the production capacity

Expansion of the enterprise, etc.


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Objectives of licensing:

The main aim of the licensing policy in India is to regulate theindustrial sector in the desired direction and to properly implementthe industrial policy, specially the policy relating to the privatesector.

The main aim of the licensing system is:

Development and control of industrial investment and productionas per the objectives of the plans

Checking the concentration of economic power

Encouraging small scale industry

Ensuring balanced regional development

Regulating location of industrial units Promoting technological advancement in industries

Encouraging new entrepreneur for setting industries.


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Compulsory licensing:

According to the licensing policy of 1952,it was compulsory to obtain

license for industries having a fixed capital of more than Rs.10 lakh. In

1970,this limit was increased to 1 crore,in 1978,it was increased to 3 crore;in

1983,it was increased to 5 crore; in 1985,it was increased to 15 crore and, in1990,it was fixed at 25 crore. According to the new industrial policy of 1991, it is

necessary to obtain license only in the case of 15 industries which are engaged

in the fields of defense, environment, luxury goods and hazardous

commodities. In the wake of liberalization the number of industries reduced to

obtain compulsory license has been reduced from 6 in 1999.the license system

has been brought to an end for all other industries:

The six industry for which licensing is compulsory are:

Alcoholic products

Tobacco products

Aerospace and defense equipments

Industrial explosivesHazardous chemical

Drugs and pharmaceuticals


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BBA 4th Unit 2nd

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