Industrial-and-Licensing-Policy.pdf

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INDUSTRIAL AND LICENSINGINDUSTRIAL AND LICENSING

POLICYPOLICY



What is Industrial Licensing?What is Industrial Licensing?

Industrial policy means rules, regulations, principles, policies andIndustrial policy means rules, regulations, principles, policies and

procedures laid down by government for regulating, developingprocedures laid down by government for regulating, developing

and controlling industrial undertakings in the country.and controlling industrial undertakings in the country.

It prescribes the respective roles of the public, private, joint andIt prescribes the respective roles of the public, private, joint and

co-operative sectors for the developmentco-operative sectors for the development

of industries.of industries.

Incorporates fiscal and monetary policies, tariff policy, labourIncorporates fiscal and monetary policies, tariff policy, labour

policy and government attitude towards foreign capital, and role topolicy and government attitude towards foreign capital, and role to

be played by multinational corporations in the development of thebe played by multinational corporations in the development of the

industrial sector.industrial sector.

Government of India has formulated policies for industrial growthGovernment of India has formulated policies for industrial growth

and development.and development.



ist!r" !# Industrial Licensingist!r" !# Industrial Licensing

Pre$ Inde%endencePre$ Inde%endence&' East India c!(%an"

)' *irst W!rld War

+' Sec!nd ,!rld ,ar



East India c!(%an"East India c!(%an"

The Britishers came to India in the year !"" asThe Britishers came to India in the year !"" as

traders of the #ast India company. $uring thetraders of the #ast India company. $uring the

British rule in India, government policy towardsBritish rule in India, government policy towards

industry and business was indifferent. The firstindustry and business was indifferent. The first

century of British rule saw the decline of nearlycentury of British rule saw the decline of nearly

all indigenous industries for many reasons %all indigenous industries for many reasons %

technological, economic and political.technological, economic and political.

&odern industrial enterprises in India developed&odern industrial enterprises in India developed

after '(".Its earliest manifestations came inafter '(".Its earliest manifestations came in

the wake of the construction of railways, whichthe wake of the construction of railways, which

made it essential to have modern workshops formade it essential to have modern workshops for

repair and maintenance of the rolling stock.repair and maintenance of the rolling stock.



*irst W!rld War *irst W!rld War The outbreak of the )irst *orld *ar brought an end to the policy ofThe outbreak of the )irst *orld *ar brought an end to the policy of

hostility between British Bengal +hamber of +ommerce and thehostility between British Bengal +hamber of +ommerce and the

government and forced on the government a more progressive policygovernment and forced on the government a more progressive policy

that included selective encouragement of some industries andthat included selective encouragement of some industries and

protective tariff.protective tariff.

In ! the famous Indian Industrial +ommission was set up toIn ! the famous Indian Industrial +ommission was set up to

eamine and report the possibilities of further industrial developmenteamine and report the possibilities of further industrial development

in India, and submit recommendations for a permanent policy ofin India, and submit recommendations for a permanent policy of

industrial stimulation.industrial stimulation.

Its proposals were based upon the fundamental principles that in theIts proposals were based upon the fundamental principles that in the

future the government must play an active part in the industrialfuture the government must play an active part in the industrial

development of the country.development of the country.



Sec!nd W!rld War Sec!nd W!rld War

This was the time when major watershed in the developmentThis was the time when major watershed in the developmentof government business relations in India. India became theof government business relations in India. India became themain base of the llied *ar efforts in the )ar #astern andmain base of the llied *ar efforts in the )ar #astern and&iddle #astern fronts its industrial development received a&iddle #astern fronts its industrial development received atremendous boost from the substantial orders for locallytremendous boost from the substantial orders for locallymanufactured goods and through setting up of a large numbermanufactured goods and through setting up of a large number

of new industrial units in fields hitherto in conceivable.of new industrial units in fields hitherto in conceivable.

$uring the two brief years that intervened between the end of$uring the two brief years that intervened between the end ofthe war/0(1 and independence/021, government effortsthe war/0(1 and independence/021, government effortswere mostly directed at dealing with shortages that developedwere mostly directed at dealing with shortages that developedin large numbers of items both consumers goods and essentialin large numbers of items both consumers goods and essential

war materials.war materials.



P!stP!st Inde%endenceInde%endence

G!-ern(ent.s R!le

3andit 4awaharlal 5ehru laid the foundation of modern India The goal3andit 4awaharlal 5ehru laid the foundation of modern India The goal

and objectives set out for the nation by 3andit 5ehru on the eve ofand objectives set out for the nation by 3andit 5ehru on the eve of

independence were 6independence were 6

7apid agriculture and industrial development of the country7apid agriculture and industrial development of the country

7apid epansion of opportunities for gainful employment7apid epansion of opportunities for gainful employment

3rogressive reduction of social and economic disparities3rogressive reduction of social and economic disparities

7emoval of poverty and attainment of self %reliance7emoval of poverty and attainment of self %reliance



O/0ecti-esO/0ecti-es !# Industrial P!licies!# Industrial P!licies

chieving a socialistic pattern of society. chieving a socialistic pattern of society. chieving industrial growth. chieving industrial growth.

chieving economic growth. chieving economic growth.

$eveloping heavy and capital goods industry.$eveloping heavy and capital goods industry.

3roviding opportunities for gainful employment .3roviding opportunities for gainful employment .

lleviating poverty. lleviating poverty. chieving a self-sustained economy . chieving a self-sustained economy .

3rotecting and developing a healthy small-scale sector.3rotecting and developing a healthy small-scale sector.

8pdating technology and moderni9ation.8pdating technology and moderni9ation.

:iberali9ation and globali9ation of economy.:iberali9ation and globali9ation of economy.



Five Year PlanningFive Year Planning

First Five Year PlanFirst Five Year Plan (1951-52 to 1956-57)(1951-52 to 1956-57) Second Five Year Plan (1951-57 to 1961-Second Five Year Plan (1951-57 to 1961-

62)62) Third Five Year Plan Third Five Year Plan (1961-62 to 1965-66)(1961-62 to 1965-66)

Fourth Five Year PlanFourth Five Year Plan (1969-70 to 197-7!)(1969-70 to 197-7!) Fi"th Five Year PlanFi"th Five Year Plan (197!-75 to 197#-79)(197!-75 to 197#-79) Si$th Five Year PlanSi$th Five Year Plan (197#-79 to 19#2-#)(197#-79 to 19#2-#) Seventh Five Year PlanSeventh Five Year Plan (19#5-#6 to(19#5-#6 to

19#9-90)19#9-90) %ight Five Year Plan%ight Five Year Plan (1992-9 to 1996-97)(1992-9 to 1996-97) &inth Five Year Plan&inth Five Year Plan (1997-9# to 2001-02)(1997-9# to 2001-02) Tenth Five Year Plan Tenth Five Year Plan (2001-02 to 2005-06)(2001-02 to 2005-06)



First Five Year PlanFirst Five Year Plan

(1951-52 to 1956-57)(1951-52 to 1956-57)

Prioriti'ed agriculture irrigation and o*erPrioriti'ed agriculture irrigation and o*er

ro+ects in order to reduce the countr,sro+ects in order to reduce the countr,s

deendence on "ood grain i.orts solvedeendence on "ood grain i.orts solve

the "ood crisis and ease ra* .aterialthe "ood crisis and ease ra* .aterialro/le. articularl, in +ute and cottonro/le. articularl, in +ute and cotton

l.ost !5 o" the resources *as allocatedl.ost !5 o" the resources *as allocated

to agriculture *hile industr, got a altr,to agriculture *hile industr, got a altr,

!9!9



Second Five Year PlanSecond Five Year Plan

(1956-57 to 1961-62)(1956-57 to 1961-62)

griculture *as given a co.le.entar, role andgriculture *as given a co.le.entar, role ande.hasis *as on industrial sector eseciall,e.hasis *as on industrial sector eseciall,heav, goods industr,heav, goods industr,

gricultural rogra.s *ere ai.ed at .eeting ra*gricultural rogra.s *ere ai.ed at .eeting ra*.aterial re3uire.ents o" industr, /esides.aterial re3uire.ents o" industr, /esides.eeting the "ood needs o" the increasing.eeting the "ood needs o" the increasingoulationoulation

4ndustrial sector *as erceived as the leading4ndustrial sector *as erceived as the leadingsector *hich could ena/le the econo., to gro*sector *hich could ena/le the econo., to gro*at a raid aceat a raid ace



Third Five Year Plan Third Five Year Plan

(1961-62 to 1965-66)(1961-62 to 1965-66)

gricultural roduction *as once againgricultural roduction *as once againgiven to riorit, as it *as "ound thatgiven to riorit, as it *as "ound thatgro*th in agricultural roduction *as thegro*th in agricultural roduction *as theli.iting "actor in econo.ic gro*thli.iting "actor in econo.ic gro*th

llocation to o*er sector *as enhancedllocation to o*er sector *as enhancedconsidera/l, to 1!6 o" the total outla,considera/l, to 1!6 o" the total outla,as o*er generation *as considered anas o*er generation *as considered an

i.ortant "actor in ensuring raid gro*thi.ortant "actor in ensuring raid gro*tho" the industrial sector *hich could lead too" the industrial sector *hich could lead tosel" sustaining econo.ic gro*thsel" sustaining econo.ic gro*th



Fourth Five Year PlanFourth Five Year Plan

(1969-70 to 197-7!)(1969-70 to 197-7!)

%.hasis shi"ted to*ards roviding%.hasis shi"ted to*ards roviding

necessar, consu.tion /ene"its to thenecessar, consu.tion /ene"its to the

less rivileged and *eaer sections o" theless rivileged and *eaer sections o" the

societ, through e.lo,.ent andsociet, through e.lo,.ent andeducationeducation

The lan also ai.ed at accelerating the The lan also ai.ed at accelerating the

.o.entu. o" econo.ic develo.ent and.o.entu. o" econo.ic develo.ent and

i.roving sta/ilit, o" "ood graini.roving sta/ilit, o" "ood grain

roductionroduction



Fi"th Five Year PlanFi"th Five Year Plan

(197!-75 to 197#-79)(197!-75 to 197#-79)

oncentrated on reigning in"lation "aced duringoncentrated on reigning in"lation "aced duringthe Fourth Plan and achieving sta/ilit, in thethe Fourth Plan and achieving sta/ilit, in theecono.ic situationecono.ic situation

i.ed at i.roving the 3ualit, o" li"e o"i.ed at i.roving the 3ualit, o" li"e o"eseciall, the do*ntrodden section o"eseciall, the do*ntrodden section o"econo.,econo.,

Several ne* econo.ic and non-econo.ic suchSeveral ne* econo.ic and non-econo.ic suchasas nutritional requirementsnutritional requirements health andhealth andfamily planningfamily planning *ere incororated in the *ere incororated in thelanning rocesslanning rocess



Si$th Five Year PlanSi$th Five Year Plan

(197#-79 to 19#2-#)(197#-79 to 19#2-#)

For.ulated /, the anata 8overn.entFor.ulated /, the anata 8overn.ent

sought to achieve higher roductionsought to achieve higher roduction

targets *ith the conco.itant increase intargets *ith the conco.itant increase in

e.lo,.ent oortunities "or the ooreste.lo,.ent oortunities "or the oorestsection o" the societ,section o" the societ,

%.hasis on irrigation and o*er and the%.hasis on irrigation and o*er and the

shi"t in aroach *as lauda/le theshi"t in aroach *as lauda/le the

govern.ent laced olitical *ill to "orgegovern.ent laced olitical *ill to "orge

aheadahead



Seventh Five Year PlanSeventh Five Year Plan

(19#5-#6 to 19#9-90)(19#5-#6 to 19#9-90)

Food grain roduction gre* /, 2Food grain roduction gre* /, 2

desite severe drought conditionsdesite severe drought conditions

during the "irst three ,ears o" the Planduring the "irst three ,ears o" the Plan

Policies ai.ed at raid gro*th in "oodPolicies ai.ed at raid gro*th in "ood

grain roduction higher e.lo,.entgrain roduction higher e.lo,.ent

levels etc and several secial rogra.slevels etc and several secial rogra.slielie Jawahar Rozgar Yojana Jawahar Rozgar Yojana *ere*ere

introducedintroduced



%ight Five Year Plan%ight Five Year Plan

(1992-9 to 1996-97)(1992-9 to 1996-97)

aunched i..ediatel, a"ter the severeaunched i..ediatel, a"ter the severe/alance o" a,.ent crisis accentuated /,/alance o" a,.ent crisis accentuated /,the 8ul" :ar in 1990the 8ul" :ar in 1990

Several structural ad+ust.ents olicies suchSeveral structural ad+ust.ents olicies suchas aas a substantial devaluation in thesubstantial devaluation in thevalue of rupeevalue of rupee dismantling of licensingdismantling of licensingrequirementsrequirements reducing trade barriersreducing trade barriersreforms in the financial sector reforms in the financial sector andand taxtaxsystemssystems *ere introduced in order to ut the*ere introduced in order to ut thecountr, on higher gro*th ath and re.ed,countr, on higher gro*th ath and re.ed,the recarious /alance o" a,.entsthe recarious /alance o" a,.entssituationsituation



&inth Five Year Plan&inth Five Year Plan

(1997-9# to 2001-02)(1997-9# to 2001-02)

;e, tas *as to i.rove the living;e, tas *as to i.rove the livingconditions o" the oo and rovide the.conditions o" the oo and rovide the.*ith ade3uate e.lo,.ent oortunities*ith ade3uate e.lo,.ent oortunities

4t .ade serious e""orts raise the level o"4t .ade serious e""orts raise the level o"agricultural and rural inco.es and targetagricultural and rural inco.es and targetrogra.s at s.all .arginal "ar.ers androgra.s at s.all .arginal "ar.ers andlandless la/orerslandless la/orers

lso ai.ed to chec the gro*th o"lso ai.ed to chec the gro*th o"oulationoulation



Tenth Five Year Plan Tenth Five Year Plan

(2001-02 to 2005-06)(2001-02 to 2005-06)

For.ulated eeing in line *ith theFor.ulated eeing in line *ith the

Pri.e <inisters vision o" dou/ling erPri.e <inisters vision o" dou/ling er

caita inco.e in the countr, andcaita inco.e in the countr, and

creating 100 .illion e.lo,.entcreating 100 .illion e.lo,.entoortunities in the ne$t 10 ,earsoortunities in the ne$t 10 ,ears



INDUSTRIAL POLICYINDUSTRIAL POLICY

OF INDIAOF INDIA

I5$8;T7I: 3<:I+= 7#;<:8TI<5 , 0'

I5$8;T7I: 3<:I+= 7#;<:8TI<5 , (!

I5$8;T7I: 3<:I+= 7#;<:8TI<5 , 2>

I5$8;T7I: 3<:I+= 7#;<:8TI<5 ,22

I5$8;T7I: 3<:I+= 7#;<:8TI<5 ,'"



4&=>ST?4 P@4Y4&=>ST?4 P@4Y

?%S@>T4@& 19!#?%S@>T4@& 19!#

Industrial policy 7esolution of 0',government

recogni9ed the need for a mied economy and

reserved national monopolies only for atomic energy,

and rail ? road industries. while many industries held by private firm could

continue, the government had the eclusive right to

initiate project in si other industries %coal, iron, and

steel, aircraft manufacturing, shipbuilding, telephone,and minerals. =et it could seek the aid of the private

sector if necessary. &oreover, the government could

regulate and license ' other industries of national

importance.



4&=>ST?4 P@4Y4&=>ST?4 P@4Y

?%S@>T4@& 19!#?%S@>T4@& 19!#

The main thrust of the /0'1 industries policy wasThe main thrust of the /0'1 industries policy was

to lay the foundation of a mied economy in whichto lay the foundation of a mied economy in which

both private and public enterprises could march handboth private and public enterprises could march handin hand to accelerate the process of industrialin hand to accelerate the process of industrial

development.development.

+ontid@.



4&=>ST?4 P@4Y4&=>ST?4 P@4Y

?%S@>T4@& 1956?%S@>T4@& 1956

The role of government was, enlargedThe role of government was, enlarged

tremendously under the new industrial policytremendously under the new industrial policyannounced in pril, (!.announced in pril, (!.

This policy epanded the area <f operation of publicThis policy epanded the area <f operation of publicsector by bringing in 2 Industries under thesector by bringing in 2 Industries under theeclusive monopoly of this ;ector and addingeclusive monopoly of this ;ector and addinganother A industries to the $omain of public sector.another A industries to the $omain of public sector.

The classification ofThe classification of

industries policy (! is discussed below6industries policy (! is discussed below6

l i"i i " 4 d i



lassi"ication o" 4ndustrieslassi"ication o" 4ndustries

The industrial policy of (! adopted theThe industrial policy of (! adopted the

)ollowing classification of industries into)ollowing classification of industries into

Three categories,Three categories,

/1. ;chedule industries/1. ;chedule industries/A1. ;chedule B industries/A1. ;chedule B industries

/>1. ;chedule + industries/>1. ;chedule + industries

SA%=>% B



SA%=>% BSA%=>% B

4&=>ST?4%S4&=>ST?4%S

This category included 2 industries. TheThis category included 2 industries. The

)uture development of these industries)uture development of these industries

*as to be the eclusive responsibility of*as to be the eclusive responsibility ofThe state. These industries include armsThe state. These industries include arms

nd ammunition, atomic energy, railways, nd ammunition, atomic energy, railways,

ircraft building, ship building, iron and ircraft building, ship building, iron and;teel, coal, heavy electricals, etc.;teel, coal, heavy electricals, etc.

SA%=>% BC



SA%=>% BCSA%=>% BC

4&=>ST?4%S4&=>ST?4%S

There were A industries placed in schedule B.There were A industries placed in schedule B.

In regard to the developed of theseIn regard to the developed of these

Industries, the state was generally to takeIndustries, the state was generally to take

Initiative in setting up new undertaking.Initiative in setting up new undertaking.

owever, the private was also epect toowever, the private was also epect to

;upplement the effort of the state in this;upplement the effort of the state in this

+ategory of industries ;ome industries in+ategory of industries ;ome industries in

SA%=>% B



SA%=>% BSA%=>% B

4&=>ST?4%S4&=>ST?4%S

All the remaining industries fell in the schedule C, theAll the remaining industries fell in the schedule C, the

future development of which was left to the initiative of thefuture development of which was left to the initiative of the

initiative of the private sector. The state, however, was toinitiative of the private sector. The state, however, was to

provide necessary assistance to private sector forprovide necessary assistance to private sector for

development of industries.development of industries. It is thus clear that the public sector was assigned aIt is thus clear that the public sector was assigned a

Dominant role in industrial development with 29 industriesDominant role in industrial development with 29 industries

ector under it.The public sector was given a commandingector under it.The public sector was given a commanding

!osition in the industrial sector. "ith this, the government!osition in the industrial sector. "ith this, the government

Assumed the role of the ma#or partner$s in the country$sAssumed the role of the ma#or partner$s in the country$s

Industrialisation process. The scope of private sector inIndustrialisation process. The scope of private sector in

Industrial programmes was thus not only limited to a fewIndustrial programmes was thus not only limited to a few

pheres, but was also rigidly controlled by the licensingpheres, but was also rigidly controlled by the licensing



@&TD@&TD

;ystem which was a part of governmentCs;ystem which was a part of governmentCs

industrial policy.industrial policy.

This industrial policy of(!, with minorThis industrial policy of(!, with minormodifications in 22 and '", continued tomodifications in 22 and '", continued to

govern IndiaCs industrial development till 4ulygovern IndiaCs industrial development till 4uly

when the new Industrial policy was when the new Industrial policy was

announced.announced.



INDUSTRIAL POLICY, 1973INDUSTRIAL POLICY, 1973

.. It was decided that compulsory eport obligations,It was decided that compulsory eport obligations,merely for ensuring the foreign echange balance ofmerely for ensuring the foreign echange balance ofthe project, would no longer be insisted upon whilethe project, would no longer be insisted upon whileapproving new industrial capacity.approving new industrial capacity.

A.A. In the areas of price control of agricultural andIn the areas of price control of agricultural andIndustrial products, the prices would be regulated toIndustrial products, the prices would be regulated toensure an adeDuate return to the investor.ensure an adeDuate return to the investor.






RESOLUTION, 1973RESOLUTION, 19735.Accorded the highest priority to the generation and5.Accorded the highest priority to the generation and

transmission of power.transmission of power.

6.An exhaustive analysis of industrial products was6.An exhaustive analysis of industrial products wasmade to identify products which are capable of beingmade to identify products which are capable of being

produced in the small scale sector.produced in the small scale sector.7.The list of industries exclusively reserved for the small7.The list of industries exclusively reserved for the small

scale sector was expanded from 18 items to morescale sector was expanded from 18 items to morethan 5 items.than 5 items.

4&=>ST?4 P@4Y



4&=>ST?4 P@4Y4&=>ST?4 P@4Y

?%S@>T4@& 1977?%S@>T4@& 1977

In $ecember 22, the central governmentIn $ecember 22, the central government nnounced a new industrial policy by way of a nnounced a new industrial policy by way of a;tatement in the 3arliament. The industrial policy,;tatement in the 3arliament. The industrial policy,despite some desirable elements, resulted in certaindespite some desirable elements, resulted in certaindistortion vi9.,E 8nemployment increased rural-urbandistortion vi9.,E 8nemployment increased rural-urbandisparities widened .Eand real investment stagnated.disparities widened .Eand real investment stagnated.<n an average, the growth of industrial sector was<n an average, the growth of industrial sector wasnot more than three to four percent per annum. Thenot more than three to four percent per annum. Theincidence of industrial sickness also become wideincidence of industrial sickness also become widespread.spread.



4&=>ST?4 P@4Y4&=>ST?4 P@4Y

?%S@>T4@& 1977?%S@>T4@& 1977 ontdDDontdDD

The trust of the industrial police statement ofThe trust of the industrial police statement of

$ecember 22 was on effective promotion of the$ecember 22 was on effective promotion of the

cottage and small industries widely dispread in ruralcottage and small industries widely dispread in rural

areas and small towns. #mphasi9ed that theareas and small towns. #mphasi9ed that the

whatever can be produced by small and cottagewhatever can be produced by small and cottage

industries must only be so produced. The focusindustries must only be so produced. The focus

point of development of small scale industries werepoint of development of small scale industries were

taken away from the big cities to districts.taken away from the big cities to districts.



4&=>ST?4 P@4Y4&=>ST?4 P@4Y

?%S@>T4@& 1977?%S@>T4@& 1977 ontdDDontdDD

The concept of district industries Centers wasThe concept of district industries Centers was

introduced for the first time.introduced for the first time. #ach district would#ach district wouldhave such a district center which would etend allhave such a district center which would etend allthe support and services reDuired by the smallthe support and services reDuired by the small

entrepreneurs. These included economicentrepreneurs. These included economicinvestigations of the districts, supply of theinvestigations of the districts, supply of themachinery and eDuipments, raw material and othermachinery and eDuipments, raw material and otherresources, arrangement for credit facilities, call forresources, arrangement for credit facilities, call for

Duality control, research.Duality control, research.



4&=>ST?4 P@4Y4&=>ST?4 P@4Y

?%S@>T4@&?%S@>T4@& 19771977 ontdDDontdDD

1.1. Within the small scale sector, a tiny sector was also defined with investment inWithin the small scale sector, a tiny sector was also defined with investment inmachinery and equipment up to Rs.1 lakh and situated in towns with a population ofmachinery and equipment up to Rs.1 lakh and situated in towns with a population ofless than 50,000 according to 191 census figures, and in villages.less than 50,000 according to 191 census figures, and in villages.

!.!. "pecial legislation to protect cottage and household industries was also proposed to"pecial legislation to protect cottage and household industries was also proposed to

#e introduced. #e introduced.

$.$. %t was also decided that compulsory e&port o#ligations, merely for ensuring the%t was also decided that compulsory e&port o#ligations, merely for ensuring theforeign e&change #alance of the pro'ect, would no longer #e insisted upon whileforeign e&change #alance of the pro'ect, would no longer #e insisted upon whileapproving new industrial capacity.approving new industrial capacity.

(.(. %n the areas of price control of agricultural and %ndustrial products, the prices would%n the areas of price control of agricultural and %ndustrial products, the prices would #e regulated to ensure an adequate return to the investor. #e regulated to ensure an adequate return to the investor.



4&=>ST?4%S P@4Y4&=>ST?4%S P@4Y

?%S@>T4@& 19#0?%S@>T4@& 19#0

The industrial policy statement of '" focused onThe industrial policy statement of '" focused on

the need for promoting competition in the domesticthe need for promoting competition in the domestic

market, technologies up gradation moderni9ation.market, technologies up gradation moderni9ation.The policy laid the foundation for an increasinglyThe policy laid the foundation for an increasingly

competitive eport base and for encourage foreigncompetitive eport base and for encourage foreign

investment in hi-tech areas. The policy, thereforeinvestment in hi-tech areas. The policy, therefore

suggested the following measures6suggested the following measures6



4&=>ST?4%S P@4Y4&=>ST?4%S P@4Y

?%S@>T4@& 19#0?%S@>T4@& 19#0 ontdDDontdDD

#ffective operational management of the public#ffective operational management of the publicsector.sector.

Integrating industrial development in the privateIntegrating industrial development in the private

sector.sector. 7egulari9ation of unauthori9ed access capacity7egulari9ation of unauthori9ed access capacity

installed in the private sector.installed in the private sector. #ncouragement of merger and acDuisition of sick#ncouragement of merger and acDuisition of sick

units.units.



4&=>ST?4%S P@4Y4&=>ST?4%S P@4Y

?%S@>T4@& 19#0?%S@>T4@& 19#0 ontdDDontdDD

The industrial policy '" was guided merely byThe industrial policy '" was guided merely byconsiderations of growth. It liberali9ed licensing forconsiderations of growth. It liberali9ed licensing forlarge and big business but by blurring the distinctionlarge and big business but by blurring the distinction

between small scale and large scale industries. Itbetween small scale and large scale industries. Itsought to promote the latter at the cost of thesought to promote the latter at the cost of thefarmer. Broadly speaking, the industrial policy chosefarmer. Broadly speaking, the industrial policy chosea more capital intensive path of the developmenta more capital intensive path of the development

and thus, it underplayed the employment objective.and thus, it underplayed the employment objective.




19911991

The new industrial policy was announced on A0The new industrial policy was announced on A0thth 4uly by &r. 3.F.4uly by &r. 3.F.5arasimha 7ao which was a kind of revolution due to the drastic5arasimha 7ao which was a kind of revolution due to the drasticchanges in the previous policies which opened up our economy fromchanges in the previous policies which opened up our economy fromits closedsecured stateits closedsecured state

The main changes made in industrial policy included following 6The main changes made in industrial policy included following 6

Industrial licensing policyIndustrial licensing policy )oreign investment policies)oreign investment policies )oreign technology policies)oreign technology policies 3ublic sector policies3ublic sector policies #HI&#HI&



FEATURESFEATURES The "eatures o" the &e* 4ndustrial Polic, areE The "eatures o" the &e* 4ndustrial Polic, areE

elf %elianceelf %eliance

&rater emphasis placed on developing our ability to pay for&rater emphasis placed on developing our ability to pay forimports from our own foreign e'change earningimports from our own foreign e'change earning

&overnment is committed to the development of indigenous&overnment is committed to the development of indigenous

capabilities in technology and manufacturing as well as upcapabilities in technology and manufacturing as well as upgradation of living standards.gradation of living standards.

To encourage entrepreneurshipTo encourage entrepreneurship

To bring new technologyTo bring new technology

Dismantling regulatory systemDismantling regulatory system

%eformation of !(%eformation of !(

)anufacturing activity to be thrown open to private competition)anufacturing activity to be thrown open to private competition



&o* lets discuss the "ollo*ing in&o* lets discuss the "ollo*ing in

/rie" E/rie" E

4ndustrial icensing4ndustrial icensingCC Foreign 4nvest.entForeign 4nvest.ent

Foreign Technolog, gree.entsForeign Technolog, gree.ents

== Pu/lic Sector Polic,Pu/lic Sector Polic,%% <?TP<?TP



A. INDUSTRIAL LICENSINGA. INDUSTRIAL LICENSING

POLICYPOLICY utomatic clearance if /where imported capital good is reDuired1 utomatic clearance if /where imported capital good is reDuired1

i1i1 In case for-e availability is assured through foreign eDuityIn case for-e availability is assured through foreign eDuity

ii1ii1 If +I) /corporate investment funding1 value of imported capitalIf +I) /corporate investment funding1 value of imported capital

good reDuired is less than A( of total value up to maimumgood reDuired is less than A( of total value up to maimumvalue of 7s A crorevalue of 7s A crore

If population of cities is less then million then no government isIf population of cities is less then million then no government is

reDuired /A( J&1reDuired /A( J&1



3hase manufacturing program will not be applicable to3hase manufacturing program will not be applicable to

new projects.new projects.

#isting unit will be provided a new broad banding#isting unit will be provided a new broad banding

facility to enable them to produce any article withoutfacility to enable them to produce any article without

any additional investment.any additional investment.

ll eisting registration scheme will be abolished ll eisting registration scheme will be abolished

/$elicensed registration #empted Industries/$elicensed registration #empted Industries

7egistration, $GT$17egistration, $GT$1

#ntrepreneur will henceforth only be reDuired to file an#ntrepreneur will henceforth only be reDuired to file an

information on new projects and substantial epansion.information on new projects and substantial epansion.



B. FOREIGN INVESTMENTB. FOREIGN INVESTMENT

pproval will be given for )$I up to ( in high priority pproval will be given for )$I up to ( in high priorityindustry. There shall be no bottleneck of any kind in thisindustry. There shall be no bottleneck of any kind in thisprocess.process.

special empower board would be constituted to special empower board would be constituted tonegotiate with large international firm and approve )$I innegotiate with large international firm and approve )$I inselected areaselected area

The import of component ,raw material and intermediateThe import of component ,raw material and intermediate

good, and payment of know-how fee and royalties will begood, and payment of know-how fee and royalties will begoverned by the general policy applicable to othergoverned by the general policy applicable to otherdomestic units.domestic units.



C. FOREIGN TECHNOLOGYC. FOREIGN TECHNOLOGY

AGREEMENTSAGREEMENTS

utomatic permission in high priority industry up to utomatic permission in high priority industry up to

lump sum payment of 7s million/ ( royalty onlump sum payment of 7s million/ ( royalty on

domestic sale ? ' royalty sale on eport sale1domestic sale ? ' royalty sale on eport sale1 5o permission on hiring foreign technician5o permission on hiring foreign technician

Testing of indigenously developed technologiesTesting of indigenously developed technologies

allowedallowed

In respect of industries other than those inIn respect of industries other than those inautomatic permission will be given subject to theautomatic permission will be given subject to the

same guidelines as above if no foreign echange issame guidelines as above if no foreign echange is

reDuired for any payment.reDuired for any payment.



D. PUBLIC SECTORD. PUBLIC SECTOR !rivate sector to be allowed in !( reserved area!rivate sector to be allowed in !( reserved area

To encourage wider participation a large part ofTo encourage wider participation a large part ofgovernment share holding in the public sector would begovernment share holding in the public sector would be

offered to mutual fund, *I$s, general public + worer.offered to mutual fund, *I$s, general public + worer.

-oard of !( will be given greater power.-oard of !( will be given greater power.

!( enterprise which are chronically sic and which are!( enterprise which are chronically sic and which are

unliely to be turned around will, for the formulation ofunliely to be turned around will, for the formulation ofrevivalrehabilitation scheme, be referred to the -oard ofrevivalrehabilitation scheme, be referred to the -oard of

Industrial and *inancial %econstruction /-I*%0or otherIndustrial and *inancial %econstruction /-I*%0or other

similar high level institutions created for the purpose.similar high level institutions created for the purpose.

% <?TP T% <?TP T



% <?TP T% <?TP T

The &7T3 ct will be amended to remove the thresholdThe &7T3 ct will be amended to remove the threshold

limits of assets in respect of &7T3 companies andlimits of assets in respect of &7T3 companies and

dominant undertaking. i.e., no prior approval reDuired fordominant undertaking. i.e., no prior approval reDuired for

establishment of new undertaking epansion, merger,establishment of new undertaking epansion, merger,

amalgamation and takeover and appointment of directoramalgamation and takeover and appointment of director

under certain circumstances.under certain circumstances.

#mphasis will be placed on controlling and regulating#mphasis will be placed on controlling and regulating

monopolistic, restrictive, and unfair trade practice.monopolistic, restrictive, and unfair trade practice.

&7T3 act is restructured by eliminating the legal&7T3 act is restructured by eliminating the legal

reDuirements.reDuirements.

THREE STUDIES SHAPE THETHREE STUDIES SHAPE THE



THREE STUDIES SHAPE THETHREE STUDIES SHAPE THE

MRTP ACTMRTP ACT

1AA%I C3))ITT44 %4!3%T 35 I5D(T%IA6 6IC45I5&1AA%I C3))ITT44 %4!3%T 35 I5D(T%IA6 6IC45I5&

!%3C4D(%4, 7988!%3C4D(%4, 7988

)A1A6A53-I C3))ITT44 %4!3%T 35 DIT%I-(TI35)A1A6A53-I C3))ITT44 %4!3%T 35 DIT%I-(TI35

A5D 6446 3* I5C3)4, 79:;A5D 6446 3* I5C3)4, 79:;

)353!36I4 I5<(I%= C3))II35 %4!3%T 3* DA)353!36I4 I5<(I%= C3))II35 %4!3%T 3* DA

&(!TA, 79:8&(!TA, 79:8



INDUSTRIAL LICENSINGINDUSTRIAL LICENSING POLICY POLICY



%ndustrial )icensing%ndustrial )icensing

)icense is a written permission issued #y the *entral +overnment to an)icense is a written permission issued #y the *entral +overnment to anindustrial undertaking stating such details as the location, the articles toindustrial undertaking stating such details as the location, the articles to #e manufactured, production capacity, change in product and other #e manufactured, production capacity, change in product and otherrelevant particulars.relevant particulars.

%n %ndia, an industrial license is normally issued after approved%n %ndia, an industrial license is normally issued after approvedapplication and if further clearances like foreign colla#oration, capitalapplication and if further clearances like foreign colla#oration, capitalgoods imports and further conditions are fulfilled.goods imports and further conditions are fulfilled.

license is initially valid for two years and production as per the license is initially valid for two years and production as per thelicensed capacity must start within the specified period.licensed capacity must start within the specified period.



-#'ectives of %ndustrial )icensing-#'ectives of %ndustrial )icensing he #asic o#'ectives of industrial licensing are as follows/he #asic o#'ectives of industrial licensing are as follows/

lanned industrial development through appropriate Regulations and controls.lanned industrial development through appropriate Regulations and controls.

irecting industrial investment in accordance with plan riorities.irecting industrial investment in accordance with plan riorities.

2nsuring government control over industrial activities %n %ndia2nsuring government control over industrial activities %n %ndia

Regulating the industrial capacity as per targets set for lanned economy.Regulating the industrial capacity as per targets set for lanned economy.

reventing concentration of industrial and economic ower and monopoly.reventing concentration of industrial and economic ower and monopoly.



-#'ectives continues3.-#'ectives continues3. *hecking un#alanced growth of industrial esta#lishments and ensuring*hecking un#alanced growth of industrial esta#lishments and ensuring

economic si4e of industrial units.economic si4e of industrial units.

alanced industrial growth through regulation of proper location ofalanced industrial growth through regulation of proper location ofindustrial units.industrial units.

6tili4ing appropriate technology .6tili4ing appropriate technology .

rotecting of small scale industries against undue competition of largerotecting of small scale industries against undue competition of largescale industries .scale industries .

roadening the industrial #ase in %ndia through new entrepreneurshiproadening the industrial #ase in %ndia through new entrepreneurshipdevelopment and ensuring industrial dispersion.development and ensuring industrial dispersion.

6tili4ing full capacity of large scale industries .6tili4ing full capacity of large scale industries .



%ndustrial )icensing olicy%ndustrial )icensing olicy

he industrial licensing policy was laid down to #ehe industrial licensing policy was laid down to #ecomplementary to the industrial policy resolution ascomplementary to the industrial policy resolution asannounced #y the +overnment of %ndia.announced #y the +overnment of %ndia.

%ndustrial licensing in %ndia can #e studied in the following%ndustrial licensing in %ndia can #e studied in the followingstages/7stages/7

1.1. he %ndustries 8evelopment Regulation: ct, 1951he %ndustries 8evelopment Regulation: ct, 1951

!.!. %ndustrial )icensing olicy 19517;0%ndustrial )icensing olicy 19517;0

$.$. %ndustrial )icensing olicies for 19;070%ndustrial )icensing olicies for 19;070(.(. %ndustrial )icensing policies 1907%ndustrial )icensing policies 1907

5.5. %ndustrial policy "tatement 19<0790%ndustrial policy "tatement 19<0790

;.;. )i#erali4ation in industrial licensing 1991 and after.)i#erali4ation in industrial licensing 1991 and after.

h d i 8 l h % d i 8 l



he %ndustries 8evelopment he %ndustries 8evelopment

Regulation: ct, 1951Regulation: ct, 1951

his ct came into effect on =ay <, 195!.his ct came into effect on =ay <, 195!.

his ct has #een descri#ed as >the single most importanthis ct has #een descri#ed as >the single most important piece of economic development legislation?, in %ndian legal piece of economic development legislation?, in %ndian legal

structure.structure.

%t had three important%t had three important ob!ectivesob!ectives. hey are/. hey are/

o implement the industrial policy,o implement the industrial policy, o ensure regulation and development of important industries,o ensure regulation and development of important industries, o ensure planning and future development of new undertaking.o ensure planning and future development of new undertaking.



=ain provisions of ct 1951=ain provisions of ct 1951 "ec. 6"ec. 6 states that evelopment *ouncils are to #e constituted in respectstates that evelopment *ouncils are to #e constituted in respect

of each scheduled industry or group of industry.of each scheduled industry or group of industry. ll e&isting industrial undertakings in the industries listed in the @irstll e&isting industrial undertakings in the industries listed in the @irst

"chedule of this ct, should #e registered with the government within"chedule of this ct, should #e registered with the government withinthe prescri#ed period and issued with a certificate of registration.the prescri#ed period and issued with a certificate of registration.#sec.1$#sec.1$

sec. 11sec. 11 of the ct says that no new industrial undertakings of a ma'orof the ct says that no new industrial undertakings of a ma'orsi4e can #e started in the scheduled industry.si4e can #e started in the scheduled industry.

"ec. 1%"ec. 1% states that the *entral government can revoke the registrationstates that the *entral government can revoke the registrationof license in case of any misrepresentation.of license in case of any misrepresentation.

6nder6nder sec.15sec.15 of the ct, the government can order an investigation intoof the ct, the government can order an investigation into

the working of an industrial undertaking.the working of an industrial undertaking. 6nder6nder sec. 16sec. 16 the government can issue directions to the managementthe government can issue directions to the management

in respect of prices, production, quality, and other areas of itsin respect of prices, production, quality, and other areas of its performance for the progress of industry and countryAs economic devt. performance for the progress of industry and countryAs economic devt.



%ndustrial )icensing policy 19517;0%ndustrial )icensing policy 19517;0

%ndustrial )icensing prior to 19;0 aimed at achieving the%ndustrial )icensing prior to 19;0 aimed at achieving thefollowing among others/following among others/

evelopment of industries and encouraging industrialevelopment of industries and encouraging industrial

activity in accordance with the plan prioritiesactivity in accordance with the plan priorities *hecking the concentration of economic power *hecking the concentration of economic power Reduction of regional disparitiesReduction of regional disparities roper allocation of foreign e&changeroper allocation of foreign e&change evelopment, protection, and encouragement of smallevelopment, protection, and encouragement of small

scale industriesscale industries =oderni4ation of technology and achievement of=oderni4ation of technology and achievement of

industrial growth.industrial growth.



olicy 19517;0 continues3olicy 19517;0 continues3

his policy in early 19;0s came to #e the o#'ect of criticism fromhis policy in early 19;0s came to #e the o#'ect of criticism fromtwo opposite angles/two opposite angles/

i: he left wing politicians and academicians critici4ed it asi: he left wing politicians and academicians critici4ed it as

having unduly helped the growth of large #usiness houses andhaving unduly helped the growth of large #usiness houses andthus furthered the concentration of economic power to commonthus furthered the concentration of economic power to commondetriment.detriment.

ii: )eaders of private #usiness and their academic critici4ed it asii: )eaders of private #usiness and their academic critici4ed it as

stifling the industrial growth of the country and creatingstifling the industrial growth of the country and creatingunemployment and large production gaps.unemployment and large production gaps.



%ndustrial )icensing olicy 19;070%ndustrial )icensing olicy 19;070

he industrial licensing policy came in for sharp criticism from varioushe industrial licensing policy came in for sharp criticism from various

committee and commission. he main criticism leveled against it were/committee and commission. he main criticism leveled against it were/

his policy had not #een consistent with the industrial policyhis policy had not #een consistent with the industrial policy

Resolution of 195;.i.e., no specific instruction had #een given to theResolution of 195;.i.e., no specific instruction had #een given to thelicensing authorities a#out keeping in view the general o#'ective oflicensing authorities a#out keeping in view the general o#'ective of

preventing concentration of economic power and monopolistic preventing concentration of economic power and monopolistic

tendenciestendencies

romotion of large industrial houses, andromotion of large industrial houses, and

6sage of some unethical practices followed #y a section of large6sage of some unethical practices followed #y a section of large

#usiness houses, for e&ample, multiple applications in different names #usiness houses, for e&ample, multiple applications in different names

for the same items.for the same items.



%ndustrial )icensing olicies190719<0%ndustrial )icensing olicies190719<0

&ndustrial licensing 'olicy of 1(7&ndustrial licensing 'olicy of 1(7

+overnment of %ndia announced a new industrial policy in @e#ruary+overnment of %ndia announced a new industrial policy in @e#ruary190.190.

"everal restrictive policies are followed in this policy. hey are/"everal restrictive policies are followed in this policy. hey are/

%t #anned the entry of large industrial houses and foreign companies%t #anned the entry of large industrial houses and foreign companiesinto any field e&cept core industries, heavy investment pro'ects, andinto any field e&cept core industries, heavy investment pro'ects, ande&port oriented pro'ects.e&port oriented pro'ects.

he government accepted the policy of converti#ility of term loanshe government accepted the policy of converti#ility of term loansgranted to industry #y pu#lic financial institutions into equity.granted to industry #y pu#lic financial institutions into equity. *ompanies with foreign holding of 5 percent and a#ove had to issue*ompanies with foreign holding of 5 percent and a#ove had to issue

fresh equity equivalent to (0 percent.fresh equity equivalent to (0 percent.





&ndustrial *icensing 'olicy of 1(77&ndustrial *icensing 'olicy of 1(77

Banata party government, which came to power after the +eneralBanata party government, which came to power after the +eneral

2lections of 19, announced a new industrial policy statement on2lections of 19, announced a new industrial policy statement onecem#er !$, 19.ecem#er !$, 19.

he 19 licensing policy provided thrust mainly in two respects/he 19 licensing policy provided thrust mainly in two respects/

riority to small scale, village, and tiny sector industries in futureindustrialisation, and

+eographical dispersal of industries from metropolitan centers torural and #ackward areas.



%ndustrial olicy "tatement 19<0790%ndustrial olicy "tatement 19<0790

he +eneral 2lections of 19<0 and the return to power of the *ongresshe +eneral 2lections of 19<0 and the return to power of the *ongress

party #rought a#out the %ndustrial olicy statement of 19<0 and 19<!. party #rought a#out the %ndustrial olicy statement of 19<0 and 19<!.

=a'or steps taken under this policy are as follows/=a'or steps taken under this policy are as follows/

)icensing was not required for an e&isting licensed undertakings if the)icensing was not required for an e&isting licensed undertakings if thetotal investment did not e&ceed Rs. $ crore and if it did not requiretotal investment did not e&ceed Rs. $ crore and if it did not require

foreign e&change e&cess of 10 percent of e&7 factory value of Rs. !5foreign e&change e&cess of 10 percent of e&7 factory value of Rs. !5

lakh, whichever is less.lakh, whichever is less.

n e&isting licensed undertaking did not require a fresh license ton e&isting licensed undertaking did not require a fresh license to

manufacture any new item from schedule % to the ma&imum of themanufacture any new item from schedule % to the ma&imum of thelicensed capacity and also e&pand or manufacture a new productlicensed capacity and also e&pand or manufacture a new product

making use of its own wastes or effluent on the recommendation of themaking use of its own wastes or effluent on the recommendation of the

administrative ministryadministrative ministry

li 19<0 90 i li 19<0 90 i



olicy 19<0790 continues3olicy 19<0790 continues3 Co industrial license was required for small7scale units to produce Co industrial license was required for small7scale units to produce

any of the items reserved for the sector under the followingany of the items reserved for the sector under the followingconditions/conditions/

i.i. he unit should not #elong to any dominant undertaking as definedhe unit should not #elong to any dominant undertaking as definedin =R ct,in =R ct,

ii.ii. he unit and other interconnected unit together should not possesshe unit and other interconnected unit together should not possessassets e&ceeding Rs. !0 crore.assets e&ceeding Rs. !0 crore.

iii.iii. %n respect of foreign ownership, there should not #e over (0 percent%n respect of foreign ownership, there should not #e over (0 percentequity owned #y foreign companies or su#sidiaries or foreignequity owned #y foreign companies or su#sidiaries or foreignindividuals.individuals.

iv.iv. he items produced should not #elong to the schedule category.he items produced should not #elong to the schedule category.





olicy ecisionsolicy ecisions

o unshackle the %ndian industrial economy from unnecessaryo unshackle the %ndian industrial economy from unnecessary #ureaucratic control. #ureaucratic control.

the series of measures taken #y government in the areas of tradethe series of measures taken #y government in the areas of trade policy, e&change rate management, fiscal policy, financial sector policy, e&change rate management, fiscal policy, financial sector

reform, overall macroeconomic management.reform, overall macroeconomic management.

&ndustrial *icensing 'olicy +&ndustrial *icensing 'olicy +

industrial licensing a#olished for all pro'ects e&cept for short list ofindustrial licensing a#olished for all pro'ects e&cept for short list ofindustries related to security, strategic concerns, social reasons,industries related to security, strategic concerns, social reasons,ha4ardous chemicals, overriding environmental reasons, items of elitistha4ardous chemicals, overriding environmental reasons, items of elitistconsumptionconsumption





,oreign &nvestment +,oreign &nvestment +

pproval given to direct foreign investment up to 51D foreign

equity in high priority industries ,import components,

intermediate goods, payment of fees royalties governed #y

general policy, payment of dividends made through R%.

@oreign equity proposals need not #e accompanied #y foreign

technology agreements, ma'ority foreign equity holding up to

51D will #e allowed for trading companies engaged in e&port

activities.

"pecial empowered #oard constituted to negotiate with num#er of

international firms approve direct foreign investment in select

areas so as to give access to high7ech world markets.



,oreign Technology Agreements +,oreign Technology Agreements +

utomatic permission to high priority industries upto payment of 1utomatic permission to high priority industries upto payment of 1crores,5D royalty for domestic sales,<D for e&port if no free foreigncrores,5D royalty for domestic sales,<D for e&port if no free foreigne&change is needed for payments.e&change is needed for payments.

-ther proposals need approval under general procedure, no permission-ther proposals need approval under general procedure, no permission

is needed for hiring foreign technicians, foreign testing of indigenouslyis needed for hiring foreign technicians, foreign testing of indigenouslydeveloped technologies.developed technologies.

'ublic "ector +'ublic "ector +

@ocus on strategic, high7ech, infrastructure, no #ar for areas of@ocus on strategic, high7ech, infrastructure, no #ar for areas ofe&clusivity to #e opened up to private sector ,pu#lic sector will #ee&clusivity to #e opened up to private sector ,pu#lic sector will #eallowed to entered in unreserved areas.allowed to entered in unreserved areas.



"ick pu#lic enterprises were referred to %@R ,social security"ick pu#lic enterprises were referred to %@R ,social securitymechanism created to protect interest of workers affected.mechanism created to protect interest of workers affected.

art of government share holding in pu#lic sector offered toart of government share holding in pu#lic sector offered tomutual funds, financial institutions ,general pu#lic ,workers.mutual funds, financial institutions ,general pu#lic ,workers.

oards of pu#lic sector companies made more professionaloards of pu#lic sector companies made more professional

with more powers, more thrust on performance improvementwith more powers, more thrust on performance improvementthrough =-6, up gradations of technical e&pertise to makethrough =-6, up gradations of technical e&pertise to make=-6 negotiations more effective.=-6 negotiations more effective.

A/-T' A/T



-T' A/T+-T' A/T+

o remove threshold limits ,eliminating the need of prior approval ofo remove threshold limits ,eliminating the need of prior approval ofcentral government for esta#lishing e&pansions of newcentral government for esta#lishing e&pansions of newundertakings, merger, amalgamation, takeover appointments ofundertakings, merger, amalgamation, takeover appointments ofdirectors .directors .

*ontrol to regulate monopolistic restrictive unfair trade practices,*ontrol to regulate monopolistic restrictive unfair trade practices,newly empowered =R commission authori4ed to investigate onnewly empowered =R commission authori4ed to investigate oncomplaints receivedcomplaints received

Cecessary comprehensive amendments will #e made in the =R ct Cecessary comprehensive amendments will #e made in the =R ctin this regard and for ena#ling the =R *ommissions to e&ercisein this regard and for ena#ling the =R *ommissions to e&ercise

punitive and compensatory powers. punitive and compensatory powers.



2&emptions from )icensing2&emptions from )icensing

! #road categories of industries are e&empted from licensing include! #road categories of industries are e&empted from licensing include

automotive ancillaries, agricultural implements, cycles, leather goods,automotive ancillaries, agricultural implements, cycles, leather goods,

glassware.glassware.

2&port7oriented industries, import su#stitution items, latest technology2&port7oriented industries, import su#stitution items, latest technology

industries, capital goods industries are e&empted if not =R or @2R orindustries, capital goods industries are e&empted if not =R or @2R or

not reserved for small7scale sector.not reserved for small7scale sector.

=ultinationals are permitted to hold equities up to (9D in selected small=ultinationals are permitted to hold equities up to (9D in selected small

scale industries <! #ulk drugs.scale industries <! #ulk drugs.

%tems relating to an industries which is not included in the first schedule%tems relating to an industries which is not included in the first schedule

of the act .of the act .

2 ti ti2&emptions continues



2&emptions continues32&emptions continues3

%tems to #e manufactured in an undertaking which does not come under%tems to #e manufactured in an undertaking which does not come under

the definition of a >factory? under the industries 8 and R : ct , 1951.the definition of a >factory? under the industries 8 and R : ct , 1951.

%tems to #e manufactured in the de7licensed sector of investment up to%tems to #e manufactured in the de7licensed sector of investment up toRs. !5 crore in fi&ed assets in non7#ackward areas and up to Rs. 5Rs. !5 crore in fi&ed assets in non7#ackward areas and up to Rs. 5crore in #ackward areas.crore in #ackward areas.

2&pansions which does not come under su#stantial e&pansion ,that is ,2&pansions which does not come under su#stantial e&pansion ,that is ,up to !5D of the e&isting capacity.up to !5D of the e&isting capacity.

"mall scale units su#'ect to certain conditions"mall scale units su#'ect to certain conditions ..

%tems which do not fall under the definition of > new article?.%tems which do not fall under the definition of > new article?.



%ndustrial )icensing/ *R%%*%"=%ndustrial )icensing/ *R%%*%"=

=ost of the o#'ectives could not #e achieved, industrial investment=ost of the o#'ectives could not #e achieved, industrial investmentcould not #e fully streamlined.could not #e fully streamlined.

%t could not fully succeed in preventing concentration of monopoly%t could not fully succeed in preventing concentration of monopoly economic power. economic power.

)icensing could not provide a clear cut guidelines a#out industrial)icensing could not provide a clear cut guidelines a#out industriallocation there#y resulting in un#alanced industriali4ation.location there#y resulting in un#alanced industriali4ation.

@oreign investments was restricted time to time affecting inflow of@oreign investments was restricted time to time affecting inflow ofcapital, technology.capital, technology.

l i



*onclusions*onclusions

%C6"R%) )%*2C"%C+ constituted the key element%C6"R%) )%*2C"%C+ constituted the key element

+overnment of %ndiaAs industrial policy since 1951.+overnment of %ndiaAs industrial policy since 1951.

"everal important controls such as =R *, capital goods"everal important controls such as =R *, capital goods

import control and government policy regarding foreignimport control and government policy regarding foreigninvestments and foreign colla#orations have #een taken.investments and foreign colla#orations have #een taken.

+overnment continues to provide necessary control measures for+overnment continues to provide necessary control measures for

the development of economy and infrastructure of the nation .the development of economy and infrastructure of the nation .

%t is e&pected that the new industrial policies would #e reviewed%t is e&pected that the new industrial policies would #e reviewed

from the +overnment from time to time.from the +overnment from time to time.



Than You

Submi!" B# $

nshul 8o,al 62>.a Shar.a 72

San+a, 8aur #2?itu+a Thaur 92./er 1024d <oha..ad

Submi!" T%$<rs Shila ain

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Industrial-and-Licensing-Policy.pdf