Industry Development

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Presented To

Prof. C. S. Balasubramanyam


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GROUP MEMBERS

NAME ROLL NO.

Mandar Deshmukh 12

Saish Mantri 33

Deepak Patil 42

Mayur Patil 43

Shruti Surve 57


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INTRODUCTION

Industrial Development:

It is development of the manufacturing sector, in other words theprocess of expanding the country's capacity to produce secondary goodsand services.

Industries are broadly divided into three categorize:

Large Scale Industries

Medium Scale Industries

Small Scale Industries


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IMPORTANCE OFINDUSTRIAL

DEVELOPMENT Provide Employment

Increase in Income and Savings

Increase in Economies of scale

Better utilization of raw materials

Development of social overhead


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INDUSTRIAL POLICY

An industrial policy is any government regulation or law that encouragesthe ongoing operation of, or investment in, particular industry. It iscombination of all government regulation aimed at regulation andcontrol of industrial activities in a country.

Goals of Industrial Policy: Rapid agricultural and industrial development of the country.

Rapid expansion opportunities for employment.

Removal of poverty and self-reliance.


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NEW INDUSTRIAL POLICY1991

NIP announced by committee in July, 1991

Focused toward LPG and other objectives

Promoting of Industrialization

Initiatives taken under NIP,1991 covers following areas: Industrial Licensing

Foreign Investment

Foreign Technology Agreements

Public Sector Policy

MRTP Act (Monopoly and Restrictive Trade Practices Act)


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Objectives of NIP,1991:

To abolish the monopoly of any sector or any individual enterprise.

To ensure that the public sector plays its rightful role.

To end poverty and unemployment and to build a modern, democratic,socialist, prosperous and forward-looking India.

Such a society can be built if India grows as part of the world economy and

not in isolation.

Up gradation to world standards in terms of manufacturing and technology.

To provide enhanced support to the small-scale sector.

To enhance foreign investment and technology collaboration, to obtain

higher technology, to increase exports and to expand the production base.


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Positive Impact of NIP,1991:

Increase in production

Removal of bureaucratic hurdles

Increase in competition

Increase in efficiency of public sector

Increase in Foreign Investment

Increase in Exports

Criticism of NIP,1991:

Concentration of Economic power

Increase in Unemployment


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OTHER INITIATIVE TAKENBY GOVT. OF INDIA

Industrial Licensing

Govt. issued notification no. 477(E) on July 25, 1991

Foreign Investment Policy

As per annexure 1: GOI decided to provide approval for direct foreign

investment up to 51% foreign equity in industries. This is subsequentlyincreased to 74% in some industries and with replacement of FERA (1973)with FEMA (1999), 100% FDI is permitted in many areas.

FDI Policy Initiatives:

The FDI policy is being progressively liberalized on an ongoing basis in order

to allow FDI in more industries under the automatic route. Recent changes in FDI Policy


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FOREIGN INFLOWS

(US$ Billion)

Financial Year As per

international

Practices

Percentage

Growth

FDI Equity

Inflow

Percentage

Growth

2003-04 4.32 (-) 14 2.19 (-) 19

2004-05 6.05 (+) 40 3.22 (+) 47

2005-06 8.96 (+) 48 5.54 (+) 72

2006-07 22.83 (+) 146 12.49 (+) 125

2007-08 34.84 (+) 53 24.58 (+) 97

2008-09 41.87 (+) 20 31.40 (+) 28

2009-10 (P) 37.75 (-) 10 25.83 (-) 18

2010-11 (P) 34.85 (-) 08 21.38 (-) 17

2011-12 (P) 46.55 (+) 34 35.12 (+)64

2012-13 (P)

(Apr Nov)

24.65 15.85

Source: DIPP; P: Provisional


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SECTOR-WISE FDI INFLOWS INTOINDUSTRY AND INFRASTRUCTURE

(US $ Billion)1991-2000 2000-2010 2010-2011 2011-2012 April Oct

2011-2012

Food Products 707.4 1237.3 246.9 170.7 190.8

Fermentation Industries 24 770.1 57.7 18.0 53.2

Textiles 241.8 828.6 129.8 74.8 94.0

Wood Products .0 18.8 1.6 1.1 11.6

Paper 250.5 716.9 44.0 30.8 5.6Leather 33.5 42.6 9.3 0.4 341.75

Chemicals 1480.9 4446.1 734.0 589.6 4001.7

Rubber, Plastics & Petroleum

Products (including Oil

Exploration)

90.3 2953.6 573.6 555.0 323.6

Non-Metallic Minerals 261.1 2263.6 657.3 623.3 207.7

Metals & Metal Products 186.2 3143.2 1098.1 964.4 1495.3Machinery and equipment 2043.1 15670.4 1846.7 1447.6 3279.0

Transport Equipment 0.0 4603.2 1286.1 1048.0 609.6

Other Manufacturing 1761.6 5705.6 1495.3 1249.7 706.2

Mining (Including Mining Service) 0.0 730.9 79.5 75.9 136.6

Power 1038.9 5220.9 1464.4 1072.0 1729.4

Telecommunication 1089.4 8915.9 1664.5 1326.7 1988.7

Total 16699.6 110289.3 19426.9 16039.2 24187.8Source: Office of Economic Advisor, DIPP


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PRIVATISATION, GLOBALIZATION ANDLIBERALISATION

Privatization:

It is the incidence or process of transferring ownership of business from thepublic sector (government) to the private sector (business). The privatesector is more efficient than the public sector.

Globalization:

It is a integration of national economies into the international economythrough trade, foreign direct investment, capital flows, migration, and thespread of technology.

Liberalization:

It is a relaxation of previous government restrictions, usually in areas ofsocial or economic policy.


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LIBERALISATION ININDUSTRY

Benefits of Liberalization:

Promotes competition, which leads to lower costs and prices for consumers

Competition promotes efficiency, so resources are wasted much less

Liberalization removes government regulations on the economy, which

promotes jobs, lower prices, higher incomes and lowers inflation Promotes technological advancement, again creating jobs and growing

incomes

Impact of Liberalization:

Increase in Foreign Investment

Attracts Multi-national Companies toward Indian Market Increase in export in 1995-96 by 28.64% over previous year

Increase in Balance of Trade


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INDUSTRIALPERFORMANCE

Recovery of Growth by 9.2% in 2009-10 and 2010-11

Manufacturing, mining, electricity and construction sectors, slowed to3.5 per cent in 2011-12 and by 3.1 in current year.

Electricity Sector has shown moderate growth in 2012-13

The growth of the mining sector in 2012-13 is estimated at 0.4%


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INVESTMENT IN INDUSTRIALSECTORS

GROSS CAPITAL FORMATION ININDUSTRY

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

Rate of growth of GCF

in industry (Percent)46.7 18.3 22.0 24.7 -24.5 24.2 22.3 -10.8

Share of Sectors of

Industry in overall GCF(Percent)

Mining 3.7 4.4 4.4 4.3 3.6 3.6 3.8 3.8Manufacturing 34.1 34.2 34.8 38.1 26.8 32.8 34.7 27.9Registered

Manufacturing24.3 29.0 27.9 32.5 24.1 27.8 29.7 24.9

Unregistered

Manufacturing9.7 5.3 6.9 5.6 2.7 5.1 5.1 3.0

Electricity 5.3 5.5 5.6 5.4 6.3 6.2 6.6 6.8Construction 5.4 4.9 7.0 7.2 5.7 4.8 5.3 6.0Share of Industry in GCF 48.4 49.0 51.8 54.9 42.5 47.5 50.4 44.4

Share of GCF in Industry

as percent of GDP of

this sector

59.0 63.6 69.2 78.7 56.9 64.7 72.5 62.4

Source: DIPP


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CONTRIBUTION OF INDUSTRIAL SECTOR INGDP

India ranks 14th in the factory output in the world

27.6% share in India GDP

Employs 17% of total workforce of India

Industry Growth Rate in India GDP came to 7.6% in 2005- 2006

The manufacturing sector contributed 9.0%

The water supply, gas, and electricity sector contributed 4.3%

The long-term average annual growth of industries comprising mining,manufacturing, and electricity between 1991-92 and 2011-12, averaged

6.7 per cent as against GDP growth of 6.9 per cent.


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CHALLENGES FACED BYINDUSTRIES IN INDIA

Unbalanced Industrial Structure

Low Demand

Regional Concentration

Loss In Public Sector Industries

Industrial Sickness

Lack Of Infrastructure

Improper Location Base

Lack Of Capital

Shortage Of Industrial Raw Material

Higher Cost Of Production And Low Quality Of Goods


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Documents

Industry Development