INDUSTRIAL POLICY – INDIA

What is industrial policy?

An industrial policy is any government regulation or law that encourages the ongoing operation of, or investment in, a particular industry. It is a comprehensive and cover all the procedures, policies, rules and regulations which control the industrial undertakings of the country. It includes fiscal and monetary policies, tariff policies and labor policy.

Major stepping stones in industrial policy on INDIA post independence

· Industrial policy resolution, 1948

· Industrial regulation and development act, 1951

· Industrial policy resolution, 1956

· Industrial policy resolution, 1977

· Industrial policy of 1980

· Industrial licensing policy

· Industrial policy of 1991

INDUSTRIAL POLICY RESOLUTION 1948

The first Industrial Policy Resolution, announced in 1948, broadly laid down the objectives of the Government’s policy in the industrial field and clarified industries and enterprises into four categories, namely:

· Those exclusively owned by the Government,

E.g. arms and ammunition, atomic energy, railways, etc.; and in emergencies, any industry vital for national defense.

· Key or basic industries,

E.g. coal, iron and steel, aircraft manufacture, ship building, telephone, telegraphs and communications equipment except radio receivers, mineral oils, etc.

The undertakings already existing in this group were promised facilities for efficient working and ‘reasonable’ expansion for a period of ten years, at the end of which, the State could exercise the option to nationalize them.

· The third category of 18 specified industries were to be subject to the Government’s control and regulation in consultation with the then provincial (now State) Governments.

· The rest of the industrial field was, more or less, left open to the private sector.

RATIONAL for RESTRICTIVE INDUSTRIAL POLICY OF 1948

India is probably one of the few countries in the world which used its import policy for the healthy development of local industries. Barring the first few years after Independence, the country was facing a shortage of foreign exchange, and because of this shortage, imports had to be restricted. Imports of consumer goods were, therefore, disallowed. A good number of restrictions were put on the import of industrial goods, and the effort of the Government was to encourage the production of these goods indigenously. Local industries were encouraged to have foreign collaborations and to import the technical know-how needed to produce what was being imported into the country.