A

PROJECT ON
INDUSTRIAL POLICY 1991
SUBMITTED TO:
DR. S KISPOTTA
ASSISTANT PROFESSOR
ECONOMICS

SUBMITTED BY:
TUSHAR MIHSRA
ROLL NO 36 5THSEMSTER
DATE OF SUBMISSION: 20.10.2015

SCHOOL OF LAW

GURUGHASIDAS CENTRAL UNIVERSITY,

BILASPUR

ACKNOWLEDGEMENT

I would like to express my earnest and deepest gratitude to, S. KISPOTTA Faculty for
giving me this opportunity to do a project on such a valuable topic of INDUSTRIAL
POLICY. I am grateful for the assistance, guidance and support that were extended during
the course of excellent research. I am also thankful to the Department for providing the
resources necessary for the research work. I thank my parents and my friends for their moral
support and love throughout my research work and project preparation. Above all I thank
God Almighty for blessing me with the health and vitality to complete the project.

TUSHAR MISHRA
ROLL NO. 36
BCOM LL.B 5th SEMSTER

DECLARATION

I, TUSHAR MISHRA, Roll No. 36, BCOM LLB 5th Semester of Guru Ghasidas University
do hereby declare that, this project is my original work and I have not copied this project or
any part thereof from any source without due acknowledgement. I am highly indebted of the
my subject professor who guide me and help me out in making this project, authors of the
books that I have referred in my project as well as the writers of the articles and the owner of
the information taken from website on it. It is only because of their contribution and proper
guidance of my faculty advisor S.KISPOTTA SIR, that I was able to gather lights on this
project.

TIUSHAR MISHRA
Roll No. 36
BCOM LLB 5Th SEMSTER

ECONOMICS
INDUSTRIAL POLICY 1991

Introduction The concept of industrial policy is comprehensive and its covers all those
producers, principles, policies, rules and regulation which control the industrial undertakings
of a country and shape the pattern of industrialization.
Before independence, the British were not interested in the industrialization. So
the production had declined to the lowest level. As soon as India got independence, the
government of India assumed an important role to promote rapid industrializations.
Immediately after the independence India experiences slow phase of development with
regard to the industries. The industrial policy indicates the respective role of the public,
private, joint and comparative sectors; small, medium, and large scale industries and
underlined the national priorities and the economic development strategy. It is also expressed
governments policy towards foreign capital and technology, labour policy, tariff policy etc,
in respect of industrial sector, in short them the industrial development, and thereby the
economic development to a very significant extent. Has been guided regulated and forested
by the industrial policy.
Since then various industrial policies have been declared by government
keeping, in view the needs of country. There are sixs industrial policies are:1) Industrial policy 1948.
2) Industrial policy 1956.
3) Industrial policy 1977.
4) Industrial policy 1980.
5) Industrial policy 1990.
6) Industrial policy 1991.
After independence, the first industrial policy was declared on April 6th, 1948 by the Union
industrial Minister Mr. Shayama Prasad Mukharjee. The policy established a base for mixed
and controlled economy in India and clearly divided the industries sector in to public and
private sectors. Later on 1948 industrial policy was replaced by new industrial policy
resolution declared on 30th April, 1956 with the basic objective on establishing socialist
pattern of society in the country. Through the government had declared a number of
industrial policies after 1956 but even new policy accepted the 1956.Industrial policy
resolution as it base. In June 1991, Narshima Rao government took charge and wave of
reforms and liberalization was observed in the economy. In this new atmosphere of economic
reform, the government declared board changes in industrial policy on June 24th, 1991.

Industrial policy up to 1991 The industrial policy of India prior to the liberalization
ushered in 1991 was characterized by the following features:

Reservation of industries (a) Further development of most of the import industries

was exclusively reserved for the public sector.
(b) Manufacturer of a large number (over 850 in 1991) of items was reserved for the
small sector.

Dominance of public sector The policy of the government was to ensure that the
industrial policy gained control over the commanding heights of the economy. The
industrial policy resolution of 1948 establishing public sector monopoly / near
monopoly in 9 industries. The industrial policy resolution of 1956, brought out in the
light of the adoption by the parliament socialist pattern of society as the national goal
and the second five year plan model which gave emphasis to the basic and heavy
industries further expended substantially of the public sector.
Further development of 17 most important industries was
exclusively reserved for the public sector (Schedule A). Further public sector was
assigned priority for establishment of new units in 12 most important of the remaining
industries (Schedule B).

Entry and growth restriction There were a number of entry and growth restriction
on the private sector (Particularly on the larger firms and foreign firms) even in
respect of industries where the private sector was fallowed. A license was mandatory
for establishing new units with investments above a specified unit, for manufacturing
new products and for substantial expansion of existing undertaking.
Large firms (having assets, including those of
interconnected undertakings, of Rs 100 Corer or more) and dominate undertakings
(i.e. those having market share of 25 percent or more) has to obtain clearness under
the MRTP act, in addition to the individuals license, for establishing new undertaking,
substantial expansions and manufacturer of new items.

Restriction on foreign capital and technology The scope of use of foreign capital
and technology was limited. Even in industries where foreign capital was allowed it is
normally subject to a ceiling of 40 per cent of the total equality, although expansion
were allowed in certain cases. Operation of foreign companies in India and issue of
securities abroad buy Indian companies were regulated in FERA ACT 1973.

New industrial policy 1991 - After the downfall of the national front government, the
congress party again came up and declare the new industrial policy on July 24, 1991, which
heralded the economic reforms in India has enormously expanded the scope of the private
sector by opening up most of the industries for the private sector and substantially
dismantatling the entry and growth restriction subjective such as dramatic etc. have been
used to describe the nature of the charge in the industrial policy.
During this period there was a declaration and implantation of
liberalization, privatization, and globalization. The industrial policy reforms unshared in 1991
have reduced the industrial licensing requirement removed restriction on investment
expansion and facilitated easy access to foreign technology and FDI.
Objective of new industrial policy The major objective on new industrial policy
are :(1) To maintain and develop the establish and the working industries on the basis of
their achievements.
(2) To mitigate the short coming and lacunas spread to the industries.
(3) To have continuous improvement in the industrial productivity.
(4) To generate employment opportunities by way of establishing new industries.
(5) To develop the exiting industries in such a manner that they have the entry in to
international competition.

Features of industrial policy The main features of new industrial policy are
(A) To provide industrial licensing, the industrial licensing system, act 1951, gave the
provision to have licensing system relaxed. There were 18 such industries were
required license
Coal industry.
Petroleum and its distillation.
Alcoholic drinks.
Sugar industries.
Animal fats & oils.
Cigar & cigarettes.
Asbestos.
Ply wood and allied products.
Skin and ketenes.
Dress for skin.
Motor car.
Paper and news print.
Electronic and aerospace and Defense equipments.
Industrial exclusive.
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Hazardous chemicals.
Drugs and pharmaceuticals.
CD player and tape recorder.
Refrigerator, washing machine, microwave.

At present, all the other industries were free from license except 5 industries they are
fallows:

Alcohol.
Industries related to tobacco.
Industries related to defense equipments and electronic aerospace.
Explosive items bombs, crackers.
Hazardous chemicals.

(B) Foreign investment, 1991 policy made special provision to have foreign
investment in one country the foreign were allowed to invest 51 % of their capital
in Indian industries.
(C) Foreign technology.
(D) Location policy.
(E) Abolition of existing registration scheme.
(F) Working of public enterprises.
(G) Expansion and diversification of exiting units.

Impact of new industrial policy The new industrial policy was awaited for a long
time. The new policy should be welcome because it has taken the bold decision to end the
license permit raj and save the entrepreneur form the harassment of breakwaters of the
country. Following are the positive impact of new industrial policy is
1. Industries are now directing their efforts towards the world market.
2. There is improvement in overall work culture. The workers are now more equality
conscious and cost conscious.
3. There is awareness about research and development.
4. There in all over relief due to change in industrial licensing.
5. Foreign investment attracted India.
6. The role of public sector is confined ho high priority areas. It has improved the level
of working and the wastage of reduced.

Critical evolution of new industrial policy The economic reforms unshared in

since 1991 are revolutionary indeed in comparison with the policy are procedural reforms
attempted in India. It is undoubtedly is a bold step in the direction of freeing the industry
from the shackles of abortive and crippling controls. Although further policies changes and
reforms are needed, changes already changes introduced implemented in real Ernest will
certainly provide a considerable growth imputes. However, real is a challenging task. The
bureaucracy has a tendency to attempt to defeat measures aimed at deregulations.

A strong mandate and political will and bond

administrative measures are essential for implementing several of the proposals. The
government, however, often shows signs of confusion and lack of boldness on the face of
opposition from trade unions, politicians and bureaucrats. There will certainly be strong
opposition from these groups to protect their vested interests. For example in the face of
strong opposition from the trade unions the governments stand on privatization has not been
clear. In our country the might of organized minority often gates dominances over the rights
and welfare of the unorganized majority.

Although the economic policy liberalization of 1991 came in

for scathing criticism by the opposition parties, when this parties drew up their election
manifestoes in April, 1996, their anti liberalization stand was conspicuous by its
inconspicuous. More interestingly when the short lived BJP government and united fronts
government those fellows announced their economic policies they amounted not only to
endorsing the liberalization. Policy ushered in by the congress government under Nrshima
Rao but also to carrying forward the process of deregulation and decontrol to achieve faster
economic growth. The economic policy of the united front (UF) government expressed in the
common minimum program (CPM) which that there no substitute for growth, and the
countrys GDP needed to grow at over seven per cent in the next 10 years in order to abolish
endemic poverty and unemployment stated the UF government is committed to faster
economic growth. The document on the CMP the further deregulation and decontrol might
required in the agricultural, industrial and other sector. In, short, Indias economic
liberalization is almost unanimously accepted by all political parties so that it is irreversible.
Development since 1991 have demonstrated to the growth competitive impulses that the
liberalization can generate there is also lot of lessons to be learned from the Chinese
experience of liberalization.

Conclusion In conclusion we may say that the new industrial policy may be able to
attract the foreign investment and improve the domestic investment but whether it shall lead
to more employment along with higher output growth is doubtful. But it is sure that the
positive results are coming. Industries are growing with a fast speed and there in all over
improvement in the economy of the country.
The industrial policy announced in July 1991 along with other economic
policy changes and measures ushered in a process economic reform in India now there no
growth restriction in private sector except in a very small number of industries.

Bibliography
Books
A. Marathe Vaishali & Sao Ram Pati, Applied economics and commercial
geography, (Navbodh Prakashan, Raipur, 1st edition, 2012).
B. Dr. Sinha V.C, Business environment,(SBPD Publishing house, Agra, 2013 14)
C. Notes on Industrial development, given by S. kispotta, Asst. Prof. Economics,
Guru Ghasidas University.

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