Industrial policy,1991MANAGERIAL ECONOMICS

1. PRESENTATION
ON
INDUSTRIAL POLICY, 1991
MASTER OF SOCIAL WORKS-II
YR

2. SYNOPSIS
• MEANING: INDUSTRIAL POLICY
• OBJECTIVES OF INDUSTRIAL POLICY
• OBJECTIVES OF NEW INDUSTRIAL POLICY
• FEATURES OF NIP
• INDUSTRIAL POLICIES
• POSITIVES AND WATCH-OUTS

3. MEANING: INDUSTRIAL POLICY
Industrial policy means rules, regulations ,
principles , policies , and procedures laid down
by government for regulating , developing and
controlling industrial undertakings in the
country. It prescribes the respective roles of
the public, private joint and cooperative
sectors for the development of industries. It
also indicates the role of the large , medium ,
and small sector . It incorporates fiscal and
monetary policies, tariff policy , labour policy
and the government attitude towards foreign
capital, and role to be played by multinational
corporations in the development of the
industrial sector.

4. OBJECTIVES OF INDUSTRIAL POLICY
Accelerating the overall rate of Preventing monopolies and
growth through industrialization. concentration of industrial
Expanding the industrial base in power.
relation to industrialization needs of
the country.
Creating competitive conditions
Generating employment and and encouraging the growth of
reducing poverty.
entrepreneurship
Promoting balanced industrial
development.
Promoting linkages with others
sectors of the economy.
Assisting small enterprises
Encouraging the growth of
industrial research and
development

5. OBJECTIVES OF NEW INDUSTRIAL POLICY
Attainment of
international
competitiveness.
Revival of Development of
weak units. backward areas.
Full utilization
Encouraging
of plant
competition
capacities to
within Indian
generate
industry.
employment.
Efficient use of
productive
resources.

6. FEATURES OF NIP
• De-reservation of Public Sector: The number of industries reserved for
public sector was reduced to 8 industries. At present, there are only three
industries reserved for public sector which include. (a) Atomic energy (b)
Railways, and (c) specified Minerals.
• De-licensing: -The most important features of NIP, 1991 was the abolition
of industrial licensing of all industries except six industries. The six
industries are of social and strategic concern. The six industries are
1. Hazardous Chemicals. 2. Alcohol 3. Cigarettes 4. Industrial Explosives
5. Defense Products, and 6. Drug and pharmaceuticals.
• Disinvestment of public sector: -The NIP 1991 permitted disinvestment of
public sector units. Disinvestment is a process of selling government equity
in PSUs in favour of private parties. Disinvestments aim at certain
objectives. (1) To provide better customer Service. (2) To make effective
use of disinvestment funds. (3) To overcome the problem of political
interference. (4) To enable the government to concentrate on social
development.

7. FEATURES OF NIP,1991 (cont…..)
• Foreign Investment: Approval will be given for direct foreign investment
up to 51 percent foreign equity in high priority industries . There shall be
no bottlenecks of any kind in this process
• Foreign Technology Agreements: Automatic permission will be given for
foreign technology agreements in high priority industries up to a lump sum
payment of Rs. 1 crore, 5% royalty for domestic sales and 8% for exports,
subject to total payment of 8% of sales over a 10 year period from date of
agreement or 7 years from commencement of production. No permission
will be necessary for hiring of foreign technicians, foreign testing of
indigenously developed technologies.
• MRTP Act: Emphasis will be placed on controlling and regulating
monopolistic, restrictive and unfair trade practices. Simultaneously, the
newly empowered MRTP Commission will be authorized to initiative
investigations on complaints received from individual consumers or classes
of consumers in regard to monopolistic, restrictive and unfair trade
practices.

8. FEATURES OF NIP,1991 (cont…..)
• Public Sector Policy: The priority areas for growth of public enterprises in
the future will be the following:
 Essential infrastructure goods and services.
 Exploration and exploitation of oil and mineral resources.
 Technology development and building of manufacturing capabilities in
areas which are crucial in the long term development of the economy and
where private sector investment is inadequate.
 Manufacture of products where strategic considerations predominate such
as defense equipment.

9. INDUSTRIAL POLICIES
Industrial Industrial
policy policy
resolution resolution
of 1991 of 1948
Industrial Industrial
policy policy
resolution resolution
of 1980 of 1956
Industrial Industrial
policy policy
resolution resolution
of 1977 of 1973

10. Positives & Watch- Outs
o POSITIVES:
• De-licensing of most industries will help entrepreneurs to quickly seize
business opportunities.
• Removal of controls under the MRTP Act will facilitate expansion and
growth.
• There will be greater inflow of foreign capital and technology due to easing
of restrictions.
• Burden on the public sector will be reduced.
o WATCH-OUTS:
• . The bureaucracy has a tendency to attempt to defeat measures aimed at
deregulations.
• Foreign investors still regard the policy and procedural system in India
confusing. Rather many feel that policy and development environment in
China is superior to India.
• Distortion in Industrial pattern would occur due to slow pace of investment in
few basic and strategic industries. Absence of a mechanism would slow down
the development of backward areas

11. THANK
YOU