industrrial policy

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INDUSTRIAL POLICY IN INDIA
by :
DR. T.K. JAIN
AFTERSCHO☺OL
centre for social entrepreneurship
sivakamu veterinary hospital road
bikaner 334001 rajasthan, india
www.afterschoool.tk
mobile : 91+9414430763

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WHAT IS INDUSTRIAL
POLICY ?
The overall policy framework by the
government towards industry. The Industrial
policies were announced in 1948, 56, & 91.
The basic structure of today is that of 1956
and 1991. It defines the scope of industries
an the level of involvement of the
government in industrial regulation and
promotion.

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What is an industry ?
Section 3(d) of I.D.R. Act defines industrial undertaking to include any
undertaking pertaining to a scheduled industry carried on in one or more
factories by any person or authority including Government. What is not
a factory : where the number of workers employed is less than 50 where
power is used or, less than 100 where no power is used, it would not be
considered to be factory under the Act and consequently, it would not be
an ‘industrial undertaking’ for the purposes of this Act. Though the
word ‘undertaking’ is not separately defined in the Act, the basic feature
expected to be present to constitute an undertaking is the existence of a
factory as defined in the Act where some manufacturing process is
carried on.

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Owner
The term owner under Section 3(f) of IDRA has been
defined to mean the person who, or the authority
which, has the ultimate control over the affairs of
the undertaking and where the said affairs are
entrusted to a manager, managing director or
managing agent, such manager, managing director
or managing agent shall be deemed to be the owner
of the undertaking. He has the responsiblity to
obtain licence and take permission from the
government.

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Set up under IDRA
There was schedule I to IDRA, which
contained list of industries for which prior
licence was necessary. Every indutrial
undertaking had to take prior licence and get
itself registered. Small scale industries and
anciliary industry were exempted. There was
a development council and an advisory
council to advise the government.

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What is small scale industry ?
When investment in plant and machinary is
less than 5 crore rupees (earlier this limit was
Rs. 1 crore), it is called small scale industry.
It can be set up by registration with DIC
(district industry centre)

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What is ancillary industry ? ?
These units are to help large industry. They
make spare parts / components for large
industry. They are located near large
industries. There is also investment limit for
ancilliary industry. Example of ancilliary
industry : companies which make steerings,
spare parts for Automobile companies.

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Location of industry
Industrial undertakings are free to select the
location of a project. However, in the case of
cities with population of more than one
million (as per the 1991 census), the
proposed location should be at least 25 KM
away from the Standard Urban Area limits

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Environmental clearances
Industries have to obtain Statutory clearances
relating to Pollution Control and
Environment for setting up an industrial
project and expansion/ modernisation of
existing projects. Environment Protection
Act, 1986 has listed 32 projects for which
these clearances are compulsory.

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Micro and small companies
Micro means investment upto 25 lakhs in plant
and machinery. Now MSME act is there
under which large companies have to make
timely payments to MSME
(micro,small,medium enterprises). Section
20 of IRDA asks the State Government to
establish by notification, one or more Micro
and Small Enterprises Facilitation Councils

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Agriculture industry – export
focus
1. A new scheme called the Vishesh Krishi and Gram Udyog Yojna
(Special Agricultural and Village Industry Scheme) has been introduced
for promoting the export of fruits, vegetables, flowers, minor forest
produce, and their value added products and gram Udyog products; 2.
Funds have been earmarked under Assistance to States for Infrastructure
Development of Exports (ASIDE) for development of Agri Export
Zones (AEZ) 3. Capital goods imported under EPCG have been
permitted to be installed anywhere in the AEZ; 4. Import of restricted
items, such as panels, have been allowed under the various export
promotion schemes 5. Import of inputs such as pesticides have been
permitted under the Advance Authorisation for agro exports; 6.
New towns of export excellence with a threshold limit of Rs 250 crore
have been notified.

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Handloom Industry Export
1. Specific funds have been earmarked under Market Access
Initiatives (MAI)/ Marketing Development Assistance (MDA)
Scheme for promoting handloom exports 2. Duty free import
entitlement of specified trimmings and embellishments has
been fixed as 5% of FOB value of exports during the previous
financial year; 3. Duty free import entitlement of hand
knotted carpet samples has been fixed as 1% of FOB value of
exports during the previous financial year; 4. Duty free
import of old pieces of hand knotted carpets on consignment
basis for re-export after repair has been permitted 5. New
towns of export excellence with a threshold limit of Rs 250
crore have been notified 6. A trade mark for handloom on
lines similar to woolmark to be introduced to enable
handloom products to develop a niche market with a distinct
identity.

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Handicraft exports
1. New Handicraft SEZs have been established to procure products from the
cottage sector and do the finishing for exports;
2. Duty free import entitlement of trimmings and embellishments has been
fixed as 5% of the FOB value of exports during the previous financial year. The
entitlement is broad banded, and extends also to merchant exporters tied up with
supporting manufacturers; 3. The Handicraft Export Promotion Council has
been authorized to import trimmings, embellishments and consumables on
behalf of those exporters for whom direct import may not be viable;
4. Specific funds have been earmarked under MAI and MDA Schemes for
promoting Handicraft exports;
5. The duty free import of trimmings, embellishments and consumables have
been exempted from Countervailing Duties;
6. New towns of export excellence with a reduced threshold limit of Rs 250
crore have been notified.

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JEMS AND JEWELLERY
EXPORT
1. Import of gold of 8 carat and above has been allowed under the
replenishment scheme subject to certain conditions.
2. Duty free import entitlement of consumables for metals other than
Gold and Platinum has been fixed as 2% of FOB value of exports during
the previous financial year;
3. Duty free import entitlement of commercial samples has been fixed
as Rs. 3,00,000;
4. Duty free re-import entitlement for rejected jewellery has been fixed
as 2% of the FOB value of exports;
5. Cutting and polishing of gems and jewellery, is treated as
manufacturing for the purposes of exemption under Section 10A of the
Income Tax Act.

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LEATHER GOODS EXPORTS
1. Duty free import entitlement of specified items has been fixed as 5% of FOB
value of exports during the preceding financial year;
2. The duty free entitlement for the import of trimmings, embellishments and
footwear components for footwear (leather as well as synthetic), gloves, travel
bags and handbags has been fixed as 3% of FOB value of exports of the
previous financial year. The entitlement also covers packing material, such as
printed and non printed shoeboxes, small cartons made of wood, tin or plastic
materials for packing footwear;
3. Machinery and equipment for Effluent Treatment Plants have been exempted
from basic customs duty;
4. Re-export of unsuitable imported materials such as raw hides and skins and
wet blue leathers is permitted;
5. CVD is exempted on specified lining and interlining material;
6. CVD is exempted on raw, tanned and dressed fur skins falling under Chapter
43 of ITC(HS).

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What is an SBU?
Strategic business unit – a unit which has
independent decision making power withing
overall corporate strategy of the corporation.
It can take strategic decisions like product,
market, technology, etc. An SBU is an
independent unit within the corporate
umbrella.

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