Unformatted text preview: Industries Development
Introduction Object of industrialisation – to attain
higher levels of economic well-being
GLoalisation, liberalisation and
Adaptability of each country depends
largely on ability of each country to cope
with the liberalised trade, finance and
technology growth. Industrial Policy initiatives - to provide the stimulus for
accelerating growth, industrial efficiency and international
Increase in public-private participation
Restrictions on expansion of large industrial houses have been
Paradigm shift from mere regulation to development
Foreign Trade Policy (FTP) 2004-2009 as a integrated approach
for the development of India’s export and import policies
FDI encouraged extensively in the last 20 years
Foreign investment brings with it added advantages of technology
transfer, marketing expertise, introduction of modern managerial
techniques and new possibilities for promotion of exports. Industrial Policy Resolutions Industrial Policy Resolutions in India – An Overview Industrial Policy Resolution, 1948
b. Postindependence need was felt for a dynamic national policy Objectives –
continuous increase in production and productivity secure equal distribution of wealth Historic document in terms of identifying the economic problems faced by India recognizing the importance of increase in production and recognizing the role of state in the development of industries. Em
phasises on –
1. Securing a continuous increase in production
2. Equitable distribution
3. State m play progressively active role in the development of Industries
4. Besides arm and am unition, atom energy and railway transport, which
would be the monopoly of the Central Governm
ent, the State would be
exclusively responsible for the establishment of new undertakings
5. Industrial field was left open to private enterprise though it was made clear
that the State would also progressively participate in this field
6. Resolution em
phasized on the role of private sectors in the econom
7. The Resolution also recognized the im
portance of participation of foreign
capital and enterprise, particularly in relation to industrial technology and
knowledge, for the rapid industrialization of India. Industrial Policy Resolution, 1956 Recognized the Directive Principles of
State Policy enshrined in the Constitution
Recognized the need to increase the rate of
economic growth and speed up
1. Improving living standards and working conditions for the mass of the people. 2. To reduce disparities in income and wealth. 3. To prevent private monopolies and concentration of economic power in different fields in the hands of small numbers of individuals.
4. The State will progressively assume a predominant and direct responsibility for setting up new industrial undertakings and for developing transport facilities. 5. Undertake State trading on an increasing scale. 6. At the same time private sector to have the opportunity to develop and expand.
7.The principle of cooperation should be applied whenever possible and a steadily increasing proportion of the activities of the private sector developed along cooperative lines. 8. The adoption of the socialist pattern of society as the national objective. 9. The need for planned and rapid development.
10. All industries of basic and strategic importance, or in the nature of public utility services, should be in the public sector. 11. It is always open to the State to undertake any type of industrial production. 12. Categorization of industries into three groups:
12. Categorization of industries into three groups: i) The first category to comprise of industries the future development of which will be the exclusive responsibility of the State.
ii) The second category to consist of industries, which will be progressively state owned and in which the State will, therefore, generally take the initiative in establishing new undertakings, but in which private enterprise will also be expected to supplement the efforts of the State.
iii) The third category to include all the remaining industries, and their future development will, in general, be left to the initiative and enterprise of the private sector. 13.The Government of India stressed the role of cottage and village and smallscale industries in the development of the national economy. 14. Disparities in levels of development between different regions to be progressively reduced. Industrial Policy Resolution,
2. 3. The Resolution emphasized on a closer interaction between the agricultural and industrial sectors.
Highlights of the Resolution:
The Resolution accorded the highest priority to the generation and transmission of power. An exhaustive analysis of industrial products was made to identify products, which are capable of being produced in the smallscale sector. The list of industries exclusively reserved for the smallscale sector was expanded from 180 items to more than 500 items. 4. Within the small scale sector, a tiny sector was also defined with
investment in machinery and equipment upto Rs.1 lakh and
situated in towns with a population of less than 50,000 according
to 1971 census figures, and in villages.
5. Special legislation to protect cottage and household industries
was also proposed to be introduced.
6. I t was also decided that compulsory export obligations, merely
for ensuring the foreign exchange balance of the project, would
no longer be insisted upon while approving new industrial
capacity. 10. In the areas of price control of agricultural and
industrial products, the prices would be regulated to ensure an
adequate return to the investor.
adequate Industrial Policy Statement,
Decentralization and role of small scale and cottage industries was the hallmark Highlights:
1. Highlighted on producing inputs needed by a large number of smaller units and making adequate marketing arrangements. 2. The nucleus plant would also work for upgrading the technology of small units. 3. The Government would promote the development of a system of linkages between nucleus large plants and the satellite ancillaries. 4. To boost the development of smallscale industries, the 4. To boost the development of smallscale industries, the investment limit in the case of tiny units was enhanced to Rs.2 lakh, of smallscale units to Rs.20 lakh and of ancillaries to Rs.25 lakh. 5. A scheme for building buffer stocks of essential raw materials for the Small Scale Industries was introduced for operation through the Small Industries Development Corporations in the States and the National Small Industries Corporation in the Centre.
6. Industrial processes and technologies aimed at optimum utilisation of energy or the exploitation of alternative sources of energy would be given special assistance, including finance on concessional terms. Industrial Policy Statement,
1980 Focused on the need for promoting
competition in the domestic market,
technological advancement and
Foundation was laid for an increasingly
competitive export base and also
encouraged foreign investment in high
technology areas. New Industrial Policy, 1991
Came into effect on 24th July 1991
Came Thrust on development and utilisation of indigenous capabilities in
technology and manufacturing as well as its upgradation to world
1. Pursue a sound policy framework encompassing encouragement of
entrepreneurship, development of indigenous technology through
investment in research and development, bringing in new
technology, dismantling of the regulatory system, development of
the capital markets and increasing competitiveness for the benefit of
the common man.
2. The spread of industrialisation to backward areas of the country to be
actively promoted through appropriate incentives, institutions and
infrastructure investments. 3. Governm to provide enhanced support to the sm
so that it flourishes in an environm of econom efficiency and
continuous technological up gradation.
4. Foreign investm and technology collaboration encouraged to
obtain higher technology, to increase exports and to expand the
5. The Governm endeavored to abolish the monopoly of any sector
or any individual enterprise in any field of m
anufacture, except on
strategic or m
ilitary considerations and open all m
6. To ensure that the public sector plays its rightful role in the evolving
socioeconom scenario of the country. The Governm ensured that
the public sector would run on business lines as envisaged in the
Industrial Policy Resolution of 1956 and would continue to innovate
and lead in strategic areas of national im
portance. 7.The Governm also ensured that it would fully protect the interests of
labour, enhance their welfare and equip them in all respects to deal with the
inevitability of technological change.
8. In order to encourage Workers’ participation in managem
cooperatives were encouraged to participate in packages designed to turn
around sick com
10. Need was also felt to preserve the environm and ensure the efficient
use of available resources.
11. In pursuit of the above objectives, the Governm took up a series of
initiatives in respect of the policies relating to industrial Licensing, foreign
ent, foreign technology agreements, public sector policy, MRTP
A ct etc.
12. With a view to ensure efficient allocation of resources, banking and
capital markets also cam in for m
ajor economic reform in terms of
substantial interest rate deregulation, liberal licensing of private sector
banks, expansion of branch networks of foreign banks, de-linking capital
market from direct government controls, transparency and wider investor
13. Separate policy m
easures were announced in the form of specific
packages aim at upliftm of sm scale and cottage industries as well
as 100% export-oriented units, and units located in the Export Processing
Zones and Technology parks and Special Econom Zones.
ic Industries (Development and
Regulation) Act, 1951
Regulation) Preamble – to provide for the development and
regulation of certain industries.
I ndustries are specified in the first schedule to
the Act, known as ‘Scheduled Industries’.
A ct is implemented through the Development of
I ndustrial Policy and Promotion, Ministry of
Commerce and Industry on whom the power to
develop and regulate scheduled industries in
vested by the Central Government ‘Scheduled
Industries’ Contains list of 38 industries
I nclude Metallurgical Industries, Fuels, Boilers, Prime
Movers, Electrical Equipment, Telecommunications,
Transportation Equipment, Industrial Machinery,
Machine Tools, Agricultural Machinery, Earth Moving
Machinery, Commercial and Office Equipment, Medical
and Surgical Appliances, Instruments, Fertilisers,
Chemicals, Drugs and Pharmaceuticals, Textiles, Paper,
Sugar, Food Processing, Vegetable Oils and Vanaspati,
Soaps, Rubber goods, Leather and Leather goods, Glass,
Ceramics, Cement, Timber products, defence industry
Highlights A ct is mainly divided into two parts: (i) those dealing
with developmental aspects and (ii) those dealing with
regulatory aspects of scheduled industries.
I ntroduces the Central Advisory Council and
Development Councils and such other facilities to secure
Registration aspects include a system of registration of
existing undertaking, licensing of new undertakings for
producing new articles and for substantial expansion or
change of location of existing undertaking. Envisages balanced industrial growth all over India
and optimum use of available resources and
infrastructure. I DR Act also sees that the industries do not suffer
due to financial mismanagement or technical
inefficiency or operational defects. In certain cases Act
provides for investigation by Central Government in
cases of mismanagement and misadministration.
The Act also deals with taking over of direct
management and control in appropriate cases.
Empowers Central Government to grant exemption
to any undertaking or scheduled industries from
application of all or any of the provisions of the Act,
Rules and orders made thereunder.
Rules Central Advisory
d. For advising the Government on matters concerning development
and regulation of Scheduled Industries
Comprises of a Chairman and such other members from among
persons who are in its opinion capable of representing –
interests of owners of industrial undertakings in scheduled
persons employed in industrial undertakings in scheduled
consumers of goods manufactured or produced by scheduled
such other class of persons including primary producers
such Development Council a. b. c. d.
d. Comprises of such members –
Persons capable of representing the interests of owners of industrial
under-takings in the scheduled industry or group of scheduled
persons having special knowledge of matters relating to the
technical or other aspects of the scheduled industry or group of
persons capable of representing the interests of persons employed in
industrial undertakings in the scheduled industry or group of
scheduled industries and
persons not belonging to any of the aforesaid categories, who are
capable of representing the interests of consumers of goods
manufactured or produced
manufactured Functions of Development
Council Recommending targets for producing,
Coordinating production programmes and
reviewing progress from time to time
Promoting standardization of products,
etc. Levy and Collection of
d. I DR Act empowers Central Government to levy and collect cess on
goods manufactured and produced in any specified scheduled
industry and hand over the proceeds to the Development Council
established for that industry.
Development Council utilises the proceeds for –
Promotion of scientific and industrial research
To promote improvements in design and quality with reference to
To provide for the training of technicians and labour in such
industry or group of industries and
To meet such expenses in the exercise of its functions and its
administrative expenses as may be prescribed.
administrative Regulation of Scheduled
Industries A chieved by registration of existing industrial
undertakings, licensing of new industrial
undertakings and licensing for producing or
manufacturing new articles.
Purpose of regulation is to channelise the
resources of the country in a manner condusive
to the overall industrial development of the
country. Circumstances Where Registration is not
necessary I f the undertaking is a small-scale
I f the undertaking is otherwise exempt
from licensing/registration provision of the
Where the undertaking concerned is not
satisfying the definition of the term
‘factory’ under the Act.
‘factory’ Small Scale and Ancillary
Section 11B The Central Government may, with a view to ascertaining which ancillary
and sm scale industrial undertakings need supportive m
exemptions or other favourable treatm under this Act to enable to
maintain their viability and strength so as to be effective inmaintain
oting in a harmonious m
anner the industrial econom of the country and
easing the problem of unemploym
ii. securing that the ownership and control of the m
aterial resources of the
com unity are so distributed as best to subserve the com
com At present 797 items are reserved for exclusive manufacture in the small scale sector. Section 29B of the Industries Development and Regulation Act, 1951, deals with policy of reservation in the small scale sector. Ancillary
engaged in –
i. manufacture of parts, components
sub assemblies, tooling or
ii. rendering of services, of supplying
or rendering, not less than fifty per
cent of its production of its total
services, as the case may be, to other
units for production of other articles.
units Factors Relevant in Ascertaining
Small Scale or Ancillary Industry
– the investment by the industrial undertaking in
i. plant and machinery, or
ii. land, buildings, plant and m
– the nature of ownership of the industrial undertaking
the smallness of the number of workers employed in the
the nature, cost and quality of the product of the industrial
foreign exchange, if any, required for the import of any plant
or machinery by the industrial undertaking; and
such other relevant factors as may be prescribed………….. Sub-sectors under Small Scale
Sectors Tiny enterprises.
Export Oriented Units.
Small Scale Service and Business
Women Enterprises. Investment Ceiling
Investment Small scale industry - investment in fixed assets in plant
and machinery whether held on ownership terms or on
lease or by hire purchase does not exceed Rs. 1 crore.
Ancillary industry – Rs. 1 crore
In calculating the value of plant and machinery, the original price paid by the owner, irrespective of whether the plant and machinery are new second hand, will be taken into account. Exclusion from
Valuation Cost of equipment such as tools, jigs, dies, moulds and
spare parts for maintenance etc.
Cost of R&D equipment and pollution control equipment
I n the case of imported machinery, im
port duty will be
included, but not the miscellaneous expenses like
transportation from the port to the site the factory
Cost of generation sets, if any, installed
Charges paid for technical know-how for erection of
plant and machinery
Cost of fire fighting equipm etc.
Cost Situations in which medium of large units can
manufacture items reserved for exclusive
production in the small scale sector Medium/large industry to obtain COB (Carry-on-Business) license
When existing small scale units manufacturing a reserved item
graduate by their process of growth, into medium or large scale
undertaking, then they have also to obtain a COB license to enable
them to continue manufacturing of such reserved items.
M edium of large industrial units are allowed to take up
manufacture of items reserved for the SSI, provided they
undertake to export a minimum of 50% of their production.
Such units can manufacture the reserved item up to the capacity
endorsed on the license.
endorsed There are only few industries that require licence.
Industrial undertakings exempt from obtaining an
industrial licensing are however required to file the
I ndustrial Entrepreneur Memorandum (IEM) in Part A
with the Secretariat of Industrial Assistance (SIA). Locational Policy and Environmental
Clearance Free to select the location of a project
Proposed location should be atleast 25 KM away
from the Standard Urban Area limits
To obtain statutory clearances relating to
Pollution Control and Environment for setting up
an industrial project and
expansion/modernization of existing projects.
Environmental Protection Act, 1986 identifies 32
projects in which environmental clearance is
mandatory. Takeover of Manag...
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- Spring '12
- industries, small scale, industrial policy, Industrial Policy Resolution