industrial policy - Industries Development and Regulation...

Info icon This preview shows page 1. Sign up to view the full content.

This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Industries Development and Regulation and Introduction Introduction Object of industrialisation – to attain higher levels of economic well-being GLoalisation, liberalisation and deregulation 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 competitiveness. Increase in public-private participation Restrictions on expansion of large industrial houses have been removed. 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 Industrial a. 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 ust 4. Besides arm and am unition, atom energy and railway transport, which s m ic 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 y 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 Recognized State Policy enshrined in the Constitution Recognized the need to increase the rate of Recognized economic growth and speed up industrialization. Highlight Highlight s 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, 1973 1973 1. 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 4. Within 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 5. Special was also proposed to be introduced. was 6. I t was also decided that compulsory export obligations, merely It 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, 1977 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 Focused competition in the domestic market, technological advancement and modernization. Foundation was laid for an increasingly Foundation 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 Thrust technology and manufacturing as well as its upgradation to world standards Highlights: 1. Pursue a sound policy framework encompassing encouragement of 1. 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. the 2. The spread of industrialisation to backward areas of the country to be 2. actively promoted through appropriate incentives, institutions and infrastructure investments. 3. Governm to provide enhanced support to the sm ent all-scale sector so that it flourishes in an environm of econom efficiency and ent ic continuous technological up gradation. 4. Foreign investm and technology collaboration encouraged to ent obtain higher technology, to increase exports and to expand the production base. 5. The Governm endeavored to abolish the monopoly of any sector ent or any individual enterprise in any field of m anufacture, except on strategic or m ilitary considerations and open all m anufacturing activity to com petition. 6. To ensure that the public sector plays its rightful role in the evolving socioeconom scenario of the country. The Governm ensured that ic ent 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 ent 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 ent, Workers’ cooperatives were encouraged to participate in packages designed to turn around sick com panies. 10. Need was also felt to preserve the environm and ensure the efficient ent use of available resources. 11. In pursuit of the above objectives, the Governm took up a series of ent initiatives in respect of the policies relating to industrial Licensing, foreign investm 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 e ajor economic reform in terms of s 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 protection guidelines. 13. Separate policy m easures were announced in the form of specific packages aim at upliftm of sm scale and cottage industries as well ed ent all 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 Preamble regulation of certain industries. I ndustries are specified in the first schedule to Industries the Act, known as ‘Scheduled Industries’. A ct is implemented through the Development of Act 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 Scheduled Industries’ Contains list of 38 industries Contains I nclude Metallurgical Industries, Fuels, Boilers, Prime Include 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 etc. etc. Highlights Highlights A ct is mainly divided into two parts: (i) those dealing Act with developmental aspects and (ii) those dealing with regulatory aspects of scheduled industries. I ntroduces the Central Advisory Council and Introduces Development Councils and such other facilities to secure developmental activities. Registration aspects include a system of registration of Registration 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 Envisages and optimum use of available resources and infrastructure. 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 The management and control in appropriate cases. Empowers Central Government to grant exemption Empowers 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 Council a. b. c. d. d. For advising the Government on matters concerning development For and regulation of Scheduled Industries Comprises of a Chairman and such other members from among Comprises persons who are in its opinion capable of representing – persons interests of owners of industrial undertakings in scheduled interests industries industries persons employed in industrial undertakings in scheduled persons industries industries consumers of goods manufactured or produced by scheduled consumers industries and 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 Persons under-takings in the scheduled industry or group of scheduled industries industries persons having special knowledge of matters relating to the persons technical or other aspects of the scheduled industry or group of scheduled industries scheduled persons capable of representing the interests of persons employed in persons industrial undertakings in the scheduled industry or group of scheduled industries and persons not belonging to any of the aforesaid categories, who are persons capable of representing the interests of consumers of goods manufactured or produced manufactured Functions of Development Council Council Recommending targets for producing, Recommending Coordinating production programmes and Coordinating reviewing progress from time to time reviewing Promoting standardization of products, Promoting etc. Levy and Collection of Cess Cess a. b. c. c. d. d. I DR Act empowers Central Government to levy and collect cess on IDR 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 the products To provide for the training of technicians and labour in such To industry or group of industries and To meet such expenses in the exercise of its functions and its To administrative expenses as may be prescribed. administrative Regulation of Scheduled Industries Industries A chieved by registration of existing industrial Achieved undertakings, licensing of new industrial undertakings and licensing for producing or manufacturing new articles. Purpose of regulation is to channelise the Purpose 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 If industrial undertaking industrial I f the undertaking is otherwise exempt If from licensing/registration provision of the Act A ct Where the undertaking concerned is not Where satisfying the definition of the term ‘factory’ under the Act. ‘factory’ Small Scale and Ancillary Industries Section 11B The Central Government may, with a view to ascertaining which ancillary The and sm scale industrial undertakings need supportive m all easures, exemptions or other favourable treatm under this Act to enable to ent maintain their viability and strength so as to be effective inmaintain i. prom oting in a harmonious m anner the industrial econom of the country and y i. easing the problem of unemploym ent, and 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 m mon good. 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 Industry Industry engaged in – i. manufacture of parts, components i. sub assemblies, tooling or intermediates; or intermediates; ii. rendering of services, of supplying ii. 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 Small – the investment by the industrial undertaking in the i. plant and machinery, or i. ii. land, buildings, plant and m achinery; – – – – – the nature of ownership of the industrial undertaking the smallness of the number of workers employed in the the industrial undertaking; industrial the nature, cost and quality of the product of the industrial the undertaking; undertaking; foreign exchange, if any, required for the import of any plant foreign or machinery by the industrial undertaking; and or such other relevant factors as may be prescribed………….. Sub-sectors under Small Scale Sectors Sectors Tiny enterprises. Export Oriented Units. Small Scale Service and Business Small Enterprises(SSSBE) Enterprises(SSSBE) Women Enterprises. Investment Ceiling Investment Small scale industry - investment in fixed assets in plant Small 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 Valuation Cost of equipment such as tools, jigs, dies, moulds and Cost spare parts for maintenance etc. spare Cost of R&D equipment and pollution control equipment Cost I n the case of imported machinery, im port duty will be In included, but not the miscellaneous expenses like transportation from the port to the site the factory Cost of generation sets, if any, installed Cost Charges paid for technical know-how for erection of Charges plant and machinery Cost of fire fighting equipm etc. ent 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 When 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 Medium manufacture of items reserved for the SSI, provided they undertake to export a minimum of 50% of their production. undertake Such units can manufacture the reserved item up to the capacity Such 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 Clearance Free to select the location of a project Free Proposed location should be atleast 25 KM away Proposed from the Standard Urban Area limits To obtain statutory clearances relating to To Pollution Control and Environment for setting up an industrial project and expansion/modernization of existing projects. Environmental Protection Act, 1986 identifies 32 Environmental projects in which environmental clearance is mandatory. Take­over of Manag...
View Full Document

  • Spring '12
  • Dr.AbhishekAgarwal
  • industries, small scale, industrial policy, Industrial Policy Resolution

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern