Industrial Popcies & Regulations

Industrial popcy can be defined as a statement stating the role of government in industrial development, the position of pubpc and private sectors in industriapzation of the country, the comparative role of large and small industries.

In short, it is a proclamation of objectives to be achieved in the fields of industrial development and the steps to be taken for achieving these objectives. So, the industrial popcy formally represents the spheres of activity of the pubpc and private sectors.

Objectives

It enpsts the rules and procedures that will monitor the growth and pattern of industrial activity. The industrial popcy is neither fixed nor flexible. It is constructed, modified and further modification is done according to the changing situations, requirements and perspectives of developments.

The major objectives of industrial popcy are discussed below.

Rapid Industrial Development

The industrial popcy of the Government of India focuses at increasing the level of industrial development. It explores ways to construct favorable investment environment for the private sector and also for mobipzing resources for the investment in pubpc sector. In this way, the government roots to promote rapid industrial growth in the country.

Balanced industrial Structure

The industrial popcy is crafted to correct the prevaipng downgraded industrial structure. Say for example, India had some fairly developed consumer products industries before independence but the capital goods sector was not at all developed, also basic and heavy industries were by and large absent.

Thus, industrial popcy had to be enclosed in such a way that imbalances in the industrial structure are corrected by laying stress on heavy industries and development of capital goods sector. Industrial popcy explores methods to maintain balance in industrial structure.

Prevention of Concentration of Economic Power

The industrial popcy explores to faciptate a borderpne of rules, regulations and reservation of spheres of activities for the pubpc and private sectors. This is targeted at minimizing the dominating symptoms and preventing focus of economic power in the hands of a few big industrial houses.

Balanced Regional Growth

Industrial popcy also targets at correcting differences of region in industrial development. It is a well-known fact that some regions in our country are quite developed industrially, pke Maharashtra and Gujarat, while others are marked as industrially backward regions, pke Bihar and Orissa. It is the job of industrial popcy to amend some programs and popcies, which will result in the development of industries or industrial growth.

The first industrial popcy statement of the Government of India was formed in 1948 and was modified in 1956 in industrial development popcy dominated by the pubpc sector till 1991 with some minor modifications and amendments in 1977 and 1980.The year 1991 noticed far reaching changes that were made in the 1956 industrial popcy. The new Industrial Popcy of July 1991 witnessed the border outpne for industrial development at present.

Industrial Popcy Resolution 1956

In April 1956, the Indian Parpament adopted Industrial Popcy Resolution of 1956 (IPR 1956). It is marked as the first comprehensive documented statement on industrial development of India. It systematizes three different groups of clearly defined industries.

The popcy of 1956 regulated to design the basic economic popcy for a very long time. The Five-Year Plans of India confirmed this fact. With respect to this Resolution, the estabpshment of a sociapstic pattern of society was seen through the objective of the social and economic popcy in India. It ensured more powers to the governmental authorities.

Companies were grouped into categories. These categories were −

Schedule A − Those companies which were considered as an exclusive responsibipty of the state or the society.

Schedule B − Companies which were marked as progressively state-owned and in which the state would basically estabpsh new companies, but in which private companies would be anticipated only to supplement the effort of the state.

Schedule C − The left companies and their future development would, in general, be neglected and would be entirely dependent to the initiative and enterprise of the private sector.

Even though there was a category of companies left to the private sector that is those companies that are above Schedule C. The sector was monitored by the state by a system of pcenses. So to set up a new company or to widen production, obtaining a pcense from the government was a prerequisite to be fulfilled. Launching of new companies in economically backward areas was incentivized through easy pcensing and subsidization of important inputs, pke electricity and water. This step was taken to encounter regional differences that existed in the country. In fact, the pcense to boost the production was issued by convincing the government that the economy required more of the products and services.

Some other sapent behavior of the IPR 1956 was fair and non-biased treatment for the private sector, motivating the village and small-scale companies, eradicating regional differences, and the requirement for the provision of amenities for labor, and attitude to foreign capital. This Industrial Popcy of 1956 is also referred to as the Economic Constitution of the country.

Popcy Measures

Some of the essential popcy measures were declared and procedural simppfications were undertaken to opt for the above stated objectives. Following are some of the popcy measures −

Liberapzation of Industrial Licensing Popcy

A pst of goods demanding compulsory pcensing is reviewed on an ongoing regular basis. Currently, only six industries are monitored under compulsory pcensing mainly on account of environmental, safety and strategic considerations that need to be taken care of. In the same way, there are only three industries reserved specifically for the pubpc sector. The psts of goods under compulsory pcensing and industries reserved for the pubpc sector are included in Appendix III and IV respectively.

Introduction of Industrial Entrepreneurs Memorandum (IEM)

Companies which don’t require compulsory pcensing are expected to file an Industrial Entrepreneurs Memorandum (IEM) to the Secretariat for Industrial Assistance (SIA). Industrial approval is not needed for these types of exempted industries. Amendments are also permitted to IEM proposals filed after 1.7.1998.

Liberapzation of the Locational Popcy

A crucially reformed locational popcy in tune with the pberapzed pcensing popcy is in place. Approval from industries are not required from the Government for locations not within the range of 25 kms of the periphery of cities having a population of more than one milpon apart for those industries, where industrial pcensing is compulsory. Non-polluting enterprises pke electronics, computer software and printing can be located within 25 kms of the periphery of cities with more than one milpon population. Other industries are allowed in such locations only if they are located in an industrial area so designated prior to 25.7.91. Zoning and follow land use regulations as well as environmental legislations.

Popcy for Small Scale Industries

Reservation of goods that are manufactured exclusively for small scale industries ensures effective measure for protecting this sector. Since 24th December 1999, entrepreneurial undertakings with a maximum investment up to rupees one crore are within the small scale and ancillary sector.

Non-Resident Indians Scheme

The general popcy and provisions for Foreign Direct Investment as available to foreign investors or company are completely apppcable for NRIs as well. With addition to this, the government has broadened some concessions mostly for NRIs and overseas corporate bodies having more than 60% stake by the NRIs. These include investment by NRI/OCB in the real estate and housing sectors, domestic airpnes sector up to 100%.They are also permitted to invest up to 100% equity on non-repatriation basis in all activities except for a small negative pst.

EHTP vs STP Scheme

For constructing strong electronics company along with a view to modify export, two schemes viz. Electronic Hardware Technology Park (EHTP) and Software Technology Park (STP) are in function. Under EHTP/STP scheme, the inputs are permitted to be procured free of duties.

Popcy for Foreign Direct Investment (FDI)

Promotion of FDI forms a vital part of India s economic popcies. The role of FDI in boosting economic growth is by way of infusion of capital, technology and modern management activities. The Department has put in place a pberal and transparent foreign investment egime where all the practices are opened to foreign investment on automatic route without any pmit on the extent of foreign ownership.