GOVERNMENT INDUSTRIAL DEVELOPMENT POLICIES & SCHEMES (CENTRE)
INTRODUCTION
As a result of colonization and exploitation by the British government, Indian Industry was typically
backward till the first half of the twentieth century. Soon after independence, the new government
had an immense task of restricting and developing its industrial base through planning and strategy,
so that the socio- economic gains could trickle down to the masses.
However, a new chapter in the history of policy making was written only in 1985 with the de-
licencing reforms of Rajiv Gandhi and the more substantial reforms and liberalization of 1991.
PRE-INDEPENDENCE PERIOD
Mahatma Gandhi, with an objective of self-sufficiency protested against English textile imports and
demonstrated the need of a society of small-scale agriculture and industry.
During this period, the foundation of modern industry in India was laid by number of pioneering
private business houses headed by entrepreneurs like Jamshedji Tata, Walchand Hirachand, Lala
Sriram, G. D Birla.
NEHRU-MAHALANOBIS ERA (PLANNED DEVELOPMENT PERIOD: 1948-1980
After India became independent in 1947, the country embarked upon an ambitious plan of
economic and industrial development based on a ‘socialistic framework’ as followed by the Soviet
Union and dedicated to self-sufficiency.
However the first tryst with industrial policy can be traced back to setting up of the National
Planning Committee in 1938 under the chairmanship of Pr. Jawahar Lal Nehru, which
recommended that the state should own or control all key industries.
It therefore accorded a definition role to economic planning which could raise socio-economic
conditions and growth of the economy as a whole.
This gave rise to a democratic structure of the Government, which was based on the ‘mixed
economy’ structure. The Industrial strategy adopted was inspired by the Mahalanobis Model.
INDUSTRIAL POLICY RESOLUTION OF 1948 –
It made clear that India is going to have a Mixed Economic model.
It classified industries into four broad areas:
A. Strategic Industries (Public Sector): It included three industries in which central government had
monopoly. These included:
1. Arms and ammunition
2. Atomic energy
3. Rail transport.
B. Basic/Key Industries (Public-cum-Private Sector): 6 industries viz. coal, iron & steel, aircraft
manufacturing, ship-building, manufacture of telephone, telegraph & wireless apparatus, and
mineral oil were designated as “key industries” or “Basic Industries”.
These industries were to be set-up by the central government.
However, the existing private sector enterprises were allowed to continue.
C. Important Industries (Controlled Private Sector): It included 18 industries including heavy
chemicals, sugar, cotton textile & woollen industry, cement, paper, salt, machine tools, fertiliser,
rubber, air and sea transport, motor, tractor, electricity, etc.
These industries continue to remain under private sector however, the central government, in
consultation with the state government, had general control over them.
D. Other industries (Private and cooperative Sector): All other industries which were not included in
the above mentioned three categories were left open for the private sector.
The industries (Development and Regulation) Act was passed in 1951 to implement the industrial
policy resolution, 1948.
INDUSTRIAL DEVELOPMENT & REGULATION ACT (IRDA), 1951
The IRDA, 1951 was introduced to ensure that industries were set up and expanded only with
obtaining a licence and specified a schedule of industries that were subject to licencing.
The overall objective of industrial licencing was to allocate and channelize private resources
according to priorities stated in the development plans. The intention was to reallocate resources
from production of machine tools and capital goods. Only small-scale industry (SSI) was exempted
from licencing to encourage labour-intensive consumer goods production in rural areas.
Through this Act, the government had full control over—
1. Approval of any proposal on capacity, location, expansion, manufacture of new products etc.
2. Approval of foreign exchange expenditure on the import of plant and machinery.
3. Approval for the terms of foreign Collaboration.
The main objectives of the Act was to empower the Government--
To take necessary steps for the development of industries;
To regulate the pattern and direction of industrial development;
To control the activities, performance and results of industrial undertakings in the public interest.
The Act applied to the ‘Scheduled Industries’ listed in the First Schedule of the Act. However small-
scale industrial undertakings and ancillary units were exempted from the provisions. The Act was
administered by the Ministry of Industries and Commerce through its Department of Industrial
Policy and Promotion (DIPP).
INDUSTRIAL POLICY STATEMENT OF 1956
Government revised its first industrial Policy (i.e. the policy of 1948) through the industrial Policy of
1956. It was regarded as the “Economic constitution of India” or “the Bible of State Capitalism”.
The 1956 Policy emphasised the need to expand the public sector, to build up a large and growing
cooperative sector and to encourage the separation of ownership and management in private
industries and, above all, prevent the rise of private monopolies.
If provided the basic framework for the government’s policy in regard to industries till June 1991.
IPR, 1956 CLASSIFIED INDUSTRIES INTO THREE CATEGORIES
1. Schedule A consisting of 17 industries was the exclusive responsibility of the state. Out of these 17
industries, 4 industries, namely arms and ammunition, atomic energy, railways and air transport
had central Government monopolies; new units in the remaining industries were developed by the
state governments.
2. Schedule B consisting of 12 industries, was open to both the private and public sectors; however,
such industries were progressively state-owned.
3. Schedule C – All the other industries not included in these two schedules constituted the third
category which was left open to the private sector. However, the state reserved the right to
undertake any type of industrial production.
The IPR 1956, stressed the importance of cottage and small scale industries for expanding
employment opportunities and for wider decentralisation of economic power and activity
Criticism: the IPR 1956 came in for sharp criticism from the private sector since this Resolution
reduced the scope for the expansion of the private sector significantly.
MONOPOLIES COMMISION, 1964
In April 1964, the Govt. of india appointed a Monopolies Inquiry Commission ‘to inquire into the
existence and effect of concentration of economic power in private hands’.
The Commission was requested to look into the prevalence of monopolistic and restrictive practices
in important sectors of economic activity, The Commission looked at concentration of economic
power in the area of industry, and examined industry-wise and product-wise concentration.
It drafted a law to control monopolies and recommended the setting up of a permanent
Monopolies and Restrictive Trade Practices Commission.
On this basis, an Act was passed and a Monopolies Commission was appointed by the government
in 1969.
MONOPOLIES AND RESTRICTIVE TRADE PRACTICES ACT (MRTP) WAS
DESIGNED MAINLY TO SERVE THREE PURPOSES—
1. To regulate the concentration of economic power in private hands to ensure that it does not cause
detriment to the public.
2. To control monopolies and prohibit monopolistic trade practices.
3. To curb restrictive trade practices
HOWEVER, THIS ACT COVERED ONLY PRIVATE SECTOR UNDERTAKINGS AND
DID NOT APPLY TO –
1. Any undertaking owned or controlled by the government.
2. Any trade union or other association or workmen or employees formed for their own reasonable
protection.
3. Any undertaking engaged in one industry, the management of which has been taken over by a body
of persons in pursuance of any authorization made by tge Central Government.
INDUSTRIAL LICENCING POLICY INQUIRY COMMITTEE (1969) and FERA (1973)
In July 1969, an Industrial Licencing Inquiry Committee was appointed to examine the shortcomings
in licencing policy. The Committee felt that the licencing policy had not succeeded in preventing the
practice of pre-empting capacity by large houses; it had not ensured development of industries
according to announced licencing policies; it did not prevent investment in non-priority etc.
In 1969, the MRTP Act was passed by the Government and following the report of of industrial
licencing policy announced in 1970.
The Foreign Exchange Regulation Act (FERA) was thoroughly revised and amended in 1973. It
brought a great change in the foreign investment policy of the government. The main aim of the
Act was to regulate foreign exchange transactions to limit the use of foreign exchange resources
INDUSTRIAL POLICY STATEMENT, 1973
This statement merely intended to make some changes in the industrial view. With a view to
prevent excessive concentration of industrial activity in the large industrial houses, the policy
statement of 1973 drew up a industries to be started by large business houses.
Therefore, it gave preference to small and medium entrepreneurs in setting up of new capacity
particularly in the production of mass consumption goods so that the competitive effort of small
industries was not affected.
Large Industries were permitted to start operations in rural and backward areas with a industries
around.
The entry of competent small and medium entrepreneurs was encouraged in all industries including
Appendix I industries.
A Secretariat for industrial Approvals (SIA) was set up in November 1973, and all industries licences,
capital goods, import licences, terms of foreign collaboration were brought under the SIA.
INDUSTRIAL POLICY STATEMENT, 1977
In December 1977, the Janata Government announced its New Industrial Policy through a
statement in the Parliament.
The main thrust of this policy was the effective Promotion of cottage and small industries widely
dispersed in rural areas and small towns.
In this policy the small sector was classified into three groups
I. Cottage and household sector
II. Tiny sector
III. Small scale industries
Thus it created a new unit viz. tiny. unit.
The 1977 industrial policy prescribed different areas for large scale industrial sector-basic
industries, capital goods industries, high technology industries and other industries outside the list
of reserved items for the small scale sector.
The 1977 industrial policy restricted the scope of large business houses so that no unit of the same
business group acquired a dominant and monopolistic position in the market.
INDUSTRIAL POLICY STATEMENT, 1980
The industrial policy statement of 1980 addressed the need for promoting competition in the
domestic market, modernization, selective liberalization, and technological up-gradation.
Due to this policy, the MRTP Act (Monopolies Restrictive Trade Practices) and FERA Act (Foreign
Exchange Regulation Act, 1973) were introduced. (on the basis of recommendation of Dutt
Committee, MRTP Act was enacted in 1969 to ensure that concentration of economic power in
hand of few rich.)
The objective was to liberalize the industrial sector to increase industrial productivity and
competitiveness of the industrial sector.
The objective was to liberalize the industrial sector to increase industrial productivity and
competitiveness of the industrial sector.
The policy laid the foundation for an increasingly competitive export based and for encouraging
foreign investment in high-technology areas.
NEW INDUSTRIAL POLICY DURING ECONOMIC REFORMS OF 1991
It was announced by the government of India in 1991 in the midst of severe economic instability in
the country.
FEATURES OF NEW INDUSTRIAL POLICY
De-reservation of Public sector- Sectors that were earlier exclusively reserved for public sector
were reduced. However, pre-eminent place of public sector in 5 core areas like arms and
ammunition, atomic energy, mineral oils, rail transport and mining was continued.
Presently, only two sectors-Atomic Energy and railway operations are reserved exclusively for the public
sector.
De-licensing – Abolition of industrial licensing for all projects except for a short list of industries.
There are only 4 industries at present related to security, strategic and environmental concerns,
where an industrial license is currently required
1. Cigars and cigarettes made from tobacco and manufactured tobacco substitutes
2. Electronic aerospace and defines equipment: all types
3. Industrial explosives including detonating fuses, safety fuses, gun powder, nitrocellulose and
matches
4. Hazardous chemicals such as hydrocyanic acid and its derivatives, phosgene and its derivatives, and
isocyanates and diisocyanates of hydrocarbon, not specified elsewhere (Example Methyl
isocyanate)
Disinvestment of public sector: Government stakes in Public sector enterprises were educed to
enhance their efficiency and competitiveness.
GOVERNMENT INDUSTRIAL DEVELOPMENT POLICIES & SCHEMES (STATE)
Introduction
The production policy ushers bold reforms, restructures, institutions, and presents a holistic
framework for sustainable industrial growth of the State. The policy is architected around eight
core strategic pillars of Infrastructure, Power, MSME, Ease of Doing Business, Startup & Entrepreneurship, Skills, Fiscal & Non-Fiscal Incentives and stakeholder Engagement supported by
Sector Specific Strategies for growth. The policy gives a great thrust to the development of MSME
sector. The policy also aims at promoting growth of service industries apart from the traditional
manufacturing industries.
In true spirit of the cooperative federalism, the policy envisages substantial alignment and synergy
with respective sectoral policies of the Central Government and would on optimum utilization of
the same and further building upon it.
The policy envisages setting up of a Policy Implementation Unit to ensure necessary support for the
implementation of various aspects of the policy.
APPLICABILITY OF THE POLICY
The policy will be applicable for 5 years from the date of notification and can be extended further
by the State. The policy may be amended and modified in the course of the implementation,
however, all such amendments and notifications shall be applied prospectively and shall not curtail
any benefit or concession already granted under the policy.
The reference to the state in the policy is reference to the State Govt. and its relevant departments
and agencies as may be specified in the detailed schemes for the implementation of the Policy.
The definition, standard operating procedures and other modalities for fiscal and non-fiscal
incentives and other aspects of the policy will be given in the detailed schemes for the
implementation of the policy.
VISION, MISSION AND GOALS OF THE POLICY
VISION
To develop the state as one of the most economically developed States in the Country and make it
the best State for doing business.
MISSION
i. To accelerate industrial growth and job creation
ii. To develop world class infrastructure for the industry.
iii. To provide quality and affordable power to the industry.
iv. To accelerate growth of MSMEs.
v. To focus and Start-ups and Entrepreneurship.
vi. To facilitate availability of skilled manpower to the industry.
vii. To improve the ease of doing business in the State.
viii. To build institutional capacity and enhance institutional linkages.
ix. To bring synergy between state programmes
GOALS
1. To accelerate industrial growth and job creation
i. To attract Rs. 5 Lakh crore of investment in 5 years.
ii. To increase the share of secondary sector in GSDP to 30% and tertiary sector to 62%
iii. To enable job creation- At least one job per household to fulfil Ghar-Ghar Rozgar Mission of the
State.
2. To develop world class infrastructure and bring anchor units
i. To develop 4 industrial parks and 10 Industrial estates in 5 years.
ii. To attract at least one author unit in various manufacturing and service industry sectors.
3. To provide quality and affordable power to the industry
i. To provide power at affordable and fixed tariff for 5 years to the industry.
ii. To upgrade power supply infrastructure to all the industrial areas to provide quality and
uninterrupted power.
4. To accelerate growth of MSME’s
I. To carryout in-depth study of 10 Clusters every year for specific interventions to increase their
competitiveness.
II. To upgrade and set up common facility centres in 10 Clusters every year.
III. To upgrade and set up 10 Technology centres in the State.
5. To focus on Startup and entrepreneurship
I. To facilitate 1000 start-ups in 5 years.
II. To set up 10 incubation centres/ accelerators in the State particularly focusing on Digital
Manufacturing, Lifesciences (Biotechnology), Agro & Food processing and Information Technology.
III. To build strong linkages with all the major institutions.
IV. To facilitate 50 Entrepreneurship Development Centres in the colleges.
6. To facilitate availability of skilled manpower for the industry
I. To set up a one Skill University in the State.
II. To set up on Skill centre for each identified industrial cluster.
III. To set up advance skilling on hi-tech manufacturing, design and IT skills for 5 identical sectors.
7. To improve the ease of doing business in the State
I. To be in top 5 States in the Country in ease of doing business in 3 years and top position in 5 years.
II. To strengthen Invest Punjab initiative by setting up of Business First Portal for a single unified
interface to the industry and Businesses for all regulatory and fiscal services throughout their
lifecycle.
III. To re-engineer the processes of 7 Core departments on priority namely industry, Power, pollution
Control, Labour, Housing & Urban Development, Local Department and Taxation to make them
extremely simple, industry-friendly and completely digital.
8. To build institutional capacity and enhance institutional linkages.
I. To restructure existing entities and empower them through statutory powers to translate the vision
and mission into reality.
II. To set up a Policy Implementation Unit to support the implementation of various aspects of the
policy and monitor the progress.
III. To set up effective mechanism for talent acquisition for specialized projects, organizations and
other initiatives.
IV. To set up effective mechanism for partnering with various national and international agencies and
develop effective PPP model for infrastructure, technology support, skills and other requirements
of the industry.
9. To bring synergy between state programmes and central schemes
I. To strengthen liaison office at Delhi with a strong team to liaison office at Delhi with a strong team
to liaison across the Central Ministries and Agencies to ensure that state draws benefits from all the
relevant Central Schemes.
II. To ensure optimum utilization of central schemes by respective departments and agencies of the
State with support from policy implementation Unit.
DEVELOPMENT ALONG INDUSTRIAL URBAN CORRIDORS
1. Amritsar Kolkata Industrial Corridor (AKIC), The State will develop area falling in AKIC along the
Eastern Dedicated Freight Corridor (EDFC) as major industrial hub. It will cover important towns of
Rajpura, Sirhind, Doraha, Sahnewal and Ludhiana. The State has already identified various land
parcels for the purpose of setting up Industrial Estates along AKIC.
2. Chandigarh-Amritsar Industrial Corridor Chandigarh-Amritsar is an important urban industrial
corridor. The State will Strengthen the existing industrial clusters on this corridor. The State would
further carry out the feasibility of various identified land pockets on this corridor and develop new
Industrial Parks and industrial Townships along this corridor.
3. Chandigarh-Hoshiarpur Gurdaspur Industrial Corridor Development of Chandigarh-Hoshiarpur-
Gurdaspur Industrial Corridor will give a fillip to Kandi Area and Border area. The State would
further carry out the feasibility of various identified land pockets on this corridor and develop new
industrial Parks and Industrial Townships along this corridor.
4. Chandigarh- Patiala-Sangrur-Bathinda Corridor Development of Chandigarh- Patiala-Sangrur-
Bathinda Corridor will ensure development of Industrial infrastructure in Malwa region of the State
and provide employment opportunities to youth in this region.
5. Development of Economic Corridors along major rivers the State will explore canalization of major
rivers namely Ravi, Beas and Sutlej and construct high speed economic corridors along these rivers
to attract industry and investment, which will develop these areas and provide jobs and growth
opportunities to local people.
LABOUR REFORMS
I. Firms employing up to 300 workers can retrench or shut shop without govt’s permission against the
current limit of 100 workers.
II. In case of retrenchment, a worker should raise an objection within 3 months. There is no time limit
at present.
III. Trade union can be formed only if it gets 30% of the workers as members against the current
provision of 15%.
Factories Act
IV. The act will apply to factories with 40 workers, if without electricity; and 20 workers, if with
electricity (the present condition respectively is 20 and 10).
V. Complaints against an employer about violation of this Act would not receive cognisance by a court
without prior written permission from the State Government.
VI. A provision for compounding of offences will be added.
Contract labour Act
VII. The act will apply to companies employing more than 50 workers (against current provision of 20
workers)
VIII. The industries will be able to hire more temporary workers without passing on to them the benefits
contract workers are entitled to.
The state would institutionalize a central inspection system for labour (regulation and abolition) Act
1970, factories Act 1948, the boilers Act 1923, various environment regulations and other laws to
minimize multiple visits of inspectors.
The state would design and implement a computerized system for identifying building/area that
needs to be inspected based on risk assessment. The state will mandate online submission of
inspection report within 24 hours to the department. No inspection will be carried out by the
inspector without the prior approval of the department.
AMENDMENT TO PUNJAB INDUSTRIAL POLICY 2017
The Punjab cabinet approved an amendment in the 2017 industrial policy to enable investors to
avail GST incentives till October 2022. The move was aimed at promoting post-Covid industrial
revival and attracting greater investment.
The cabinet chaired by chief minister Amarinder Singh gave approval to amend the industrial and
business development policy, 2017, for extension of GST formula for availing incentives under the
said policy till October 17, 2022.
To avail the benefit of additional borrowing of 2 per cent of gross state domestic product (GSDP) in
2020-2021, the cabinet also gave approval to amend provision of the Punjab Fiscal responsibility
and budget management (FRBM) Act, 2003.
The state cabinet also gave the nod to amend the Punjab bureau of investment promotion act 2016
for incorporating provisions for automated deemed approval of various regulatory clearances. This
enabling provision would not only expedite speedy approval/clearances but also assure industrial
units of a time-frame within which clearances would be granted.
The investor friendly initiative would be to further enhance ease of doing business and instil greater
confidence amongst entrepreneurs and industrialists in the state, by providing system generated
deemed approvals and auto renewals based on self-certification.
The cabinet also approved ‘The Indian Partnership (Punjab Amendment) bill, 2021’ for the revision
of fee for various services as contained in Schedule-1 under Section 71 of the Act, such as
registration of firms, updating of records, inspection and copying.
The prescribed fee structure for various service as currently contained in schedule -1 of the act is
too meagre and has become irrelevant with the passage of time, as the existing fee structure has
not been revised since the Act came into force in 1932.
Under the revised structure, Rs. 5000 would now be charged for making a statement under section
58 for application registration as against Rs. 3 charged earlier, as per government statement.
Instead of the existing Re 1, the revised structure provides for charging Rs 500 each for making a
statement under section 60 for recording of alternations in firm name and principal place of
business, among other changes.
Further, Rs 100 each in place of earlier fee of fifty paisa would be now charged for inspection of one
volume of the register of firms, for inspection of all documents related to one firm.
Notably, barring Punjab and Haryana, other major states like Maharashtra, Rajasthan, Madhya Pradesh
and Uttar Pradesh have been charging higher fee for various services offered under the Indian partnership
Act, 1932.
1. Socialism is opposed to
a. Social Security scheme
b. Equal distribution of wealth
c. Unrestricted competition
d. Collective ownership and management
2. The Concept of mixed economy relates to
a. The coexistence of rural sector and urban
sector
b. The coexistence of public sector and
private sector
c. The coexistence of small-scale sector and
large-scale sector
d. The coexistence of service sector and
manufacturing sector.
3. An ‘Open economy’ is an economy in which
a. Foreign investment is allowed
b. Foreigners can stay for an indefinite time
period
c. Licence is not required to start a business
d. Exports as well as imports take place
4. Economic Liberalization in India started with
a. Substantial changes in industrial licencing
policy
b. The convertibility of Indian rupee
c. Doing away with procedural formalities
for foreign direct investment
d. Significant reduction in tax rates.
5. SAMPADA scheme is related to
a. Empowering women through
microfinance
b. Agricultural credit to small farmers
c. Agro-food processing industry
d. Providing loans for development of textile
industries
6. Consider the following statements regarding
arguments for tree trade:
(1) Free trade leads to specialization in
production
(2) Free trade prevents monopoly
(3) Free trade protects domestic industries.
Which of the statements given above is/are
correct?
a. 1 Only
b. 1 and 2 Only
c. 2 and 3 only
d. 1,2, and 3
7. Division of labour often involves:
(1) Specialize economic activity
(2) Highly distinct productive roles
(3) Employment roles for every individual
(4) Individual engage in only in a single activity
and are dependent on others to meet their
various needs
Select the correct answer using the codes given
below:
a. 1, 3 and 4 Only
b. 2 and 4
c. 1 and 3 Only
d. 2 and 4 Only
8. Consider the following statements and identify
the right ones:
(1) The Industrial policy of 1948 was the first
industrial policy statement by the Government.
(2) It gave leading role to the private sector.
a. I only
b. 2 Only
c. Both
d. None
9. Consider the following statements and identify
the right ones:
1. As per the 1948 policy, six industries were
under the mixed sector.
2. New units could be set up by the private
sector.
a. I Only
b. 2 only
c. Both
d. None
10. Which of the following was not an objective
of the 1956 Industrial Policy?
a. Development of cooperative sector
b. Expansion of public sector
c. Develop heavy and machine making
industreis
d. None of the above
11. Which of the following industries are to be
given compulsory licencing?
a. Alcohal
b. Tobacco
c. D-gs and pharmaceuticals
d. All of the above
12. Which of the following industries was de-
reserved in 1993?
a. Atomic Energy
b. Atopic minerals
c. Mining of copper and zinc
d. Railways
13. Which of the following industries is not a
Maha-Ratna Industry?
a. GAIL
b. (Coal India Limited
c. SAIL
d. Airport Authority of India
14. Which of the following industries is not a Nav-
Ratna Industry?
a. HAL
b. Oil India Limited
c. MTNL
d. All of the above
ANSWER KEY
1. C
2. B
3. D
4. A
5. C
6. B
7. B
8. A
9. A
10. D
11. D
12. C
13. D
14. D