Indian Industrial Policy

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Industrial Policy, 1991

The industrial policies pursued till 1990 enabled India to develop a vast and diversified industrial structure. India attained self–sufficiency in a wide range of consumer goods. But the industrial growth was not rapid enough to generate sufficient employment, to reduce regional disparities and to alleviate poverty. It was felt that government controls and regulations had put shackles on the growth of different segments of Indian Industry. Lack of adequate competition resulted in inadaquate emphasis on the reduction of costs, up-gradation of technology and improvement of quality standards. It is to reorient and accelerate industrial development with emphasis on the productivity, growth and quality improvement to achieve international competitiveness that the Industrial Policy of 1991 was announced.

Objectives of IP, 1991:
IP, 1991 has the following objects:
to build on the gains already made
to correct the distortions or weaknesses that have crept in to maintain a sustained growth in productivity and employment, and to attain the international competitiveness.

Elements of IP, 1991:
To achieve these objectives, IP, 1991 introduced changes with respect to: Industrial licensing
Foreign investment
Foreign technology agreements
Public sector policy and the

Till the 1990s, licensing was compulsory for almost every industry, which was not reserved for the public sector. This licensing system was applicable to all industrial enterprises having investment in fixed assets (which include land, buildings, plant & machinery) above a certain limit. With progressive liberalization and deregulation of the economy, industrial license is required in very few cases. Industrial licenses are regulated under the Industries (Development and Regulation) Act 1951. At present, industrial license is required only for the following:

i. Industries retained under compulsory licensing...
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