B.Com Ist Year Industrial Licensing Policy Long Short Question Answer

B.CB.Com Ist Year Industrial Licensing Policy Long Short Question Answer :- hii friends this post is very useful for all the student B.com, In this post you will find Business Environment Topic Wise chapter wise all the content Question Answer Notes Model Paper Examination Paper Sample Practice Paper PDF Download Hindi & English For Free

Industrial Licensing Policy

26. Discuss the concept of Industrial Licensing in India.


What do you understand by industrial licensing ?

State the major objectives and features of industrial licensing in India.


An industrial licence is a written permission from the government to an industrial unit to manufacture goods specified in the permission letter. A licence to run an industry also specifies such particulars as the location of the goods to be produced, the capacity of the unit, period within which the industrial capacity is to be established, etc, The purpose of industrial licensing is to make an optimum use of the scarce resources, redress the various imbalances and reduce inequalities to the possible extent. It heps in the implementation of industrial policy by giving it practical shape and also helps to achieve the objective of industrial development.

According to Industrial (Development and Regulation) Act, 1951, “Licensing is a written permission granted by the Central Government to an industrial organisation so that it can produce or construct commodities listed in the first scheduled.”


The major objectives of industrial licensing in India are as follows:

(1). To prevent monopoly power and economic concentration in industries.

(2) Balanced economic development of different regions for reducing disparities in the levels of industrial development.

(3) To direct investment in industries according to plan priorities.

(4) to make an optimum use of the limited capital resources and the available technical skills so that they are not Altered away in unnecessary or less important channels of investment.

(5) To encourage new enterpreneurs to start industrial units.

(6) To encourag export export oriented industries in order to earn foreign exchange.

(7) To build up a self-reliant economy by promoting import substitution industries.

(8) To promote and encourage the decentralised industrial

sector or develop small and village industries.

(9) To economise the use of critical inputs like scarce raw material, fertilisers etc.

(10) To promote industries in areas which preserve ecological balance.

(11) To promote such industries as result in energy conserving and high fuel efficiency.


The origin of industrial licensing of India can be traced to the Industries (Development and Regulation) Act of 1951. Till the year 1960, industrial licensing was needed for all units having investment of more than Rs. 10 lakh. Since then, the licensing exemption limit has been raised from time to time. By now a comprehensive system of licensing has been evolved aiming only exercising control to one of providing help and guidance by making essential procedures fully transparent and by eliminating delays. The main features of the new licensing policy of India are as follows:

(1) Short list of Industries for Compulsory Licensing : The industrial licensing has been ablished for all projects except for a list of 18 industries related to security and strategie concerns, hazardous chemicals and environmental factors in the industrial policy, 1991. Later on it was reduced to 14 industries and in 1998-99, the number of compulsory licensing list was reduced to 5 industries only. At present, other than 5 industries, there is no need of licensing for private sector industries.

(2) No Licence for Broad Banding : Under the new policy, there is no need for the licences for the purpose of expansion of industrial units. The broad banding schere may be in operation for all the existing units under which no licence is needed.

(3) Delimiting the Public Sector: In a new licensing policy only 4 industries given in schedule I are reserved for public sector, but the government reserves its right to enter into other industries in public interest. The public sector units are fully exempted from obtaining the industrial licences.

(4) Exemption to Monopoly and Large Business Houses: Under the new licensing policy, monopoly and large business houses are treated with the other types of business undertakings. A measure of amendment in the MRTP Act, has her that the

investment limits in the monopoly and dominant enterprises, have withdrawn. Moreover, it is not necessary for these companies obtain prior approval of the Central Government for any ansion of the existing undertaking.

(5) Exemption to Small-scale Industries : Small scale dustries are fully exempted for the bounding of industrial licensing.

(6) Liberalised Inflow of Foreign Technology : Automatic permission for foreign technology agreement in 34 high priority industries would be granted subject to a limit of Rs. 1 crore or to a limit either 5 percent of domestic sales or 8 percent of export sales.

(7) Exemption on Imports of Capital Goods : Import of all apital goods and raw material except consumer goods have become free from the import restrictions.

(8) Exemption for Substantial Expansion : Under the new policy, licence is not needed for substantial expansion of production capacity subject to:

(i) Where such goods are not belonging to the category reserved for public sector,

(ii) where such industrial undertaking has not been set up within 25 kms. of the territorial limit of a city with a population of 10 lakh.

(9) Submission of Memorandum : Industries, to which licence system does not applicable, are not required to get them registered with the Government. This exemption will also apply to all subsequent expansion of existing units. Entrepreneurs will hence forth only be required to file an information memorandum on new projects and subsequent expansions.

(10) Abolition of Registration Scheme : In the new ensing policy, all types of registrations has abolished and industries have made free from these provisions.

Through the licensing policy of 1991, India has made the licensing system very simple. Thus, at present in real sense there is censing policy for industries.

B.Com Ist Year Industrial Policy In India Long Short Question Answer

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