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

B.Com Ist Year Industrial Policy In India 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 Policy in India

Q.25. Explain the main features of the present industrial policy of India. How far it will be helpful in the rapid industrial growth of the country?


Discuss the New Industrial Policy (1991) of the Government of India. How far it has succeeded in achieving its objects.

Ans. Meaning of Industrial Policy: Industrial policy refers to government’s policy towards industries, their establishment functioning and growth. The policy also covers all those principles, rules and regulations which control and direct the pattern of industrial development of a country. The industrial development of a country is directed by the industrial policy. Thus, the industrial policy of the government must be well defined, clear and progressive

Industrial Policy, 1991: After having attained independence, the government of India declared its first industrial policy on 6th April 1948. With the approach of rapid industrial growth and development, the next industrial policy, 1956 gave primacy to the role of the state to assume a predominant and direct responsibility for industrial development. To meet new challenges from time to time it was further modified in 1973, 1977, 1980, 1985 and 1990

On July 24, 1991, the government announced a new industrial policy which was altogether different as compared with all previous pendes in this regard. This policy laid emphasis on increasing beign collaboration, setting economy free from unnecessary controis, and making public sector competitive. This policy gave opportunity to private sector to work in a free environment. This policy is also known as open, liberal and revolutionary policy.


(i) To abolish the monopoly of any sector in any de

Manufacture except on strategicor security grounds.

(ii) to encourage private entrepreneurship and investment industrial activities.

(iii) To enhance support to small-scale sector.

(iv) To bring overall changes in the economic structure of the country and build a sound and diversified industrial base.

(v) To increase the competitiveness of industries for the welfare of the common man.

(vi) To maintain a sustained growth in productivity and gainful employment.

(vii) To remove regulatory system and other weaknesses.

(viii) To achieve technological dynamism in the country.

(ix) To attain global competitiveness.

(x) To encourage a liberalised environment and to simplify the various statutory controls, prohibitions, rules and regulations towards the industries.


The main features of this policy are as follows:

(1) Free from Licensing : Industrial licencing will be abolished for all projects except for a list of 18 industries related to security and strategic concerns, social reason, hazardous chemicals and over-riding environmental reasons and items of elitist consumption. This list was reduced to 15 items as per decision taken on 28 April, 1993. At present only 5 industries require licensing. ts

(2) Reservation for the Public Sector : The new industrial policy statement stipulates that areas of security and strategic concerns will continue to be reserved for the public sector, but several items reserved for the public sector were made open to the private sector. Only 8 main key sectors were reserved for the public sector. Now, it has reduced to only 2 sectors.

(3) Dis-investment in Public Sector Undertakings : In order to raise resources and encourage wider public participation, a part of the government’s share holding in the public sector would be offered to mutual funds, financial institutions, general public and workers.

(4) Promote Inflow of Foreign Investment : Direct or indirect restriction upon the foreign investments are abolished. Now, under the new policy high priority industries, which require more investment and high technique, will not need any permission from the government for having 51 percent foreign equity collaboration, such industries are listed in the schedule III. in which 34 industries are included. This 51% facility will be provided mainly dustries in which finance is received to import capital goods through foreign collaboration. 100% FDI has been permitted in many sectors such as manufacturing activity in Special Economic with some exceptions, telecom sector, airports, com services, drugs, hotel and tourism sector.

(5) Foreign Technology: With a view to provide the desired level of technological dynamism in Indian industry, the new policy words automatic approval for foreign technology agreements in high priority industries up to Rs. 1 crore. No permission will be pecessary for making payment in foreign currencies for hiring foreign technical experts and foreign testing of indigeneously developed technologies.

(6) Changes in MRTP Act : Such industrial units in which investment in assets is more than the Rs. 100 crore limit, (from 1985), are called MRTP firms. Prior to the new policy such companies are allowed to enter only in some selected industries, on merit basis, and they had to acquire sanction from the government for each investment proposal. Government found this adverse to the development of industries, hence the restrictions, imposed under MRTP Act were abolished. Consequently these companies are at par with other companies. MRTP Act is also revised accordingly. Now, more emphasis is given upon proper control over monopoly and restrictive trade practices.

(7) Rehabilitation Schemes for Sick Public Enterprises: The chronically sick public enterprises will be referred to the Board for Industrial and Financial Reconstruction (BIFR) for the formulation of revival rehabilitation schemes. The interests of workers affected by such scheme will be protected by devising a social security mechanism.

(8) Liberalisation of Location Policy: The industries (other) than in the category of compulsory licensing) are free from licensing provisions situated in the cities below 10 lakh population. Industries situated outside the surface of 25 km. in the cities above 10 lakh population are also exempted from the licensing provisions. Pollution free industries could be establishe ustries could be established in the surface of 25 km.

(9) Abolition of Registration Schemes : All existing gistration schemes such as delicensed registration, exempted uustries registeration will be abolished. Enterpreneurs now only required to file an information memorandum on new projects and substantial expansions.

(10) Automatic Clearance of Imports of Capital Goods : ports of all capital goods and raw material except consumer goods are from the import restrictions.

(11) Worker’s Participation in Management : industrial policy statement protect the interests of workers and encourage worker’s participation in management.

(12) Policy for Small Scale Industries : In new pol: adequate arrangement will be made for giving priority to small se industries in allotement of indigenous raw material and providin service package. Integrated scheme for the development infrastructure for small scale industries will be launched so that industries could be set up in rural and backward areas.


Government had adopted liberalisation in the eighties, which had very good effect upon the economic development of the country, New Industrial Policy is also one step forward in the same direction, which will enable the country to make more rapid industrial development. New Industrial Policy may accelerate the industrial development in the following manners:

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