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Industrial Policy in India
Industrial Policy in India
• Objectives:
– Improvement in living standards and working
conditions for the mass of the people.
– Reduction in income and wealth disparities
– Prevention of private monopolies and concentration of
economic power in different fields in the hands of small
numbers of individuals.
Industrial Policy Resolution 1956
– Progressively predominant and direct
responsibility for the State in setting up new
industrial undertakings and for developing
transport facilities
– Undertake State trading on an increasing scale.
– Equal opportunity for the private sector to
develop and expand.
– The adoption of the socialist pattern of society
as the national objective.
– The need for planned and rapid development.
Industrial Policy Resolution 1956
• Categorization of industries:
• Substantial changes:
– Only six industries require compulsory licensing
– Only three industries reserved for the public sector
– Relation of restriction on FDI: FDI up to 100 % under
automatic route for most manufacturing activities in
Special Economic Zones; FDI ceiling in pvt banking
sector up to 74%; oil exploration (100%); natural gas
and LNG pipelines (100%); telecom (74%)
• Small Scale industries sector: reduced # of items
reserved from 821 (1991) to 506 (2005)