What were the objectives of the industrial policy, 1991? Describe the salient features of this policy.
Major Objectives of India’s New Industrial Policy 1991 are as follows-
The New Industrial Policy,1991 seeks to liberate the industry from the shackles of licensing system Drastically reduce the role of public sector and encourage foreign participation in India’s industrial development. The broad objectives of New Industrial Policy are as follows:
(i) Liberalising the industry from the regulatory devices such as licenses and controls.
(ii) Enhancing support to the small scale sector.
(iii) Increasing competitiveness of industries for the benefit of the common man.
(iv) Ensuring running of public enterprises on business lines and thus cutting their losses.
(v) Providing more incentives for industrialisation of the backward areas, and
(vi) Ensuring rapid industrial development in a competitive environment.
The New Industrial Policy has made very significant changes in four main areas viz., industrial licensing role of public sector, foreign investment and technology and the MRTP act. The major provisions of this policy are discussed below.
(1) Abolition of Industrial Licensing:
In the earlier industrial policy, industries were subjected to tight regulation through the licensing system. Though some liberalisation measures were introduced during 1980’s that positively affected the growth of industry. Still industrial development remained constrained to a considerable extent.
The new industrial policy abolishes the system of industrial licensing for most of the industries under this policy no licenses are required for setting up new industrial units or for substantial expansion in the capacity of the existing units, except for a short list of industries relating to country’s security and strategic concerns, hazardous industries and industries causing environmental degradation.
To begin with, 18 industries were placed in this list of industries that require licenses. Through later amendment to the policy, this list was reduced. It now covers only five industries relating to health security and strategic concerns that require compulsory licensing. Thus the industry has been almost completely made free of the licensing provisions and the constraints attached with it.
(2) De-reservation of Industries for Public Sector:
The public sector which was conceived as a vehicle for rapid industrial development, largely failed to do the job assigned to it. Most public sector enterprises became symbols of inefficiency and imposed
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