Question

Explain the main features of presnt industrial policy of india

Answer 1

Industrial licensing represented red tapism. Because of the large scale changes, the Industrial Policy of 1991 or the new industrial policy represents a majorchange from the early policy of 1956. The new policy contained policy directions for reforms and thus for LPG (Liberalisation, Privatisation and Globalisation)

Answer 2

1. Abolition of Industrial Licensing:

In a major move to liberalise the economy, the new industrial policy abolished all industrial licensing irrespective of the level of in vestment except for certain industries related to security and strategic concerns, and social reasons.

Now there are only 6 industries for which licensing is compulsory as amended in February 1999. These are alcohol, cigarettes, hazardous chemicals, drugs and pharmaceuticals, electronics, aerospace and defense equipments, and industrial explosives.

2. Public Sector’s Role Diluted:

The number of industries reserved for the public sector since 1956 was seventeen. This number has now been reduced to three. They are arms and ammunition and allied items of defense equipment, atomic energy and rail transport.

The main elements of Government Policy towards Public Sector Undertakings (PSUs) are:

(i) Bring down government equity in all non-strategic PSUs to 26 per cent or lower, if necessary;

(ii) Restructure and revive potentially viable PSUs;

(iii) Close down PSUs which cannot be revived; and

(iv) Fully protect the interests of workers.

3. Abolition of Phased Manufacturing Programmes:

ADVERTISEMENTS:

Devaluation of currency and increasing FDI led government to liberalise local content requirement for indigenous firms.

4. MRTP Act:

MRTP Act has been amended to remove the threshold limits of assets in respect of MRTP companies and dominant undertakings.

The new industrial policy also states that the government will undertake review of the existing public enterprises in low technology, small-scale and non-strategic areas. Sick units will be referred to the Board for Industrial and Financial Reconstruction for advice about rehabilitation and reconstruction.

For enterprises remaining in the public sector it is stated that they will be provided a much greater degree of management autonomy through the system of Memorandum of Understanding (MOU).$⠀⠀⠀⠀⠀⠀⠀$