During the intervening period of post 1956 and up to 1990 June, half a dozen times industrial policies were modified to suit the changing conditions as well as philosophies of ruling political parties. Notwithstanding the changes, until 1991 June, for practical purposes virtually the 1956 Policy continued as base. Therefore, the modifications and changes in the industrial policies will be explained only briefly.
Industrial Licensing Policy, 1970
The 1951 Industries Act empowered the union government with vast powers to regulate industries including compulsory licensing of industries. During the course of operation of the licensing policy and working of industries Act, many irregularities and loopholes in the Act were noticed. They were hotly debated. Noting the criticism and allegations, Government appointed Monopoly Enquiry Commission under the chairmanship of NC Das Gupta in 1964, Dr RK. Hajari Committee in 1965 (known as Industrial Planning and Licensing Policy Committee) and Dutt Committee in 1967.
The 1951 Industries Act empowered the union government with vast powers to regulate industries including compulsory licensing of industries. During the course of operation of the licensing policy and working of industries Act, many irregularities and loopholes in the Act were noticed. They were hotly debated. Noting the criticism and allegations, Government appointed Monopoly Enquiry Commission under the chairmanship of NC Das Gupta in 1964, Dr RK. Hajari Committee in 1965 (known as Industrial Planning and Licensing Policy Committee) and Dutt Committee in 1967.
The latter committee under the chairmanship of Dr. Subimal Dutt, which is officially known as Industrial Licensing Policy Enquiry Committee, submitted its Report in 1969 July Based on its recommendations, a new Industrial Licensing Policy was announced in 1970 February. An important feature of this Policy is division of industries into Core Heavy Investment, Middle and Unlicensed Sectors. Basic and defense-oriented 9 groups industries were in to be the core sector. Investment of large industrial houses and foreign company were to be limited to this Core sector, provided the industries do not belong to the reserved list of public sector mentioned in Schedule A of 1956 policy. Industries needing more than Rs. 5 crores investment formed the Heavy Investmunt sector. In this, private sector was permitted, barring the Schedule A industries, Middle Sector comprises industries needing Rs 1 crore to 5 crores and for these industries liberal licensing policy would be followed. the Unlicensed sector, units requiring Rs.1 crore investment were included Another feature ofthe policy is acceptance of the concept of Joint Sector recommended by the Dutt Committee. It is argued that as a good part of the finances of private sector flows from public financial institutions, the policy suggests that public financial institutions can convert their loans into equity. Therefore, a convertibility clause is to be included while sanctioning financial assistance.
Industrial Licensing Policy, 1973
After gap of 3 years, the 1970 Policy was amended in 1973 February. A major change in the definition and also a major concession to MRTP companies are two important features of this Policy. The asset requirement to call an industry as large house or MRTP company was raised from Rs. 20 crores to Rs. 35 crores. The scope of Core Sector was expanded from 9 to 19 industries. A list of 19 industries, comprising Core or those which have direct linkage with Core industries and those having long term export potential, was prepared. As the list was put in Appendix I to the Policy, the industries are known as Appendix 1 list. The MRTP and FERA companies were allowed to invest in these industries. The appendix list also included low priority industries such as man-made fibres and synthetic detergents.
After gap of 3 years, the 1970 Policy was amended in 1973 February. A major change in the definition and also a major concession to MRTP companies are two important features of this Policy. The asset requirement to call an industry as large house or MRTP company was raised from Rs. 20 crores to Rs. 35 crores. The scope of Core Sector was expanded from 9 to 19 industries. A list of 19 industries, comprising Core or those which have direct linkage with Core industries and those having long term export potential, was prepared. As the list was put in Appendix I to the Policy, the industries are known as Appendix 1 list. The MRTP and FERA companies were allowed to invest in these industries. The appendix list also included low priority industries such as man-made fibres and synthetic detergents.
Janata Industrial Policy, 1977
After nearly 2 1/2 rule the congress people gave mandate to Janata decades by part Party in the 1977 March) elections. The party experimented with Rolling Plan and announced Industrial Policy known as Janata Policy in 1977 December. As the Janata party was dominated by Gandhians, a distinctive feature of the new Policy is emphasis on growth of small sector, lts thrust was on the development of cottage and rural industries in small towns and villages. The policy states "whatever can be produced by small and cottage industries, must only so produced" To promote and develop small industries, many measures were announced. The Small Scale Industry (SSI) sector was divided into 3 categories, of which one is Tiny Sector with an investment in fixed capital (building, equipment and machinery) up to Rs. l lakh. Reserved list of items to SSI was expanded from 180 to 807 items. It was decided to set up District Industries Centres to provide all services and support needed by the SSI sector under single roof. It created a separate department under IDBI to provide financial assistance. It proposed to strengthen and enlarge operations of KVIC. Under the policy, large scale industries are to be limited to basic industries, capital goods industries and high technology industries. With regard to large industrial houses, it was stated that they should rely on their internal resources to take up new projects or expand existing ones. The role of public sector was expanded from the production of important strategic goods to the supply of essential consumer goods to serve as a stabilising force. As to foreign collaborations, the policy stated that in the sectors where technological know-how was not needed, present foreign collaborations would not be renewed. Except in the case of export oriented and sophisticated technology areas, as a rule Indianisation would be followed i e majority interest in ownership and effective control should be vested with the Indian parties.
After nearly 2 1/2 rule the congress people gave mandate to Janata decades by part Party in the 1977 March) elections. The party experimented with Rolling Plan and announced Industrial Policy known as Janata Policy in 1977 December. As the Janata party was dominated by Gandhians, a distinctive feature of the new Policy is emphasis on growth of small sector, lts thrust was on the development of cottage and rural industries in small towns and villages. The policy states "whatever can be produced by small and cottage industries, must only so produced" To promote and develop small industries, many measures were announced. The Small Scale Industry (SSI) sector was divided into 3 categories, of which one is Tiny Sector with an investment in fixed capital (building, equipment and machinery) up to Rs. l lakh. Reserved list of items to SSI was expanded from 180 to 807 items. It was decided to set up District Industries Centres to provide all services and support needed by the SSI sector under single roof. It created a separate department under IDBI to provide financial assistance. It proposed to strengthen and enlarge operations of KVIC. Under the policy, large scale industries are to be limited to basic industries, capital goods industries and high technology industries. With regard to large industrial houses, it was stated that they should rely on their internal resources to take up new projects or expand existing ones. The role of public sector was expanded from the production of important strategic goods to the supply of essential consumer goods to serve as a stabilising force. As to foreign collaborations, the policy stated that in the sectors where technological know-how was not needed, present foreign collaborations would not be renewed. Except in the case of export oriented and sophisticated technology areas, as a rule Indianisation would be followed i e majority interest in ownership and effective control should be vested with the Indian parties.
