REFORMS IN INDUSTRIAL POLICY AFTER 1991

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Course Code: IBO – 03
Course Title: India's Foreign Trade
Assignment Code: IBO-03/TMA/2019-20
Coverage: All Blocks

IBO – 03 India's Foreign Trade Solved Assignment for 2019-20

Q5.) Write short notes on the following:

2.) Reforms in Industrial Policy after 1991

Ans: The industrial policy means the procedures, principles, policies, rules, and regulations which control the industrial undertaking of the country and pattern of industrialization. It explains the approach of Government in context to the development of the industrial sector. It prescribes the respective roles of the public, private joint and cooperative sectors for the development of industries. It also indicates the role of the large, medium, and small sector. It incorporates fiscal and monetary policies, tariff policy, labor policy and the government attitude towards foreign capital, and role to be played by multinational corporations in the development of the industrial sector.

Reforms in Industrial Policy after 1991 : 

(a.) Increase Production: Foreign Investment and Foreign technology agreements are designed to attract capital, technology and managerial expertise from abroad. This inflow of foreign investment and better technology will help to raise production.

(b.) Liberalized Industrial Licensing Policy: Under this policy, with the exception of 18 industries, the licensing system has been removed for all other industries. Some of those 18 industries, where the licensing system is still mandatory are Army and Defence, Forest Conservation, Industries engaged in manufacturing goods which are harmful to the Environment and Industries, which are manufacturing luxury goods, for the affluent class, etc.

(c.) Change in the MRTP Act: In the industrial policy 1991, major changes have been made in the Monopolistic and Respective Trade Practice Act. Companies having an investment of Rs. 100 crores, will not be required to take prior Government permission, for opening new subdivisions or to expand the present industry or for amalgamation of companies.

(d.) Foreign Technology: No prior permission from the government will be required in importing foreign technology, up to the limit of One Crore rupees. Indian companies will be free to negotiate their terms and conditions, with their foreign collaborations, in matters of technology transfers.

(e.) Reservation of Small Scale Industries: This policy has stated that the government shall keep giving assistance to small scale industries. The limit for small scale industries has been reduced from Rs. 3 Crore to Rs. 1 Crore, since December 1999.