50
Industrial Policy

Industrial Policy-Final.ppt

Embed Size (px)

Citation preview

Page 1: Industrial Policy-Final.ppt

Industrial Policy

Page 2: Industrial Policy-Final.ppt

Industrial Policy It covers rules, regulations, principles,

policies, & procedures laid down by government for regulating & controlling industrial undertakings in the country.

It prescribes the respective roles of the public, private, joint, cooperative large, medium & small scale sectors for the development of industries.

Page 3: Industrial Policy-Final.ppt

Industrial Policy Contd...

It incorporates fiscal & monetary policies, tariff policy, labor policy.

It shows the government attitude not only towards external assistance but also toward public & private sectors.

Page 4: Industrial Policy-Final.ppt

Main Objectives1. To maintain a sustained growth in

productivity.2. To enhance gainful employment3. To prevent undue concentration of

economic power.

Page 5: Industrial Policy-Final.ppt

Main Objectives4. To achieve optimal utilization of human

resources5. To attain international competitiveness

and6. To transform India into a major partner

and player in the global arena

Page 6: Industrial Policy-Final.ppt

Introduction of DIPP The Department of Industrial Policy &

Promotion was established in 1995 and has been reconstituted in the year 2000 with the merger of the Department of Industrial Development.

Page 7: Industrial Policy-Final.ppt

Role & Function of DIPP1) Encouragement to foreign technology

collaborations at enterprise level and formulating policy parameters for the same;

2) Administration of Industries (Development & Regulation) Act, 1951

Page 8: Industrial Policy-Final.ppt

Role & Function of DIPP

3) Formulation of policies relating to Intellectual Property Rights in the fields of Patents, Trademarks, Industrial Designs and Geographical Indications of Goods and administration of regulations, rules made there under.

Page 9: Industrial Policy-Final.ppt

Role & Function of DIPP4) Promoting industrial development

of industrially backward areas and the North Eastern Region including International Co-operation for industrial partnerships and

5) Promotion of productivity, quality and technical cooperation.

Page 10: Industrial Policy-Final.ppt

Industrial Policies

Industrial Policy Resolution of 1948 Industrial Policy Resolution of 1956 Industrial Policy Resolution of 1973 Industrial Policy Resolution of 1977 Industrial Policy Resolution of 1980 The New Industrial Policy of 1991

Page 11: Industrial Policy-Final.ppt

Industrial Policy 1991 Policy focus is on –

Deregulating Indian industry; Allowing the industry freedom and

flexibility in responding to market forces and

Providing a policy regime that facilitates and fosters growth of Indian industry.

Page 12: Industrial Policy-Final.ppt

Industrial Policy 1991 In pursuit of the industrial objectives,

Government decided to take a series of initiatives in respect of the policies relating to the following areas:

Industrial Licensing Foreign Investment Foreign Technology Agreements Public Sector Policy MRTP Act

Page 13: Industrial Policy-Final.ppt

Industrial Licensing Policy The Industrial Policy Resolution of 1956

identified the following three categories of industries: Those that would be reserved for development in

public sector. Those that would be permitted for development

through private enterprise with or without State participation.

Those in which investment initiatives would ordinarily emanate from private entrepreneurs.

Page 14: Industrial Policy-Final.ppt

The industries requiring compulsory licensing are: Distillation and brewing of alcoholic drinks Cigarettes of tobacco and manufactured tobacco

substitutes Electronics Aerospace and defence equipment Industrial explosives -including detonating fuses, safety

fuses, gun powder, Nitrocellulose and matches Hazardous chemicals –

including items hazardous to human safety and health and thus fall for mandatory licensing

Page 15: Industrial Policy-Final.ppt

The government has reserved certain items for exclusive manufacturing in the small-scale sector.

Non-small-scale units can undertake the manufacturing of items reserved for the small scale sector only after obtaining an industrial license.

In such cases, the non-small-scale unit is required to undertake an obligation to export 50 percent of the production of small-scale industry (SSI) reserved items.

Page 16: Industrial Policy-Final.ppt

Industrial Licensing Policy Industrial Licensing is governed by the

Industries (Development & Regulation) Act, 1951.

Industrial licensing was abolished for all industries, except those specified (18 industries), irrespective of levels of investment.

Page 17: Industrial Policy-Final.ppt

Foreign Investment Foreign investment is when a company or

individual from one nation invests in assets or ownership stakes of a company based in another nation.

As increased globalization in business has occurred, it has become very common for big companies to branch out and invest money in companies located in other countries.

Page 18: Industrial Policy-Final.ppt

These companies may be opening up new manufacturing plants and attracted to cheaper labor, production and fewer taxes in another country.

They may make a foreign investment in another firm outside their country because the firm being purchased has specific technology, products, or access to additional customers that the purchasing firm wants.

Page 19: Industrial Policy-Final.ppt

Overall, foreign investment in a country is a good sign that often leads to growth of jobs and income. As more foreign investment comes into a country it can lead to even greater investments because others see the country as economically stable.

Page 20: Industrial Policy-Final.ppt

Foreign investment can be split into direct and indirect investments.  Direct investments are when companies make

physical investments and purchases in buildings, factories, machines and other equipment outside their home country. 

Indirect investments are when companies or financial institutions purchase positions or stakes in companies on a foreign stock exchange. This type of investment isn't as favorable as direct investment because the home country can sell their investment very easily or the next day if they choose. 

Page 21: Industrial Policy-Final.ppt

Foreign Technology Agreements Foreign Technology Agreements-Glimpses Foreign Technology Agreements in India caters to the

growth of the technology in the Indian industries. The primary purpose of the agreement is to induce the required amount the technological development and promotion of technologically advanced industries. The foreign technology is transferred from foreign sources such as research and development agencies, foreign parent companies, and other sources to the Indian counterparts.

Page 22: Industrial Policy-Final.ppt

The transfer of foreign technology takes places by the means of foreign direct investments and foreign technology collaboration agreements. 

Foreign Technology Agreements in India permits transfer of technology by the means of Government approval or through the automatic route delegated by RBI.

Page 23: Industrial Policy-Final.ppt

Government Approval-Foreign Technology Agreements in India

Proposals which requires licensing

The manufacturing and products should be compliant with the

small scale industries

Proposals which involves previous trademark agreement, joint

ventures, technology transfer, etc

In case of an extension of the foreign technology collaboration

agreements which had been automatically approved earlier

Proposals with no parity with the norms of the automatic approval

Page 24: Industrial Policy-Final.ppt

Automatic Approval-Foreign Technology Agreements in India

The RBI grants automatic approval by the means of the

regional offices to Indian industries for foreign

technology collaboration

The payments pertaining to the technology transfer

should not exceed US$ 2 million

The royalty to be paid is restricted to 5 % in case of

domestic sales, 8 % in case of exports and total payment

should be 8 % on sales for a period of 10 years

Page 25: Industrial Policy-Final.ppt

The royalty period should not exceed 7 years from the

date of starting of the business or 10 years from the date

mentioned in the agreement

The royalty paid is 1 % in case of domestic sales and 2

% in case of exports as granted under automatic route

for use of the trademark foreign collaborator

The royalty paid is 5 % in case of domestic sales and 8

% in case of exports as granted under automatic route

for wholly owned subsidiaries

Page 26: Industrial Policy-Final.ppt

Public Sector Policy Four major reforms were introduced by govt. of India

in public sector in New Industrial Policy in 1991.1. Restructure and bring back potentially viable PSUs.2. Shut down PSUs which cannot be invigorated.3. Bring down Govt’s equity in all non strategic PSUs

to 26% or lesser if required.4. Fully defend the interest of workers.

Page 27: Industrial Policy-Final.ppt

In 1991, New Economic Policy (NEP) was announced to reform the defects of the public sectorThese are as follow:

(i)Reduction of Reservations: 1991, NEP decreased the reservations of public sector

units from 17 to 8. But from 1993 to 2001 the government further reduced

the list of reserved PSUs from 8 to 3. Hence, the new reserved lists included :

Atomic energy. Rail Transport and Minerals for atomic energy.

Page 28: Industrial Policy-Final.ppt

(ii) Policy of Disinvestment: The government of India had adopted the

policy of privatisation in the year 1991. The industries which are sick and weak and

have a very high operation cost must be sold to the private sector. Hence, the selling of shares of the PSEs to the hand of private sector for the fulfilment of privatisation policy is known as Disinvestment.

Page 29: Industrial Policy-Final.ppt

(iii) Weak Public Sector Units: The government of India has given

responsibility to Board for Industrial and Financial Reconstruction (BIFR) to decide which PSUs have any future hope and which are to be shut down immediately.

According to BIFR, up to August, 2004, 286 PSUs were in the list, out of which 203 (85 central and 118 state) were registered. To tackle the financial problems, the government also set-up National Renewal Fund (NRF).

Page 30: Industrial Policy-Final.ppt

(iv) Memorandum of Understanding (MoU): To raise the productivity and performances of

PSUs, MoU system had introduced in 1991. It strengthens the relationship between PSUs and administrative departments. This system has started in 1987-88 with 4 PSUs and now it has gone up to 112 for 2005-07. The main work of MoU is to judge the PSUs and levelled their perform

(v) Navaratnas

Page 31: Industrial Policy-Final.ppt

MRTP Act Removed the threshold limits of assets in respect of MRTP

companies and dominant undertakings Eliminated the requirement of prior approval of Central

Government for Establishment of new undertakings Expansion of undertakings Merger, Amalgamation and Takeover Appointment of Directors under certain circumstances.

The newly empowered MRTP Commission will be authorised to initiative investigations on complaints received from individual consumers or classes of consumers in regard to monopolistic, restrictive and unfair trade practices.

Page 32: Industrial Policy-Final.ppt

MRTP ACT

The Monopolies and Restrictive Trade Practices Act, 1969, aims to prevent concentration of economic power to the common detriment, provide for control of monopolies and probation of monopolistic, restrictive and unfair trade practice, and protect consumer interest.

Page 33: Industrial Policy-Final.ppt

Unfair Trade Practice:

Misleading advertisement and False Representation

Falsely representing that goods and services are of a particular standard, quality, grade, composition or style.

Falsely representing any second hand renovated or old goods as new.

Page 34: Industrial Policy-Final.ppt

Representing that goods or services, seller or supplier have a sponsorship, approval or affiliation which they do not have.

Making a false or misleading representation concerning need for, or usefulness of goods or services.

Page 35: Industrial Policy-Final.ppt

Giving to public any warranty, guarantee of performance that is not based on an adequate test or making to public a representation which propose to be such a guarantee or warranty.

False and misleading claims with respect to the price of goods or services.

Giving false or misleading facts about the goods, services or trade of another person or concern.

Page 36: Industrial Policy-Final.ppt

INDUSTRIAL POLICY SINCE 1956 When India achieved Independence in 1947,

the national consensus was in favour of rapid industrialization of the economy which was seen not only as the key to economic development but also to economic sovereignty.

Page 37: Industrial Policy-Final.ppt

Building on the so-called "Bombay Plan" in the pre-Independence era, the first Industrial Policy Resolution announced in 1948 laid down broad contours of the strategy of industrial development.

At that time the constitution of India had not taken final shape nor was the Planning Commission constituted. Moreover, the necessary legal framework was also not put in place.

Page 38: Industrial Policy-Final.ppt

Yet, an important distinction was made among industries to be kept under the exclusive ownership of Government, i.e., the

public sector, those reserved for private sector and the joint sector.

Page 39: Industrial Policy-Final.ppt

Subsequently, the Indian Constitution was adopted in January 1950, the Planning Commission was constituted in March 1950 and the Industrial (Department and Regulation) Act (IDR Act) was enacted in 1951 with the objective of empowering the Government to take necessary steps to regulate the pattern of industrial development through licensing.

Page 40: Industrial Policy-Final.ppt

This paved the way for the Industrial Policy Resolution of 1956, which was the first comprehensive statement on the strategy for industrial development in India.

Page 41: Industrial Policy-Final.ppt

The Industrial Policy Resolution - 1956 classified industries into three categories.

The first category comprised 17 industries (included in Schedule A of the Resolution) exclusively under the domain of the Government.

These included railways, air transport, arms and ammunition, iron and steel and atomic energy.

Page 42: Industrial Policy-Final.ppt

The second category comprised 12 industries (included in Schedule B of the Resolution), which were envisaged to be progressively State owned but private sector was expected to supplement the efforts of the State.

Page 43: Industrial Policy-Final.ppt

The third category (Schedule C) contained all the remaining industries and it was expected that private sector would initiate development of these industries but they would remain open for the State as well.

Page 44: Industrial Policy-Final.ppt

It was envisaged that the State would facilitate and encourage development of these industries in the private sector, in accordance with the programmes formulated under the Five Year Plans, by appropriate fiscal measures and ensuring adequate infrastructure.

Page 45: Industrial Policy-Final.ppt

Schedule A Schedule B Schedule C Arms and

Ammunition.

Atomic energy.

Iron and steel.

Gold, diamond & mineral oil.

Generation & distribution of electricity.

Fertilizers

Road transport

Sea transport

Drugs etc

All other private sector companies

Page 46: Industrial Policy-Final.ppt

Objectives of IPR 1956(a) to speed up industrialisation and achieve a faster rate of economic growth; (b) to develop machine-making and heavy industries; (c) to build up a large and growing co-operative sector; (d) to expand the public sector; and (e) to reduce disparities in income and wealth, and private monopolies

Page 47: Industrial Policy-Final.ppt

Features of IPR 19561. Three-fold classification of industries.

2. Inter-dependence and co-operation between the

sectors.

3. Role of Small-scale and cottage industries.

4. Balanced regional industrial development.

5. Sound industrial relations and labour welfare.

6. Personnel. 

7. Management of State enterprises.

Page 48: Industrial Policy-Final.ppt

(i) Objectives. The Industrial Policy Statement of 1956 was issued to achieve the following important objectives: (a) to speed up industrialisation and achieve a faster rate of economic growth; (b) to develop machine-making and heavy industries; (c) to build up a large an growing co-operative sector; (d) to expand the public sector; and (e) to reduce disparities in income and wealth, an curb private monopolies.

(ii) Three-fold classification of industries. For the purpose of allocation as between the private and the public sectors the industries have been divided into three broad categories; 

(iii) Inter-dependence and co-operation between the sectors. The policy Resolution does not seek to place industries in watertight compartments. The Government has been given the freedom to undertake any type of industrial production. The private enterprise may also produce some of the items included in Schedule A which contains industries falling in the domain of the State, e.g., generation of electricity, etc. Moreover, the State may get some of the components manufactured by private undertakings, and so may private enterprise depend upon the public sector for some of its requirement. 

Page 49: Industrial Policy-Final.ppt

(iv) Role of Small-scale and cottage industries. On account of their peculiar advantages, their large employment potential, and potentialities for ensuring a more equitable distribution of income as also for mobilizing labour and capital resources still lying underutilized, a the cottage and small-scale industries are to be provided all facilities for growth. The industrial estates and rural community workshops are recognised as the instruments of improving the state of such industries. The development of these industries is to be integrated with that of large-scale industries. Subsidies and tax concessions are envisaged for these industries. The organisation of industrial Co-operatives is to be encouraged. 

(v) Balanced regional industrial development. The Resolution recognizes the need for spreading the benefits of industrial development evenly over the various regions of the country. Industrial facilities (power and transport) are to be extended specially to those areas which lag behind in the matter of employment.

Page 50: Industrial Policy-Final.ppt

(vi) Sound industrial relations and labour welfare. The Policy Joint consultation and association of labour with management as steps in this direction. The resolution further emphasises the improvement of working and living conditions of the workers, and suggests that proper and increased incentives must be provided to labour. The public sector undertakings have been called upon to act as model employers.(vii) Personnel. The Resolution stresses the need for managerial and technical personnel for the rapid industrialisation of country. Such personnel for the rapid industrialisation of the country. Such personnel are all the more important for the fast expanding public sector undertakings. Facilities for the training of personnel at university level and in the factory are to be provided. (viii) Management of State enterprises. In the context of a fast expanding public sector, measures like decentralisation of the authority are to be adopted for toning up the efficiency of Stage industrial undertakings. These industrial undertakings will be expected to function on sound business principles so that the resources of the State may, to some extent, be augmented from surpluses.