Industrial Policy Statement, 1969

This was basically a licencing policy which aimed at solving the shortcomings of the licencing policy started by the Industrial Policy of 1956. The experts and industrialists (new comers) complained that the industrial licencing policy was serving just the opposite purpose for which it was

mooted. Inspired by the socialistic ideals and nationalistic feelings the licencing policy had the following reasons:

(i) exploitation of resources for the development of all;

(ii) priority of resource exploitation for the industries;

(iii) price-control of the goods produced by the licenced industries;

(iv) checking concentration of economic power;

(v) channelising investment into desired direction (according to the planning process).

In practice, the licencing policy was not serving the above-given purpose properly. A powerful industrial house was always able to procure fresh licences at the cost of a new budding entrepreneur. The price regulation policy via licencing was aimed at helping the public by providing cheaper goods, but it indirectly served the private licenced industries ultimately (as central subsidies were given to the private companies from where it was to benefit the poor in the form of cheaper goods). Similarly, the older and well- established industrial houses were capable of creating hurdles for the newer ones with the help of different kinds of trade practices forcing the latter to agree for sell-outs and takeovers. A number of committees were set up by the government to look into the matter and suggest remedies.11 The committees on industrial licencing policy review not only pointed out several shortcomings of the policy, but also accepted the useful role of industrial licencing.12 Finally, it was in 1969 that the new industrial licencing policy was announced which affected the following major changes in the area:‌

(i) The Monopolistic and Restrictive Trade Practices (MRTP) Act was passed. The Act intended to regulate the trading and commercial practices of the firms and checking monopoly and concentration of economic power.

(ii) The firms with assets of Rs. 25 crore or more were put under obligation of taking permission from the Government of India before any expansion, greenfield venture and takeover of other firms (as per the MRTP Act). Such firms came to be known as the ‘MRTP Companies’. The upper limit (known as the ‘MRTP limit’) for such companies was revised upward to Rs. 50 crore in 1980 and Rs. 100 crore in 1985.13

(iii) For the redressal of the prohibited and restricted practices of trade, the government did set up an MRTP Commission.

Industrial Policy Statement, 1973

The Industrial Policy Statement of 1973 introduced some new thinking into the economy with major ones being as follows:

(i) A new classificatory term i.e., core industries was created. The industries which were of fundamental importance for the development of industries were put in this category such as iron and steel, cement, coal, crude oil, oil refining and electricity. In the future, these industries came to be known as basic industries, infrastructure industries in the country.

(ii) Out of the six core industries defined by the policy, the private sector may apply for licences for the industries which were not a part of schedule A of the Industrial Policy, 1956.14 The private firms eligible to apply for such licences were supposed to have their total assets at Rs. 20 crore or more.

(iii) Some industries were put under the reserved list in which only the small or medium industries could be set up.15

(iv) The concept of ‘joint sector’ was developed which allowed partnership among the Centre, state and the private sector while setting up some industries. The governments had the discretionary power to exit such ventures in future. Here, the government wanted to promote the private sector with state support.

(v) The Government of India had been facing the foreign exchange crunch during that time. To regulate foreign exchange the Foreign Exchange Regulation Act (FERA) was passed in 1973.16 Experts have called it a ‘draconian’ Act which hampered the growth and modernisation of Indian industries.

(vi) A limited permission to foreign investment was given, with the multinational corporations (MNCs) being allowed to set up subsidiaries in the country.17

Industrial Policy Statement, 1977

The Industrial Policy Statement of 1977 was chalked out by a different political set up from the past with a different political fervour—the dominant voice in the government was having an anti-Indira stance with an inclination towards the Gandhian-socialistic views towards the economy. We see such elements in this policy statement:

(i) Foreign investment in the unnecessary areas were prohibited (opposite to the IPS of 1973 which promoted foreign investment via technology transfer in the areas of lack of capital or technology). In practice, there was a complete ‘no’ to foreign investment.18

(ii) Emphasis on village industries with a redefinition of the small and cottage industries.

(iii) Decentralised industrialisation was given attention with the objective of linking the masses to the process of industrialisation. The District Industries Centres (DICs) were set to promote the expansion of small and cottage industries at a mass scale.

(iv) Democratic decentralisation got emphasised and the khadi and village industries were restructured.

(v) Serious attention was given on the level of production and the prices of essential commodities of everyday use.

Industrial Policy Resolution, 1980

The year 1980 saw the return of the same political party at the Centre. The new government revised the Industrial Policy of 1977 with few exceptions in the Industrial Policy Resolution, 1980. The major initiatives of the policy were as given below:

(i) Foreign investment via the technology transfer route was allowed again (similar to the provisions of the IPS, 1973).

(ii) The ‘MRTP Limit’ was revised upward to Rs. 50 crore to promote setting of bigger companies.

(iii) The DICs were continued with.

(iv) Industrial licencing was simplified.

(v) Overall liberal attitude followed towards the expansion of private industries.