2.1.1.6. Industrial Policy Statement, 1977

The main elements of this policy were:

1. Development of Small-Scale Sector: The main thrust of the new industrial policy was an effective promotion of cottage and small industries. The Government initiated wide-spread promotional and supportive measures to encourage the small-scale sector. The small-scale sector was classified into 3 categories viz. Cottage and household industries which provide self-employment; tiny sector and small-scale industries. The purpose of the classification was to specifically design policy measures for each category. The policy statement considerably expanded the list of reserved items for exclusive manufacture in the small- scale sector.

2. Restrictive approach towards large business houses: The large scale sector was allowed in basic, capital goods and high-tech industries. The policy emphasized that the funds from financial institutions should be made available largely for the development of small sector. The large sector should generate internal finance for financing new projects or expansion of existing business.

3. Expanding role of public sector: The industrial policy stated that the public sector would be used not only in the strategic areas but also as a stabilizing force for maintaining essential supplier for the consumer.

Further, the policy statement reiterated restrictive policy towards foreign capital whereby the majority interest in ownership and effective control should rest in Indian hands.