INDIAN ECONOMY: INDUSTRIAL POLICIES AND PROGRAMMES IN INDIA

INDIAN ECONOMY: 

INDUSTRIAL POLICIES AND PROGRAMMES IN INDIA

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Come On Let us dive into the ocean of Indian Economy,

Overview

• Industrial policies and programmes in India fall under the purview of the Ministry of Heavy Industry and Public Enterprises, and the Ministry of Commerce and Industry
• The Ministry of Heavy Industry and Public Enterprise contains two departments:
  • Department of Heavy Industries
  • Department of Public Enterprises
• The Ministry of Commerce and Industry has two departments:
  • Department of Commerce
  • Department of Industrial Policy and Promotion
• Most industrial policies thus fall under the Department of Heavy Industries and the Department of Industrial Policy and Promotion

Compulsory licensing

• The government requires compulsory licenses for certain specified industries
• This licensing is mainly on account of environmental and strategic concerns
• Industries requiring compulsory licensing include
  • Alcoholic drinks
  • Cigars and cigarettes made from tobacco and tobacco substitutes
  • Aerospace and defence equipment
  • All items related to use of atomic energy
  • Explosives
  • Hazardous chemicals
• In addition to the above, certain items are reserved for manufacture by small scale industries only. Non-small scale industries are required to obtain licenses and undertake an export obligation of 50%
• Drugs and pharmaceuticals were taken off the compulsory list in 2005

INDUSTRIAL POLICIES

Automobile Policy

1. Objectives of the policy include
   • Emerge as a global source for automobile components
   • Establish an international hub for manufacture of small passenger cars, and a key centre for tractors and two-wheelers
   • Ensure a transition to open trade at minimal risk to the economy
   • Assist development of vehicles using alternative energy sources
   • Development of safety and environment standards at par with international standards
2. The Policy assures automatic approval for FDI up to 100%
3. Used vehicles imported into the country to meet environmental standards
4. The Policy is implemented by the Department of Heavy Industry, Ministry of Industry and Public Enterprises

Industrial Policy

• Launched in 1991
• Implemented by Department of Industrial Policy and Promotion, Ministry of Commerce and Industry
• Objectives include
  • Maintain sustained growth
  • Enhance gainful employment
  • Optimal utilization of human resources
  • Attain international competitiveness
• The Policy enshrines the liberalisation of industrial licensing policy
• The Policy enshrines the establishment of Software Technology Parks (STP) and Electronic Hardware Technology Parks (EHTP)

FDI Policy

• India has one of the most liberal FDI policies among developing countries
• FDI up to 100% is allowed in the automatic route in all activities except the following, which require prior approval
  • Prohibited sectors
  • Industries that require a compulsory license
  • Proposals in which the foreign collaborator has an existing collaboration in the same field
  • Acquisition of shares in an Indian company in the financial services sector
• In the automatic route, no governmental approval is required
• FDI in activities not covered under the automatic route, approval from Government in required. Such approvals are granted by the Foreign Investment Promotion Board
• Sectors prohibited for FDI include
  • Gambling and betting
  • Lottery
  • Atomic energy
  • Retail trading
  • Agriculture (except Horticulture, animal husbandry) and plantations (except tea plantations)

North East Industrial and Investment Promotion Policy (NEIIP)

• Launched in 2007

• Implemented by Department of Industrial Policy and Promotion, Ministry of Commerce and Industry

• Covers Arunachal Pradesh, Assam, Manipur, Mizoram, Nagaland, Meghalaya, Tripura and Sikkim
• Major initiatives include subsidy for infrastructure expansion (25%), exemption from income tax and excise duty (100%)
• Industries covered by the Policy include
  • Services
  • Bio technology
  • Power generation
• The nodal agency for the Policy is the North East Industrial Development Finance Corporation (NEDFi)

INDUSTRIAL PROGRAMMES AND SCHEMES

Indian Leather Development Programme (ILDP)

• Launched in 2007

• Implemented by Department of Industrial Policy and Promotion, Ministry of Commerce and Industry

• Objectives of the programme include
  • Augmentation of raw material base
  • Enhancement of capacity
  • Addressing environmental concerns
  • Global marketing of Indian leather
• Activities covered under the scheme include
  • Modernisation of machinery
  • Hardware and IT solutions
  • Worker safety
  • Environmental and waste management

Industrial Infrastructure Upgradation Scheme

• Launched in 2001

• Implemented by Department of Industrial Policy and Promotion, Ministry of Commerce and Industry

• Central government to sponsor 75% of expenditure
• Activities covered under the scheme include
  • Physical infrastructure (such as road, water etc)
  • Effluent treatment, waste disposal
  • IT infrastructure
  • R&D infrastructure
  • Quality and benchmarking infrastructure
  • Marketing infrastructure

Industrial Park Scheme

• Launched in 2002

• Implemented by Department of Industrial Policy and Promotion, Ministry of Commerce and Industry

• Envisages the establishment of
  • Industrial model towns for the development of industrial infrastructure
  • Industrial parks with facilities for industrial purposes
  • Growth Centres, to act as hubs for industrial activity in the under developed areas

Please Note: From next week, articles on Indian Economy will be moved to Mondays. The next Indian Economy feature will be on 14 Dec 2009.

THANKS

JOHAR..