Industrial Policy

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India has had 8 industrial policies since independence.
  1. Industrial policy of 1948 - It decided the model of the economic system of India i.e. mixed economy. It also put industries under Central and State List such as coal, power, railways were in Central List and paper, medicines, cycles were in State List.
  2. Industrial policy of 1956 - It started a classification of industries also called as Reservation of Industries. Schedule A had industries with centre's monopoly (which later became Public Sector Undertakings or PSUs). Schedule B had industries where States were to develop and the private sector was to expand the industry. Schedule C had all the industries left out of Schedules A and B. They were to be developed by the private sector. This was the beginning of the License Raj.
  3. Industrial policy of 1969 - It was mainly introduced to solve problems of the previous policy. It introduced MRTP (Monopolistic and Restrictive Trade Practices) Act, which was to check if any company was indulging in monopolistic activities.
  4. Industrial policy of 1973 - One of the most important policies, it introduced the concepts of Core Industry (industries vital for development of other industries), Joint Sector (partnership between Centre, State and the private sector) and FERA (Foreign Exchange Regulation Act) (to ease India of the foreign exchange deficit, but it did not fulfill its purpose).
  5. Industrial policy of 1977 - It focussed on rural economy. It was influenced by the Gandhian and Socialistic views (new government came to power in 1977 with Morarji Desai as Prime Minister; it was more socialistic in nature). It put emphasis on village industries and decentralised industrialisation.
  6. Industrial policy of 1980 - It was a result of change of government at the Centre. Congress came back to power and re-introduced its old policies and improved a few others.
  7. Industrial policy of 1985-86 - These two industrial policies were developed on the lines of liberalisation. The world was moving towards globalisation and there were discussion all over the world to reduce tax barriers to facilitate the movement of goods and services.
  8. Industrial policy of 1991 - The Magna Carta of economic reforms in India. Prior to 1991, India was a Closed Economy i.e. it did not partake in world trade as much except in a few circumstances. The major industries were controlled by the centre and were monopolised by it. Any private venture had to be licensed through the Centre. This policy changed it completely. It ushered in the following changes.
  • De-reservation of industries
  • De-licensing of industries
  • Promotion of foreign investment

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