Comprehensive notes on Industrial Policy.
Industrial Policy
Meaning of Industrial Policy
Industrial Policy encompasses principles and activities aimed at fostering industrialization within a country.
It includes regulations, rules, and procedures designed to guide industrial activities toward specific goals, such as:
Overall industrial development.
Economic advancement.
Balanced regional growth.
Increased employment opportunities.
It spans policies related to labor, capital, cottage and small industries, foreign capital, and trade protection.
Industrial Policy serves as a tool through which the government actively participates in the growth process.
Importance of Industrial Policy
Limited Capacity of Private Sector
In underdeveloped countries, the private sector often lacks the resources and willingness to undertake high-risk ventures.
The government's active involvement becomes essential for industrial development.
The government invests in public interest projects and critical infrastructure like roads, power plants, and basic industries, which in turn stimulate the private sector.
Public and private sectors may collaborate on joint projects.
Regulation of Private Sector
Industrial Policy is crucial for regulating the private sector to align with national development plans.
It ensures that limited resources are allocated according to plan priorities.
The government controls and regulates the private sector to ensure compliance with these priorities.
Regulation of the Foreign Sector
Underdeveloped countries rely on foreign capital, assistance, and trade during the initial stages of growth.
Appropriate policies are necessary to ensure that foreign involvement benefits national interests and promotes economic development.
A clear industrial policy is necessary to coordinate the contributions of public, private, and foreign sectors.
Industrial Policy in Free India
After independence, India recognized the need for a well-planned industrial policy.
Five industrial policies were formulated: in 1948, 1956, 1977, 1980, and 1991.
The National Manufacturing Policy was announced in 2011, followed by the 'Make in India' program in 2014.
These policies can be categorized into:
Pre-reform period (1948, 1956, 1977, 1980).
Post-reform period (1991 onwards).
Industrial Policy of 1948
Announced in April 1948, initiating a mixed economy where the government actively participates in the country's progress.
Both public and private sectors were given opportunities for development.
Main Features
(1) Classification of Industries
Divided large-scale industries into four categories:
(i) Public Sector: Included industries like arms and ammunition, atomic energy, and railways, with full state control. The state could take over defense and strategic industries in emergencies.
(ii) Public-cum-Private Sector: Included six basic industries: coal, iron and steel, aircraft, shipbuilding, mineral oil, telephone cables, and wireless apparatus. New undertakings would be established by the government, while existing private units would continue for ten years, after which nationalization would be considered.
(iii) Controlled Private Sector: Included 18 important industries like tractors, motor vehicles, machine tools, cotton textiles, heavy chemicals, cement, power, sugar, paper, shipping, and minerals. These remained under private sector, but the central government, in consultation with state governments, maintained general control.
(iv) Private and Cooperative Sector: Included remaining industries to be run on private or cooperative ownership. The government reserved the power to intervene if any industry did not function satisfactorily.
(2) Cottage and Small-scale Industries
Policy emphasized the rapid development of cottage and small-scale industries to utilize local resources.
Aimed at achieving efficiency in consumer goods production and generating employment.
Special financial institutions were emphasized to provide government assistance.
(3) Labour and Capital Relations
Cooperation between labor and capital was emphasized for smooth industrial development.
Decision to give fair wages, social security, and other facilities to laborers.
Labor participation in management and a fair share in industrial prosperity was ensured.
(4) Attitude towards Foreign Capital
Recognized the importance of foreign capital for industrial development to increase technical know-how.
Government control over foreign capital considered necessary to safeguard national interests.
Major share of management and ownership would be in Indian hands where foreign capital was invested.
(5) Change in Tariff Policy
Optimum utilization of natural resources and protection of Indian industries from foreign competition called for a change in tariff policy.
Heavy tariffs were imposed to protect domestic industry.
(6) Social Overhead Costs
Emphasis was laid on the improvement of social overheads, viz., transport facilities, electricity, irrigation, import of capital goods and supply of raw material.
Industrial Policy of 1956
A comprehensive new industrial policy was announced in 1956.
Main Objectives
Acceleration of industrial and economic development.
Development of basic and machine-building industries.
Reduction of income and wealth inequalities.
Checking the concentration of monopoly and economic power.
Main Features
(1) Classification of Industries: Industries were divided into three categories:
(i) Public Sector: Schedule 'A' enlisted 17 industries for the public sector, including arms and ammunition, atomic energy, iron and steel, heavy machinery, heavy electrical parts, mineral oil, coal, air transport, railway transport, shipping, telephones, wireless apparatus, copper, lead and zinc mines, and electricity generation.
(ii) Public-cum-Private Sector: Schedule 'B' included 12 industries to be progressively state-owned, with the government typically taking the initiative in new undertakings.
(iii) Private Sector: Schedule 'C' included all remaining industries not in the above categories. Establishment and development were left to the private sector, operating in conformity with state economic and social policies.
(2) Fair Treatment to Private Sector: The policy promoted private sector industries by providing power, transport, and finance facilities.
The government committed to non-discriminatory and equal treatment.
(3) Cottage and Small-scale Industries: Importance was assigned to cottage and small-scale industries, promoting employment, reducing wealth inequality, and utilizing local capital.
(4) Balanced Regional Growth: Special provisions were made to check unbalanced industrial growth.
Industrially backward regions would receive priority for new industry establishment.
(5) Technical and Managerial Personnel: Arrangements were made to impart technical and managerial training in public and private sectors through training institutions and business management courses.
(6) Proper Amenities for Labourers: The policy emphasized providing social security, pension benefits, and improved working conditions for laborers, with opportunities for management participation.
(7) Proper Management of Public Enterprises: Efficient management of public enterprises was emphasized to generate adequate revenue and effectively utilize resources.
(8) Foreign Capital: Several modifications were introduced to attract foreign capital on a large scale.
(9) Flexible: The government retained the power for any kind of industrial production.
The categorization of industries was not rigid and could be changed as needed.
Industrial Policy of 1977
The Janata Party Government announced a new industrial policy on December 23, 1977.
Replaced on July 23, 1980, by another industrial policy by the Congress Government.
Main Features
(1) Small-scale Industries: Emphasis was placed on the successful development of small and tiny industries, unlike previous policies focused on large-scale industries.
District Industries Centers were to be set up in each district to meet the needs of local industries.
A separate cell in the Industrial Development Bank was established to focus on small industries.
Attention was given to marketing, product standardization, and quality control.
(2) Labour-intensive Technology: Special efforts were made to develop small, ordinary machines and maximize their use to increase productivity and income in small and cottage industries.
The use of labor-intensive technology was promoted to create more employment, coordinated with rural development programs.
(3) Role of Large-scale Industries: Large-scale industries were limited to key and strategic areas like capital goods, iron and steel, petroleum, and fertilizers.
(4) Licensing Policy: Licensing policy aimed to regulate big industrial houses to achieve social and economic goals, encouraging small and cottage industries to expand while restricting big units.
(5) Public Sector: The government aimed to make public sector enterprises viable, efficient, and profitable, managed by competent managers with necessary freedom.
(6) Indigenous and Foreign Technology: Emphasis was placed on basing industrial development on indigenous technology, with preference to buying the best available technology for sophisticated and priority sectors.
Foreign technology was to be used in a restricted manner.
(7) Foreign Trade: Self-sufficiency was the highest objective. Restrictions on imports were to be withdrawn if they hampered priority industries.
Industries would receive concessions in custom and excise duties to encourage exports, with compulsory export obligations in certain cases.
(8) Balanced Regional Development: No more licenses were to be issued for establishing industries within certain limits of metropolitan cities with populations exceeding 1 million and other cities exceeding 500,000 (according to the 1971 census).
(9) Workers' Participation: Government policy emphasized increasing worker participation in management, with cooperation encouraged in public and private sector industries for smooth and efficient operations.
(10) Sick Industries: The government would selectively take over sick industries to minimize losses, taking immediate measures to rehabilitate and manage the taken-over units.
Industrial Policy of 1980
The Congress government announced a new Industrial Policy on July 23, 1980, mainly based on the Industrial Policy of 1956.
The main drawback of the 1977 policy was the undue emphasis on small and cottage industries, ignoring large-scale and public sector industries.
The government aimed to dispel a false notion that public and private sectors were mutually competitive and that small and large-scale industries were opposite, announcing a balanced industrial policy.
Main Features
(1) Small Industries: Investment limits for small industries were increased to develop these industries:
Small industries: 10 lakh to 20 lakh.
Ancillary industries: 15 lakh to 25 lakh.
Tiny industries: 1 lakh to 2 lakh.
(2) Khadi and Village Industries: Policy encouraged khadi and village industries to generate employment in villages and promote:
Handloom industry.
Handicrafts.
Khadi.
Other village industries.
(3) Balanced Growth: Both large and small industries were to receive special attention to achieve higher industrial growth, unlike the 1977 policy which emphasized only small-scale industries.
(4) Regularisation of Excess Production Capacity: Government permitted units with production capacity exceeding their licensed capacity to make full use of it to increase national output.
(5) Provision for Automatic Growth: Large-scale industries were allowed to fully utilize production capacity and produce beyond their licensed capacity up to a certain limit due to resource scarcity and rising capital goods prices.
(6) Public Sector: Efficiency of public sector undertakings was to be increased with proper training of executives and appointment of professionals as managers, along with special schemes to improve loss-making units.
(7) Sick Enterprises: Sick units were to be revived to improve efficiency, motivated to operate in conjunction with healthy units, provided with tax concessions, and taken over by the government only if all efforts failed.
(8) Export-oriented Industries: Applications for establishing export-oriented industries were to be considered sympathetically, provided with facilities for import of technology, raw materials, etc.
(9) Development of Backward Regions: Balanced regional development was emphasized. New large-scale industries were not allowed in already concentrated big cities.
The government planned to set up big industries/nuclear plants in backward areas to promote small-scale ancillary industries by meeting their demand for intermediate goods.
(10) Infrastructure: Necessary provisions were made for industrial infrastructure such as energy, transport, and coal.
The government endeavored to develop alternative energy sources and provide financial assistance for energy conservation and generation projects.
New Industrial Policy of 1991
Government of India announced its new industrial policy on July 24, 1991.
Main Objectives
Liberalize the Indian industrial economy from administrative and legal controls.
Raise industrial efficiency to international standards.
Accelerate industrial growth.
Main Features
(1) Contraction of Public Sector: Reduced the number of industries reserved for the public sector:
From 17 to 8 in 1991.
These 8 industries were: (i) Arms and Ammunition, (ii) Atomic Energy, (iii) Coal, (iv) Mineral Oil, (v) Mining of Iron Ore, Manganese Ore, Gold, Silver, (vi) Mining of Copper, Lead, Zinc, (vii) Atomic Minerals, (viii) Railways.
Reduced to 3 in 2004-05, namely atomic mineral, atomic energy, and railways.
Reduced to 2 in 2010-11, i.e., Atomic Energy and Railways.
Key infrastructure components in railways, such as high-speed train projects, were opened to the private sector.
(2) Delicensing: Reduced the requirement for industrial licenses:
Required only for 18 industries in the new policy.
Reduced to 6 in 1999.
Reduced to 5 in 2006, including alcoholic products, tobacco products, aerospace and defense equipment, industrial explosives, and hazardous chemicals.
(3) Abolition of Registration: Abolished all existing registration schemes related to industries.
Entrepreneurs now only needed to give a memorandum of information for new projects.
(4) Foreign Capital: Increased foreign capital investment limits:
Raised from 40 per cent to 51 per cent equity.
Permitted up to 74 per cent in 9 industries and for trading houses primarily engaged in export activities.
Allowed up to 100 per cent in many areas with the replacement of FERA by FEMA in 1999.
(5) Setting up Foreign Investment Promotion Board: Constituted a special board to negotiate with international firms and approve foreign direct investment, abolished in 2017.
(6) Technical Experts: Removed the need for permission to hire foreign technicians or test indigenously developed products.
(7) Public Enterprises Incurring Losses: Mandated investigation of persistently loss-incurring public enterprises by the Board for Industrial and Financial Reconstruction (BIFR).
(8) Facilities to Labourers: Provided social security mechanisms and set up the National Renewal Fund to rehabilitate retrenched employees and workers of public sector units.
(9) Location of Industries: Relaxed location clearance requirements for cities with a population of less than 1 million, except for industries requiring licensing compulsorily.
Required non-pollutant industries to be set up at a distance of 25 kms from city municipal limits in case of cities with population of 1 million and above.
(10) Encouragement to Industries in Backward Areas: Offered special incentives to industries in backward regions to reduce regional disparities.
(11) Freedom from Administrative Controls: Exempted expansion programs of new units from administrative controls and allowed existing units to produce any commodity based on their license.
(12) Concessions from Monopolies Act: Amended the Monopolies and Restrictive Trade Practices Act to remove asset limits for MRTP companies and prevent restrictive trade practices, replacing it with the Competition Act, 2002.
(13) New Definition of Micro, Small and Medium Enterprises (MSMEs):
(a) Micro enterprise: Investment in plant and machinery up to 1 crore and annual turnover up to 5 crore.
(b) Small enterprise: Investment in plant and machinery up to 10 crore and annual turnover up to 50 crore.
(c) Medium enterprise: Investment in plant and machinery up to 50 crore and annual turnover up to 250 crore.
(14) Reservation for Small-scale Industries: Special provisions were made for promoting small-scale industries.
Items earlier reserved for small scale industries were dereserved in 2015-16.
At present, no item is reserved for small scale industries
(15) Facilities of Import: Provided automatic approval for importing capital goods valued at less than 25 per cent of the total plant and machinery value, up to a maximum limit of 2 crore.
Implementation of Industrial Policy of 1991
(1) Contraction of Public Sector: The number of industries reserved for public sector is reduced to two. These include: (i) Atomic Energy, (ii) Railways.
(2) Reduction in the Number of Industries for Compulsory Licensing: In 2006, the number of industries in respect of which industrial licensing is compulsory, has been reduced to 5 only.
(3) Expansion of Large Industries: Some of the areas reserved for small-scale industries are opened for large-scale industries. Like the manufacture of readymade garments
(4) Promotion of Exports: In June 1993, the Development Commissioners for Export Promotion Zones (EPZS) were given some specific powers for granting approval to 100 per cent export-oriented units. These powers were earlier vested with the Zonal Authorities under the Ministry of Commerce.
(5) Reduction in Duties: Excise duties on capital goods are reduced. Import duties have also been reduced so as to allow increased import of capital goods, raw inaterials and technology. It has benefited the domestic industrial units.
(6) Encouragement to Foreign Investment: A concessional tax rate on capital gains for foreign institutional investors was introduced to increase foreign investment. In many industries foreign investment limit is raised to 100 per cent. The foreign direct investment got enhanced to a great extent due to new industrial policy. In 1991, the magnitude of foreign direct investment was US $ 97 million. In 2023-24, it increased to US $ 70,954 million.
(7) Raising Funds from International Capital Markets: In the year 1995-96, government allowed Indian corporate sector to raise funds from international capital markets. For raising funds from these markets, Indian companies issue ADR (American Depository Receipts) and GDR (Global Depository Receipts).
(8) Technology Upgradation: For improving technology and improving quality of production, government announced a reimbursement scheme. Under this scheme, if an industrial unit obtains ISO 14,000 then expenses incurred for obtaining it are reimbursed by government.
(9) Tax Holiday for Industries in Backward Areas: In 1993-94, government announced a five-year tax holiday for setting up industrial unit in any of the backward areas notified by government.
(10) Encouragement to Private Sector Participation in Development of Infrastructure: From 1995-96, government has encouraged private sector to participate in the development of infrastructure like power, roads, sea ports, airports, telecommunication, etc.
(11) Disinvestment: For raising funds, government set up Disinvestment Commission in the year 1996-97. Equity shares of 5,80,870 crore were disinvested Up to March 2024.
(12) Setting up Foreign Investment Promotion Board (FIPB): For attracting foreign investment, government has set up FIPB. This board encouraged foreign investors to invest in India. In year 2017, FIPB was abolished.
(13) Abolition of MRTP Act: Government abolished MRTP Act in the year 2002.
(14) Increase in Investment Limit of Small Enterprises: With effect from 2020, investment limit for small enterprises has been increased. Now enterprises with more investment in plant and machinery and more sales can also avail facilities and incentives provided to small scale units.
Evaluation of Industrial Policy of 1991
This industrial policy is a very liberal policy.
Main objective of this industrial policy is to formulate, on the basis of the experience gained from the previous industrial policies, such a balanced policy as is free from the weaknesses of the old policies, generates maximum employment opportunities and renders Indian industrial production competitive in international field.
Merits
(1) Increase in Production: Increased capital, technology and managerial expertise from abroad.
(2) Promotes Liberalisation: Removing bureaucratic hurdles in industrial growth.
(3) Increase in Efficiency of Public Sector: Increasing the efficiency of the public sector.
(4) Increase in Competition: Liberal licensing, etc., have increased competition in the economy.
(5) Less Economic Burden on Government: Area of public sector has been reduced.
(6) Increase in Exports: Given various concessions like liberal loans, setting of special economic zones, liberal import of capital goods, raw materials.
(7) Balanced Regional Development: Special provisions have been made to set up big industries in backward regions.
(8) Significance for Small-scale Industries: Investment limit in support to small scale sector.
(9) Increase in Foreign Investment: New Industrial Policy has promoted foreign investment in India.
(10) Increase in Welfare of Workers: The government has taken various measures to protect the interest of the labour, enhance their welfare and train them to learn the methods of using new technology.
Shortcomings
(1) Reduction in Role of Public Sector: The new industrial policy has reduced the role of the public sector.
(2) Privatisation will not Automatically Lead to Efficiency: The new policy lays more emphasis on privatisation.
(3) Concentration of Economic Power: New policy will lead to increase in concentration of economic power.
(4) Increase in Regional Imbalances: Critics say it will lead to increase in regional imbalances.
(5) Adverse Effect on Economic Sovereignty: It is feared that excessive freedom to foreign capital may ultimately affect our economic sovereignty.
(6) Adverse Effect on Small-scale Industries: Small-scale units are not in a position to face competition with MNCs.
(7) Ignores Social Objectives: The new industrial policy has ignored the social objectives of our five year plans.
(8) Increase in Unemployment: Because of liberal import of foreign technology, use of capital-intensive technology has increased.
Suggestions for Making Industrial Policy More Production Oriented
(1) Increasing Efficiency and Profitability of Public Sector: Make public sector industries efficient and profitable, dedicated and persons of high calibre should be appointed in public sector.
(2) Increasing Competitiveness of Private Sector: There is need to increase competitiveness of private sector.
(3) Liberalisation of Labour Legislations: The existing labour legislations are very rigid.
(4) Reduction in Regional Imbalances: Licensing policy should ensure that industrial houses set up their units in backward regions also.
(5) Reducing Too Much Dependence on Foreign Capital: Government should ensure that our economy does not depend excessively on foreign capital and technology.
(6) Due Attention to Small-scale Sector: Government should promote small-scale industries.
(7) Strengthening Infrastructure: Government should take special measures to strengthen infrastructure like transportation, communication, power supply, etc.
National Manufacturing Policy, 2011
The government of India announced a national manufacturing policy on 4th November 2011 with the objective of enhancing the share of manufacturing sector in gross domestic product to 25 per cent within a decade and creating 100 million additional jobs.
Features
(1) Promoting Employment-Intensive Industries: Employment-intensive industries such as textiles and garments, gems and jewellery, leather and footwear and food processing industries will be encouraged.
(2) Promoting Capital Goods Industry: Capital goods industry is the mother industry for manufacturing sector.
(3) Promoting Industries with Strategic Significance: Certain industries have strategic significance for achieving sustainable development and national security. These include aerospace, shipping, defence equipments, solar energy, information technology, telecommunication, etc.
(4) Promoting Industries Where India Enjoys Competitive Advantage: India enjoys competitive advantage mainly in automobiles, pharmaceuticals and medical equipments, readymade garments, gems and jewellery, etc.
(5) Promoting Micro, Small and Medium Enterprises (MSMEs): The micro, small and medium enterprises contribute 45 per cent of the manufacturing output, 48.1 per cent of manufacturing exports and it employs about 111 million persons in the country.
(6) Promoting Public Sector Enterprises: PSES continue to play major role in the growth of national economy.
(7) Simplification of Business Regulations: On an average, a manufacturing unit in India is supposed to comply with nearly 70 laws and regulations.
(8) Establishment of National Investment and Manufacturing Zones (NIMZS): For developing best manufacturing hubs in the world, modern industrial townships named National Investment and Manufacturing Zones (NIMZS) will be developed.
(9) Industrial Training and Skill Upgradation: At present, only 10 per cent of Indian workforce gets any vocational training.
(10) Technology Upgradation: Special efforts will be made for development of indigenous technology.
Make in India Programme
In August 2014, government launched 'Make in India Programme' to strengthen manufacturing sector of India.
Objectives
(1) To achieve 12 to 14 per cent annum growth rate in Indian manufacturing sector and to make it the engine of growth for the economy.
(2) To create 100 million additional jobs in manufacturing sector by year 2022.
(3) To enhance global competitiveness of Indian manufacturing sector.
(4) To achieve technological upgradation in manufacturing sector of India.
(5) To create appropriate skills among the masses so as to achieve faster and inclusive growth.
(6) To ensure sustainability of growth and to protect the environment.
Steps Taken by Government to boost Manufacturing Sector
(1) Promoting Liberalisation: To promote manufacturing sector, government has further liberalised various legislations governing manufacturing sector.
(2) Promoting Globalisation: To attract global manufacturers to India, government has promoted the inflow of foreign capital to India.
(3) Developing Industrial Corridors: Government is developing industrial corridors to set up quality infrastructure of international standards.
(4) Developing Smart Cities: Government has planned to develop 100 smart cities to boost manufacturing activities in India.
(5) Establishment of National Investment and Manufacturing Zones (NIMZS): For developing best manufacturing hubs in the world, modern industrial townships named National Investment and Manufacturing Zones (NIMZS) will be developed.
(6) Strengthening Intellectual Property Regime: To protect intellectual property rights of innovators, government has strengthened intellectual property regime.
(7) Skill Development: To ensure availability of quality labourforce for the manufacturing units, government is promoting vocational and technical education in the country.
(8) Favourable Economic Policy: Government is making necessary changes in economic policies so as to make them favourable for manufacturing sector.
(9) Promoting Specific Sectors: Government has identified specific sectors which have huge potential of boosting manufacturing activities.
Strengths of Indian Manufacturing Sector
(i) Improvement in the global image of India as a manufacturing nation.
(ii) Sustained availability of good quality workforce.
(iii) Cost of manpower is relatively low as compared to other nations.
(iv) Huge demand for manufactured goods due to large population base and increasing income of middle class offers ample marketing opportunities to manufacturing sector.
(v) Strong banking network and efficient capital markets which provide ample opportunities to NRIs and foreign investors to invest in India.
(vi) Conducive policy environment, i.e., supportive government policies which promote manufacturing sector.
(vii) Improvement in industrial infrastructure facilitates growth of manufacturing sector.
Industrial Licensing Policy
The Indian Government resorted to the licensing system in order to maintain control over industries according to the Industries Development and Regulation Act, 1951.
Objectives of Licensing
(i) Development and control of industrial investment and production as per objectives of plans.
(ii) Checking the concentration of economic power.
(iii) Encouraging small-scale industry.
(iv) Regulating location of industrial units and ensuring balanced regional development.
(v) Promoting technological advancements in industries.
(vi) Encouraging new entrepreneurs for setting industries.
Compulsory Licensing
According to the licensing policy of 1952, it was compulsory to obtain licence for industries having a fixed capital of more than 10 lakh. In 1970, this limit was increased to 1 crore; in 1990, it was fixed at 25 crore. According to the new Industrial Policy of 1991, it is necessary to obtain licence only in the case of industries which are engaged in the fields of defence.
equipments, luxury goods and hazardous commodities. In the wake of liberalisation number of industries required to obtain compulsory licence was reduced to 6 in 1999. This number has been reduced to 5 in 2006. The licence system has been brought to an end for all
other industries. The five industries for which licensing is compulsory are: (i) Alcoholic products,
(ii) Tobacco products, (iii) Aerospace and defence equipments, (iv) Industrial explosives,
(v) Hazardous chemicals.
Impact of New Industrial Policy on Industrial Sector
(1) Promotes Liberalisation: This new industrial policy has attempted to liberalise the economy by removing bureaucratic hurdles in industrial growth.
(2) Promotes Globalisation: New industrial policy has promoted globalisation.
(3) Increase in Efficiency of Public Sector: The reduction in number of industries reserved for public sector from 17 to 2 and the threat of closure of sick public sector enterprises has resulted in increasing the efficiency of the public sector.
(4) Special Facilities to Export-Oriented Industries: New industrial policy offered special facilities to export-oriented units (EOU) to promote exports.
(5) Balanced Regional Development: In the new policy, special provisions have been made to set up big industries in backward regions.
(6) Micro, Small and Medium Enterprises (MSMEs): The new industrial policy provided enhanced support to MSME sector so that it can grow in an environment of economic efficiency and continuous technological upgradation.
(7) Increase in Competition Under New Industrial Policy: Easy entry of multinational companies, privatisation, removal of asset limit on MRTP companies, liberal licensing have increased competition in the economy.
(8) Developing Industrial Corridors: Under new industrial policy, government is developing industrial corridors to set up quality infrastructure of international standards.
(9) Promoting Industries with Strategic Importance: Certain industries have strategic significance for achieving sustainable development and national security.
(10) Promoting Industries Where India Enjoys Competitive Advantage: In certain industries, India has strong base, has developed indigenous expertise and cost effective methods.
Other Impact
(i) Improvement in technology of industrial units.
(ii) Improvement in skills of industrial workforce.
(iii) Increase in capital inflow (from both domestic and foreign sources) in industrial sector.