Surprise presents are always a no no to the parents. Bought a Samsung tab only to see disappointment on their faces, that why am I such a spendthrift. Anyway, today’s learnings – Post Liberalisation Industrial Policy
Post Liberalization Industrial Policy – Features
- There are two aspects to the Post Liberalization Industrial Policy – Monopoly of the government and Liberalization of industrial licensing policy.
- Monopoly of the government i.e ownership and regulation exists only in 3 industries – Atomic energy, Atomic Minerals and Railways. There are exceptions for mining of atomic minerals, beach sand deposits, state governments can grant license to private parties subject to prior consent of the Department of Atomic Energy.
- Liberalisation of Industrial Licensing Policy – Industrial Licensing was abolished for all the items except for a list of five industries related to security, strategic and environmental concerns – (Cigar, cigarettes, substitutes of prepared tobacco, industrial explosives, match boxes, distillation and brewing of alcohol drinks, electronics, aerospace, hazardous chemicals and all defence equipments
- There have been amendments to the MRTP act, which was passed in 1969 with the focus to improve competition in the market but was restricting the size of the market by stopping bigger firms to enter was replaced by Competition Act 2002.
- Chronically sick industries were referred to the Board of Industrial and Financial Reconstruction and the motive was to focus the public sector on strategic, essential and high tech infrastructure which indicated more power to the board of directors and also a possible disinvestment of the public sector.
FDI – Routes and Regulations
- India has two main routes through which it gets FDI – Automatic route (where FDI is allowed without prior approval from the Government or Reserve Bank of India) and Government route – (where FDI can be done only after approval from the Government of India)
- Sectors where FDI is permitted upto 100% and under automatic route – (Agriculture, Animal Husbandry, Mining, Exploration of metal and non metal ores, credit info, etc)
- Sectors where FDI is permitted upto 100% and under government route – (Publishing, Printing, Satellite establishment and operations, Food product training, Mining, Mineral Exploration)
- Sectors where FDI is permitted upto certain limit and under government route – (Defence – 49% limit, Pharmaceuticals – 74% limit) after which the government approval would be required.
- Public Sector Privatization and de reservation through disinvestment – Earlier public enterprises were accorded preference even in regions where private investments were possible. Disinvestment and privatisation of existing PSUs were implemented to improve corporate efficiency, competition among PSUs and measure financial performance. There was involved transfer of government holdings in PSUs to private shareholders.
- Special Efforts were taken out like Establishment of Export Oriented Units (EOUs), Export Processing Zones (EPZs), Agriculture Export Zones (AEZs), Special Economic Zones (SEZs) and National Investment and Manufacturing Zones (NIMZ) have been carried out which have contributed to the export sector of the country
- As a part of the Government’s liberalization and economic reforms program, IEM (Industrial Entrepreneurs Memorandum) was introduced where all the industrial undertakings exempt from the requirements of industrial licensing, including existing units undertaking substantial expansion are required to file information in the prescribed form for IEM i.e Form IEM with the Secretariat of Industrial Assistance, Department of Industrial Policy and Promotion, Government of Indian and get the acknowledgement.
- The Foreign Exchange Management Act was introduced in 1999 to facilitate external trade and payment and for promoting the orderly development and maintenance of foreign exchange market in India.
- Foreign technology agreements were promoted to induce the required amount of technological development and promotion of technologically advanced industries. This also permitted transfer of technology by means of FDI and Foreign Technology Collaboration Agreements through government approval or automatic route as mentioned by RBI.
So this was all about Post Liberalization Industrial Policies. Stay tuned for more informative blogs!
