Over the last four decades India has recorded
remarkable expansion and diversification in practically all areas of
industrial development. India's vast resources-human, agricultural,
mineral and industrial- have been fully exploited for this purpose. The
New Industrial Policy has helped in catalyzing foreign investment into
India. The total amount of foreign direct investment approval which was
Rs 5,341 million in 1991, swelled to Rs 141,871.9 million in 1994. Of
the total FDI approvals, 80% are in the priority sectors such as power,
oil refineries, electronics and electrical equipment, chemicals,
telecommunications, food processing etc.
Policy Resolution of 1956 and the Statement on Industrial Policy of
1991 provide the basic framework for the overall industrial policy of
the Government in regard to the manufacturing industries. In the initial
stages of the country's development, growth of industry was regulated
through the granting of industrial licenses and other industrial
approvals. The Industries (Development and Regulation) Act, 1951 was the
principal legislation providing the legal basis for industrial
licensing. The industrial policy announced on 24th July, 1991
substantially dispensed with industrial licensing, announced measures
facilitating foreign investment and technology transfers, and threw open
the areas hitherto reserved for the public sector.
The private sector can now operate in all areas except those of
strategic concern such as defence, railway transport and atomic energy.
The list of industries reserved for the public sector now stands reduced
to 6. Private participation is permitted in some specific areas in this
list as well, such as mining; oil exploration, refining and marketing;
and parts of the railway transport sectors.
The requirement of obtaining an industrial license for manufacturing
activity is limited to:
- Industries reserved for the pubic sector.
- 16 industries of strategic, social or environmental concern.
- Industries reserved for the small scale sector.
All other industries are exempt from licensing, and only subject to
the locational restrictions of metropolitan areas.
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