Export & Import - Exim Policy- Industrial Policy, India Finance & Investment Guide

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: