Industrial policies include different procedures, principles (i.e., the philosophy of a given economy), policies, rules and regulations, incentives, etc undertaken by the government to impact the ownership & structure of the industry and its performance. The government has enacted multiple industrial policies since independence to achieve industrial growth and development.
INDUSTRIAL POLICY :
Industrial Policy is a formal declaration undertaken by the Government that outlines the government’s general policies for industries. It is characterized by actions and policies of the government which impact the industrial development of a country. The Industrial Policy Resolution of 1948 outlined the broad policy roles of the state in industrial development both as an entrepreneur and authority.
NEED FOR INDUSTRIAL POLICIES
It is commonly accepted that government intervention is critical in the event of market failures, which might include - inadequacies in capital markets, which are typically caused by information asymmetries. absence of necessary investments hindering exploitation of scale economies With regard to firm-level spending in learning and training, there is a lack of data. a lack of coordination and knowledge across technologically interconnected investments Given India's current economic predicament, these are compelling grounds for establishing an economy-wide planning body. However, the Indian government should abandon the "command and control" strategy that prevailed prior to 1991.
VARIOUS INDUSTRIAL POLICIES UNDERTAKEN BY THE GOVERNMENT
INDUSTRIAL POLICY RESOLUTION OF 1948
Industrial Policy Resolution of 1948 laid emphasis on a Mixed Economic Model and defined the role of the State in industrial development both as an entrepreneur and authority. It gave a four-fold classification of industries such as: Strategic Industries (Public Sector) consisted of industries where the Central Government had a monopoly such as Arms and ammunition, Atomic energy, etc. Basic/Key Industries (Public-cum-Private Sector), was to be established by the Central Government and private sector enterprises were allowed to participate. It included coal, iron & steel, aircraft manufacturing, ship-building, manufacture, etc. Important Industries (Controlled Private Sector), were with the private sector but had control of central and the state governments. It included heavy chemicals, sugar, cotton textile, woolen, etc.
INDUSTRIAL POLICY STATEMENT OF 1956
Industrial Policy Statement of 1956 laid down the foundation for policies to be followed in regard to industrial development till 1991. It advocated increasing the participation of the public sector, building a strong cooperative sector, and encouraging the separation of ownership and management in private industries.
It divided industries into three categories:
SCHEDULE A: It consisted of industries under the state's responsibilities such as arms and ammunition, atomic energy, railways, etc.
SCHEDULE B: It consisted of industries open to both the private and public sectors and were progressively State-owned.
SCHEDULE C: All the other industries not included in these two Schedules constituted the third category which was left open for the private sector.
INDUSTRIAL POLICY STATEMENT 1977
Industrial Policy Statement 1977 focused on the effective promotion of cottage and small industries that were mainly spread in rural areas and small towns. In this policy, the small sector was divided into three groups such as cottage and household sector, tiny sector, and small scale industries. It advocated for decreasing the occurrence of labor unrest and encouraged the worker’s participation in management from shop floor level to board level.
INDUSTRIAL POLICY OF 1980
Industrial Policy of 1980 advocated for promoting the concept of economic federation, increasing the efficiency of the public sector and reversing the trend of industrial production of the past three years, and reaffirming its belief in the Monopolies and Restrictive Trade Practices (MRTP) Act and the Foreign Exchange Regulation Act (FERA).
INDUSTRIAL POLICY OF 1991
Industrial Policy of 1991 led to the de reservation of the public sector were earlier exclusively reserved for the public sector, abolition of Industrial Licensing for all projects except for ceratin specific industries, disinvestment of the public sector was envisioned that would reduce government stakes in Public Sector Enterprises and increase the efficiency and competitiveness of the sector, automatic approvals for foreign technologies, etc.
DRAWBACKS OF INDUSTRIAL POLICIES
Despite the emergence of periodic industrial policies by the government, the manufacturing sector remained stagnant, for instance, GDP has stagnated at about 16% since 1991 for manufacturing sector. The decreased pace of investments in many basic and strategic industries such as engineering, power, machine tools, etc. Restructuring and modernization of industries lead to the displacement of manpower in various industrial sectors. The New Industrial Policy of 1991 did not focus on a pollution-free development of the industrial climate.
CONCLUSION
As the world learned during the financial crisis, unregulated markets may turn chaotic. Regulation by the government is required. India, on the other hand, will not wish to return to the 'engineered-controlled' industrial policy model, which is unsuitable for a dynamic, learning process. The third archetype, 'complex self-adaptive systems,' is the most appropriate model for industrial progress in India.