Industrial Policy
*Doing Business Report*(by World Bank) (gives a reflection of the business environment of a country) 1)Ease of doing business index -relative ranking of doing business with other countries -low numerical value: good 2)Distance to Frontier score -absolute measure of progress by a country -0 means bad, 100 means frontier (both measures 10 areas and 1 area-labour market regulation by doing business
*Ease of doing business India* -india 63rd in 2019(top new zealand) -state highest: Andhra Pradesh lowest: Arunachal Pradesh, Lakshadweep *e-Biz Project* -one of *MMPs(Mission Mode Projects)* under *Digital India Program* -setup of *G2B(Government to Business Portal)* on *PPP model*
*FDI in India* -DIPP formulate the policy of govt in FDI -two routes:- •Government route •Automatic route(some 100% FDI permitted)
*FDI Policy 2017*(by DIPP) 1)abolition of the Foreign Investment Promotion Board(FIPB)(replaced by Foreign Investment Facilitation Portal-FIFP) 2)introduction of *competent authorities* -DIPP for FDI applications in Single Brand,Multi Brand and Food Product Retail Trading -DEA for FDI in Financial services sector 3)Introduction of *Standard Operating Procedure(SOP)* to process FDI 4)Key provisions likely to benefit applicants -maxm time for approval: 10 weeks
*life cycle of SEZ* -prior approval from *Board of Approval(BoA)*(headed by secretary,dept of Commerce) -BoA then grants an *in-principle* or *formal* approval -central govt issues notification*(notified SEZs)* (highest no. of notified SEZs state: Telangana) -BoA authorizes the developer to start operation*(Operational SEZs)* -developers are allowed various tax concessions/exemptions for affecting exports
*Features of SEZs* -a designated duty-free enclave -does not require a license for imports -must become net foreign exchange earner within 3 yrs -are allowed manufacturing,trading and service activities -full freedom for *subcontracting* -domestic sales are dutied -no routine examinations by the custom authorities -not pay any income tax on their profits for first 5 years and only 50% tax for 2 more years(if half of profit is reinvested,50% tax is extendable for next 3 yrs) -raw materials from cement to steel to electric parts are subject to zero tax and duty -25% of area for export activities,rest 75% for economic and social infrastructure -provisions for sector specific sezs and multiproduct sezs *Major difference between SEZ and NIMZ(National Investment and Manufacturing Zones)* -SEZ promotion of exports; NIMZ principle of Industrial development -in terms of size(at least 5000 hec for NIMZ) -level of infrastructure planning -governance structures related to regulatory procedures and exit policies
*National Manufacturing Policy 2011* -increase manufacuring contribution to gdp from 16% to 25% by 2022 -create 100 million additional jobs -estb of NIMZ(5000 hec,by states,uncultivable land) -support to small &medium industries -industrial training and skill development programmes -incentives to states for infrastructure development -incentives for *green manufacuring* -relaxation in regulations -increased focus on employment intensive industries,capital goods industry,industries with strategic significance,industries where india enjoys a competitive advantage,SME sector
*Fomulation of a New Industrial Policy* -by DIPP(Dept of Industrial Policy and Promotion)(replaced by DPIIT-Dept for Promotion of Industry and Internal Trade) of Ministry of Commerce and Industry -replace Industrial Policy of 1991 and subsume National Manufacturing Policy -six thematic areas:- •manufacturing and MSME •technology and innovation •ease of doing business •infrastructure,investment •trade and fiscal policy •skills and employability for the future *[Make in India]* scheme(almost same like National Manufacturing Policy 2011)
*National Industrial Corridor Development and Implementation Trust(NICDIT)* -by DIPP -redesignated the DMIC-PITF(Project Implementation Trust Fund)
*Golden Quadrilateral Project* (roadway network connecting 4 metros:-mumbai,chennai,kolkata,delhi) *Diamond Quadrilateral Project* (railway network connecting 4 metros:-mumbai,chennai,kolkata,delhi)
*Industrial Policy Statement 1973* -drew up a list of industries to be started by large business houses so that small industries were not affected -encouraged small and medium entrepreneurs -large industries permitted to operate in rural and backward areas
*Industrial Policy Statement 1977* 1)restrictive approach towards large business houses 2)development of small-scale sector (3 categories of small sector:- cottage and household industries,tiny sector,small-scale industries) •expanded the reserve list of items for exclusive manufacture in the small-scale sector 3)expanding role of public sector •not only strategic area development but also supplier to consumers •restricitive policy towards foreign capital of ownership of public sectors
the procedures,policies,prinicples,rules and regulations which control the industrial undertaking of the country and pattern of industrialisation *(Industrial Policy)*
*Industrial Policy before Independence* -Agrarian economy -few categorized as industrial activity:-silk manufacturing,utensil manufacuring,wood works,some products under pharmaceutical etc -principle of *one-way free trade*(imports were tariff free and exports dutied,benefiting industrialization in England) -Department of Commerce and Industry 1905 -Board of Scientific and Industrial Research 1940
*Industrial Polcies after Independence untill 1990* *Industrial Policy Resolution(IPR) 1948* (4 categories of industries:- •Industries with exclusive state monopoly •Industries with govt control(18 industries identified) •Industries in the mixed sector(public and private) •Industries under private sector)
*Industries (Development and Regulation)Act-IDRA 1951* -gave wide powers to govt to regate industries -specified a schedule of industries for licensing (even expansion needed prior permissions) -govt regulated distribution and prices of output of industries
*Industrial Policy Regulation 1956* -(3 new categories of industries:- •Schedule A industries(monopoly of state or govt with intervention of private sector) •Schedule B industries(monopoly of state or govt with no intervention of private sector) •Schedule C industries(not mentioned in the above categories)) -encouragement to small scale and cottage industries -emphasized on reduction of regional parities(industrial setup in backward areas) -public sector greater role to develop these areas
*Monopolies Commission 1964* -to inquire into the existence and effect of concentration of economic power in private hands -*Monopolistic and Restrictive Trade Practices Act(MRTP) 1969* was enacted -the act sought to control the establishment and expansion of all industrial units that have asset size over a particular limit
*Industrial Policy 1980* 1)effective management of public sector 2)liberalization of industrial licensing •increased capacity of existing units under MRTP and FERA •increased the asset limit under MRTP •*broad-branding concept* was introduced(industries decided the product-mix) 3)redifining small-scale industries •tiny investment upto 1 lakh •small Investment from 10 to 20 lakh •ancilliaries investment from 15 to 25 lakh
*New Industrial Policy 1991* 1)abolition of industrial licensing -only 5 industries need licensing(previously 18) 2)changes to public sector Industries -reduced reservation of public sector(public sector confined to only 2 industrial sector:-atomic energy and minerals used in generation of atomic energy,railway) -efforts to revive loss making enterprises (by Board of Industrial and Financial Resolution-BIFR) -greater autonomy to public enterprises 3)Liberalized policy towards foreign capital(increased upto 40%) and technology 4)changes in MRTP Act(replaced by *Competition Act 2002*) -no need MRTP clearance for large businesses 5)Greater support to small-scale industries -large industries can hold shares upto 24% of small-scale industries -tiny sector to rs 5 lakh
*Special Economic Zones(SEZ)*(introduced in export import policy 2000) -SEZ refers to a *specially demarcated territory(deemed foreign territory)* with tax holidays,exemption from export import duties,world level economic and social infrastructure for production and augmentation of *export activities* within the territory alongwith facilities like abundant and relatively cheap labour,strategic location,market access etc -*Special Economic Zone Act 2005*(cover all legal and regulatoey aspects of SEZs) -*minimum area requirement* •multi sector SEZ: 1000 hectares*(now 500 hectares)* •specific sector SEZ: 100 hectares*(now 50 hectares)*
*objectives of SEZ* -attract FDI -earn foreign exchange and contribute to exchange rate stability -boost the export sector(specially non-traditional exports) -create employment opportunities -introduce new technology -develop backward regions [*FTWZ(Free Trade and Warehousing Zones)* -special SEZs with a focus on trading and warehousing -100% FDI permitted]
a package of infrastructure spending allocated to a specific geographical area,with the intent to stimulate industrial development; create an area with a cluster of manufacturing and other industry on the pre-existing infrastructure such as ports,highways and railroads *(Industrial Corridor)* *Five Industrial/economic corridor* 1)DMIC(Delhi-Mumbai Industrial Corridor) -8 nodes -26% equity of govt of japan 2)CBIC(Chennai-Bengaluru Indsutrial Corridor) -3 nodes -project implemented by *Japan International Cooperation Agency(JICA)* 3)BMIC(Bengaluru-Mumbai Industrial Corridor)
4)VCIC(Vizag-Chennai Industrial Corridor) -2500km East Coast Economic Corridor -funded by ADB -infrastructure development and investments for node-centric development 4)AKIC(Amritsar-Kolkata Industrial Corridor) -Eastern Dedicated Freight Corridor(EDFC)
*Dedicated Freight Corridors(DFC)*(by a special purpose vehicle DFCCIL(DFC Corporation of India Limited) -create world class infrastructure with advanced tehcnology and knowledge to carry higher throughput per train -improve overall transport efficiency -offer customer guaranteed,faster transit,efficient,environment friendly transport -encourage total supply chain management -reduce the unit cost transport logistics -increase the rail share in the freight market
Two corridors *Western DFC* and *Eastern DFC*
*New amendments in FDI Policy 2017* 1)100% FDI under automatic route for single brand retail trading 2)100% FDI under automatic route in construction development 3)Foreign airlines allowed to invest upto 49% under approval route in Air India 4)FII/FPIs allowed to invest in power exchanges through primary market(before only secondary market) 5)Definition of 'medical devices' amended
industrial policy before independence after independence before 1991 IPR 1948,IDRA 1951,IPR 1956,MC 1964,MRTP act 1969,IPS 1973,IPS 1977,IP 1980 after 1991 IP 1991 SEZ,SEZ act 2005,obj,life cycle,features,FTWZ,NIMZ NMP 2011,New IP formulation(six thematic areas) Industrial corridors NCDIT,golden QP,diamond QP DFCorridors Doing Business Report e-Biz FDI in India New amendments in FDI Policy 2017
in india the key objective of the economic policy is to develop the ____ of society (socialist pattern)
the industrial policy in the pre-reform period stressed on ____ in the field of industrial development (state interventions)