Industries (Development and Regulation) Act, 1951: Industrial Policy Resolution1948

Industries (Development and Regulation) Act, 1951
· The purpose of the act was to look after regulation and development of important industries
· It mandated every existing or new industrial undertaking to register itself with the state
government
· It restricted manufacturing a new article unless the licence has been renewed or a new
licence has been obtained to include the new article.
· Hence There were 5 types of licences
- for new undertakings
- substantial expansion
- production of new articles
- change in location
- carrying on business
· Classic example is car manufacture. For over thirty years we had just two cars. The
Ambassador and Fiat. One had to wait for few months to get delivery.
· This act restricted growth of India. A GDP growth rate of just 3.5% in the period between 1960 and
1980 which was very low compared to other countries
INDUSTRIAL POLICY RESOLUTION1948

Strategic Industries: It included three industries: Arms and ammunition, Atomic energy and Rail
transport in which Central Government had monopoly
Basic/Key Industries 6 industries :. These industries were to be set-up by the Central Government.
However, the existing private sector enterprises were allowed to continue.
(coal, iron & steel, aircraft manufacturing, ship-building, manufacture of telephone, telegraph & wireless
apparatus, and mineral oil )
Important Industries: It included 18 industries including heavy chemicals, sugar, cotton textile , etc.
These industries continue to remain under private sector however, the central government, in
consultation with the state government, had general control over them.
(heavy chemicals, sugar, cotton textile & woollen industry, cement, paper, salt, machine tools, fertiliser,
rubber, air and sea transport, motor, tractor, electricity etc.)
Other Industries : All other industries which were not included in the above mentioned three categories
were left open for the private sector.
· The policy aimed that state must play active role in development of industries. The policy
was aimed to Protect cottage & small-scale industries.
INDUSTRIAL POLICY RESOLUTION1956

The policy aimed to prevent private monopolies and expand the public sector
· It gave importance to cottage and small scale industries for expanding
employment opportunities and for wider decentralisation but also promoted
heavy industries
· The 3 categories of industries were:
· Schedule A consisting of 17 industries including arms and ammunition, atomic
energy, railways etc. was the exclusive responsibility of the State.
· Schedule B, consisting of 12 industries, was open to both the private and
public sectors;
· Schedule C- a third category of industries which were left open to the private
sector
· The policy reduced the scope for the expansion of the private sector significantly as the
sector was kept under state control through a system of licenses.
SECOND FIVE YEAR PLAN
Development of:
· Mining and industry
· Community agriculture development
· Power and irrigation
· Social services
· Communication and transport
The plan resulted a growth rate of 4.27% and expansion of state owned heavy industries
small scale
the performance and progress achieved by the small scale sector are the result of various measures
initiated by the government for the growth and efficient working
After the formulation of first Five - Year Plan (1951-56), a special commitee was formed called KARVA
committee for promoting the small scale sector and job opportunities
the Small Scale Industries Board was established in 1954 and a number of useful schemes such as,
supply of machineries on hire purchase basis, wider grants, were introduced
One more organisation established by the government was the National Small Industries Corporation
(NSIC, 1955). which laid the foundation for the growth of Indian small scale
Large scale
Textile policy - was a restrictive policy where use of manmade fibres and Installation of spinning mills
and power looms remained prohibited during 1956 to 1985 so as to prevent loss of employment.
Government had followed a policy of supporting small scale industries by restricting the volume of
production in the large scale sector, by differential taxation, and by direct subsidies
The industrialization strategy of Professor Mahalanobis in the 2nd five year plan placed emphasis on the
development of heavy industries and proposed a dominant role for the public sector in the economy.
Hence many public sector companies were establised like ONGC was established in 1956 and
Hindustan Machine Tools in 1953
The automobile sector saw a very slow paced growth the industry was protected by high import
tariffs, manufacturing licenses and restrictions on imports of automobiles and automotive
components
(Public sector did not live upto the expectations of generating surpluses to accelerate the pace of
capital accumulation and help reduce inequality.)
TRADE
during the first two plans India’s major imports consisted of food grains, cotton, jute, etc. But,
after that the trend has changed. with the changing requirements of the process of
industrialisation, India’s import trade shifted to capital goods
During this period, the exports consisted of agricultural products and manufactured goods
Import substituition policy allowed India to manufacture a fairly wide array of products, but as it
turned out the quality of those products was very poor and there was lack of direct competition

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Industries (Development and Regulation) Act, 1951: Industrial Policy Resolution1948

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Industries (Development and Regulation) Act, 1951

INDUSTRIAL POLICY RESOLUTION1948

INDUSTRIAL POLICY RESOLUTION1956

SECOND FIVE YEAR PLAN

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