Industrial Sector (Part – IV)

The New Industrial Policy, 1991 had the main objective of providing facilities to market forces and to increase efficiency.
Larger roles were provided by

L-Liberalization (Reduction of government control)

P - Privatization (Increasing the role & scope of the private sector)

G-Globalisation (Integration of the Indian economy with the world economy)
Because of LPG, old domestic firms have to compete with New Domestic firms, MNC's and imported items The government allowed Domestic firms to import better technology to improve efficiency and to have access to better technology. The Foreign Direct Investment ceiling was increased from 40% to 51% in selected sectors.

The maximum FDI limit is 100% in selected sectors like infrastructure sectors. Foreign Investment promotion board was established. It is a single-window FDI clearance agency. The technology transfer agreement was allowed under the automatic route.

Phased Manufacturing Programme was a condition on foreign firms to reduce imported inputs and use domestic inputs, it was abolished in 1991.

Under the Mandatory convertibility clause, while giving loans to firms, part of the loan will/can be converted to equity of the company if the banks want the loan in a specified time. This was also abolished.

Industrial licensing was abolished except for 18 industries.
Monopolies and Restrictive Trade Practices Act - Under his MRTP commission was established. MRTP Act was introduced to check monopolies. The MRTP Act was relaxed in 1991.

On the recommendation of the SVS Raghavan committee, Competition Act 2000 was passed. Its objectives were to promote competition by creating an enabling environment.

The NIP (New Industrial Policy) significantly reduced the number of industries requiring licenses. Previously, many industries needed government permission to operate, which limited private sector growth and innovation.

The policy aimed to shift the focus from government control to market forces. By removing licensing requirements, the government hoped to encourage competition, efficiency, and innovation within the industrial sector.

While most industries were de-licensed, certain industries, such as those involved in defense, environmental protection, or producing luxury goods, continued to require licenses. The removal of licensing requirements was particularly beneficial for small and medium-sized businesses, who often faced challenges with bureaucratic hurdles. The NIP's liberalization of the licensing system was a major step in India's economic reforms, contributing to increased foreign investment, trade, and overall economic growth.

1. Electronic aerospace and defence equipment;

2 Industrial explosives including detonating fuses, safety fuses, gun powder, nitrocellulose and matches;

3. Cigars and cigarettes of tobacco and manufactured tobacco substitutes;

4. Specified hazardous chemicals i.e. (a) Hydrocyanic acid and its derivatives, (b) Phosgene and its derivatives and (c) Isocyanates and diisocyanates of hydrocarbon, not elsewhere specified (example methyl isocyanate).

Note: As per the Supreme Court Order of 1997 (and an Amendment of 2016), distillation and brewing of alcoholic drinks (potable alcohol) is now under the jurisdiction of States. In addition, certain industries are reserved exclusively for the Public Sector (presently, Atomic Energy and Railway Operations only come under this category). Presently, there are no items reserved for exclusively manufacture by Small Scale Sector.

New Industrial Policy, declared by the P.V. Narsimha Rao's Government on July 24, 1991 had abolished the requirement of license in all industries except 18 industries. This list was gradually reduced further. Presently, only four industries are under compulsory industrial licensing:

1. Electronic aerospace and defence equipment;

2 Industrial explosives including detonating fuses, safety fuses, gun powder, nitrocellulose and matches;

3. Cigars and cigarettes of tobacco and manufactured tobacco substitutes;

4. Specified hazardous chemicals i.e. (a) Hydrocyanic acid and its derivatives, (b) Phosgene and its derivatives and (c) Isocyanates and diisocyanates of hydrocarbon, not elsewhere specified (example methyl isocyanate).

Note: As per the Supreme Court Order of 1997 (and an Amendment of 2016), distillation and brewing of alcoholic drinks (potable alcohol) is now under the jurisdiction of States. In addition, certain industries are reserved exclusively for the Public Sector (presently, Atomic Energy and Railway Operations only come under this category). Presently, there are no items reserved for exclusively manufacture by Small Scale Sector.

L-Liberalization (Reduction of government control)

P-Privatization (Increasing the role & scope of the private sector)

G-Globalisation (Integration of the Indian economy with the world economy)
Because of LPG, old domestic firms have to compete with New Domestic firms, MNC's and imported items.

The government allowed Domestic firms to import better technology to improve efficiency and to have access to better technology. The Foreign Direct Investment ceiling was increased from 40% to 51% in selected sectors.

The maximum FDI limit is 100% in selected sectors like infrastructure sectors. Foreign Investment promotion board was established. It is a single-window FDI clearance agency. The technology transfer agreement was allowed under the automatic route.

Phased Manufacturing Programme was a condition on foreign firms to reduce imported inputs and use domestic inputs, it was abolished in 1991.

Under the Mandatory convertibility clause, while giving loans to firms, part of the loan will/can be converted to equity of the company if the banks want the loan in a specified time. This was also abolished.

Industrial licensing was abolished except for 18 industries.
Monopolies and Restrictive Trade Practices Act - Under his MRTP commission was established. MRTP Act was introduced to check monopolies. The MRTP Act was relaxed in 1991.

On the recommendation of the SVS Raghavan committee, Competition Act 2000 was passed. Its objectives were to promote competition by creating an enabling environment.

(i) Ambiguous Development Policy: In this context it was said that, there is no clear policy for weak industries.

(ii) Threat of global competition: In this context it was said that, Indian companies are compelled to compete with multinational corporations because of liberalization.

(iii) Limit of Foreign Investment: In this context, concessions and incentives given for promotion to foreign investment is being criticized.

Therefore option (c) is the correct answer.

Purchasing of white goods could be a means to show one's social status, especially when publicly displayed goods and services are too expensive for other members of a person's class. Sometimes, this type of consumption is typically associated with the specific purpose of displaying one's wealth. This is the reason why these articles are classified as the items bought for conspicuous consumption.

MTNL was listed at the New York Stock Exchange (NYSE) in November, 2001. MTNL delisted its American Depository Shares (ADS) from the NYSE w.e.f. from 31 December, 2012. Hence, at present statement of option (c) is also incorrect. BSNL became the first telecom service provider in India to launch a nationwide cellular service at one time in year 2002.

Key characteristics of FMCG:

• High demand: FMCG products are in high demand due to their essential nature in daily life.
• Low price: They are typically priced affordably to encourage frequent purchases.
• Short shelf life: Many FMCG items have a short shelf life, either due to perishability or high consumer demand.
• High turnover rate: Due to their fast-selling nature, FMCG products have a high turnover rate, meaning they are sold and replenished frequently.
• Convenience: FMCG products are often packaged for easy storage and consumption.