Salient Features of New industrial policy 1991

Hi friends, in today's article we are going to know about the Features of New industrial policy 1991. So let's discuss this.

Salient Features of New Industrial Policy 1991 introduced by the govt of India

The Congress govt. announced new industrial policy in July 24, 1991. The main aims or objective of the industrial policy are mentioned below-

(i) Abolition of industrial licensing: The new policy has abolished the system of industrial licensing for all industrial undertaking, except for a short list of industries related to security and strategic concerns, social reasons etc. There are only eighteen (18) types of industries for which licensing is compulsory.

(ii) Policy regarding public sector: The new policy restructure the public sector industries. The new Industrial policy has reduce the list of industries under public sector to fight as against  the seventeen (17) industries reserved earlier as per 1956 policy.

(iii) MRIR limit: As per MRIR Act, any firm with assets over a certain size (Rs. 100 crores since 1985) was classified as MRIR firms and such firm was allowed to start only selected industries on as case by case approval. The new policy abolished the MRIR limits. Here importance is given on unfair trade practices.

(iv) Foreign investment and technology: The new industrial policy prepared a specified list of high technology and high investment priarity industries. In which automatic permission will be available for direct foreign investment upto 61% foreign equity.

(v) Location Policy Liberalised: The new policy mentioned that in location other than cities of more than one million population, no industrial approvals from the centre will be required except for industries, subject to compulsory licensing. In cities with more than one million population, industries other than those of non polluting in nature will be located outside 25 Km. In the new policy declaration was that will be no need on industrial approval from the centre except big cities and having more one million people.

(vi) Abolition of phased of manufacturing programmes: The policy has totally abolished this programme as the govt. feels due to reforms of trade policy and devaluation of rupee there is no need to enforce.

(vii) Removing of mandatory: From the very beginning a large part of industrial investment was financed who have followed a mandatory convertibility clause in their lending operations for new industrial project. But the new industrial policy removed this system and hence forth financial institutions will not impose the mandatory convertibility clause.

Merits of New Industrial Policy 1991

The important advantage of the new industrial policy are mentioned below-

(i) The new policy liberalises the industrial sector from unnecessary control and regulation.

(ii) The new policy accelerates industrial growth.

(iii) The new policy accelerates industrial production.

(iv) The new policy provides an opportunities to the domestic industries to capture the world market.

Demerits New Industrial Policy 1991

(i) The new policy opened huge opportunities for the development and expansion of capital based industries. It neglects the development of the small scale industries.

(ii) The new policy created a market for rich section.

(iii) Liberalization of foreign investment upto 51% created the market for the foreign compries and multinational corporation.

(iv) The new policy encouraged the policy of privatization in the industrial sectors.

(v) One important aspect of the economy which has been neglected in the NIP (New Industrial Policy) is that of generation of employment to match with the increase in the labour force.