Industry in India

2019 ias preliminary exam test series
  • The quest for industrial development started soon after independence in 1947. The Industrial Policy Resolution of 1948 defined the broad contours of the policy delineating the role of the State in industrial development both as an entrepreneur and authority.
  • This was followed by comprehensive enactment of Industries (Development & Regulation) Act, 1951 (referred as IDR Act) that provides for the necessary framework for implementing the Industrial Policy.
  • The main objectives of the Industrial Policy of the Government are: (i) to maintain a sustained growth in productivity; (ii) to enhance gainful employment; (iii) to achieve optimal utilisation of human resources; (iv) to attain international competitiveness; and (v) to transform India into a major partner and player in the global arena.
  • Economic reforms initiated since 1991 envisage a significantly bigger role for private initiatives.


  • Industrial policy since 1991 has been more of facilitating the industrial development rather than anchoring it through permits and controls.
  • Industrial licensing has been abolished for most of the industries and there are only 5 industries where an industrial license is currently required:
  1. Electronic aerospace and defence equipment of all types.
  2. Industrial explosives including detonating fuses, safety fuses, gunpowder, nitrocellulose and matches.
  3. Specified hazardous chemicals i.e., (i) hydrocyanic acid and its derivatives, (ii) phosgene and its derivatives and (iii) isocyanates and disocyanates of hydrocarbon, not elsewhere specified (example: methyl Isocyana te).
  4. Cigars and cigarettes of tobacco and manufactured tobacco substitutes.
  5. Distillation and brewing of alcoholic drinks.
  • Powers for regulation of potable alcohol have been vested in the States as per Supreme Court decision in 1997 in line with the Constitutional provisions.
  • In 2014 the validity of all Industrial licenses for allowing time to commence commercial production has been extended from two to three years.


  • Government has enacted the Micro, Small and Medium Enterpiises Development (MSMED) Act, 2006 stepping up the investment limit in Plant & Machinery to 5 crore for small enterprises and Rs.10 crore for medium enterprises, so as to reduce the regulatory interface with the majority of the industrial units.
  • Following 20 items are reserved for manufacture by Micro and Small Enterprises (MSE) Sector. (i) Pickles and Chutney; (ii) Bread; (iii) Mustard Oil (except solvent extracted); (iv) Groundnut oil. (except solvent extracted; (v) Wooden furniture and fixtures; (vi) Exercise books and registers; (vii) Wax candles; (viii) Laundry soap; (xi) Safety matches; (x) Fireworks; (xi) Agarbattis; (xii) Glass bangles; (xiii) Steel Almirahs; (xiv) Rolling Shutters; (xv) Steel chairs-all types; (xvi) Steel tables- all other types; (xvii) Steel Furniture—all other types; (xviii) Padlocks; (xix) Stainless steel utensils; and (xx) Domestic utensils—aluminium.
  • All undertakings other than me MSE sector, engaged in the manufacture of items reserved for MSE sector are required to obtain an industrial license and undertake an export obligation of 50% of the annual production.
  • This condition of licensing is, however, not applicable to those undertakings operating under 100% Export Oriented Undertakings Scheme or set up in the Export Processing Zone (EPZ) and the Special Economic Zone (SEZ).

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