Industrialize or Perish

Industries refer to units that are engaged in the business activity of converting raw materials or semi-finished goods into finished or final goods, which are then made available to the final consumers. For any economy to flourish industrialization is very essential. Industries act as major accelerators of economic development in a country. There are many advantages of having a good industrial system functioning in a country. Especially in a developing country like India, Industries are of utmost importance.

They provide the vast population with better employment opportunities, better standard of living, better supply of goods and services and so on. However, in a vast country like India it is important that the functioning of these industries be monitored. Here comes the need for a strong and efficient Industrial Policy. In order to see to that the industries function in the desired manner it is essential that these industries be kept under observation and also the government works on the functioning of these industries. Industrial Policy is an important document which lays a wide canvas and sets the tone for implementing promotional and regulatory roles of the government. ” – K. Aswathappa Thus, it is clear from the above definition that an Industrial Policy lays down a definite framework that governs and monitors the functioning of the industries in a country. It is essential to understand the importance or reasons behind having a strong and efficient Industrial Policy in any country:

1. Balanced Development of industries
2.  Meet National Priorities
3. Regulate Expansion of Private Industries
4. Prevent Concentration of Wealth in Few Hands
5. Monitor Foreign

Trade Three Major Industrial Policies in India

There have been three major industrial policies in the Indian Industrial context. The first was Industrial Policy Resolution of 1948. This resolution soon after the independence focused on accepting the role of both private and public sector units in the country, role of small and cottage industries and also remarked that the small and cottage industries are major employing . This resolution also divided the industries into four categories – Industries where state had monopolies, mixed sector, the field of government control and the field of private enterprise.

This resolution did not give much importance for the welcoming of foreign capital. Second important industrial policy was Industrial Policy of 1956. This policy focused on accelerating the rate of economic growth and speeding of industrialization, importance of public sectors, prevent monopolies and reducing income disparities. This policy was highly criticized for giving importance for the development of public sector units rather than the private enterprises. Third and the most important is the Industrial Policy of 1991. This year is also called as the year of economic reforms in India.

This marked the major shift of the Indian Economy from closed to open economy. Liberalization, Privatization and Globalization was introduced in the economy in order to encourage competition in the economy. This policy focused on the following spheres Abolishing Industrial Licensing, Encouraging Foreign investment and foreign trade agreements, reducing the importance of public sector units and liberalizing the restrictions on the working of industries. Recent Developments in Industrial Policy: Change is inevitable and nothing can escape change. So are the industrial sector and the industrial policy.

Over the years the industrial policy has gone through many changes and developments. Some of the recent developments in Industrial sector Policy are as follows: a. Liberalization: The Industrial Policy of earlier years focused more on stringent rules and regulation. The tariff policies, trade regulations etc were strict and prevented the development of industries. This policy was used in order to protect some industries. However, now after the reforms in 1991 the scenario has completely changed. The economy is now more liberal in terms of tariff and foreign trade rules.

This has increased the investment in certain sectors and has also increased the overall national income. Liberalization has also enabled the economy to be self sufficient. This will reduce the dependence of the domestic economy on foreign economy. b. Globalization: Today the Indian market is merged with the global market. This has increased the competition for domestic industries leading to better quality goods, efficient working of the organization and also reduced prices. Globalization has added on more jobs for the citizens within the country.

Now global markets have made it possible for the consumers to choose from a wide variety of products. It also increases the foreign trade of the country.

Reduced Role of Public Sector

The role of public sector over the years has reduced. Due to this there is a reduction in hindrances such as Bureaucracy and Red-Tapism. Thus, the reduced role of public sector has certainly helped the economy to grow and develop efficiently and effectively. This has also reduced the burden on the government budgets. Also, many sick units have now been converted into private enterprises.

Thus, this has also increased the revenue of the country. d. De-licensing: There was a license raj before the introduction of the 1991 reforms. Now the economy is relived of this. The government in order to encourage investment has abolished the compulsory licensing for all industries except a few that are strategic and defense related and which seek governmental supervision. De-licensing is the major change that has improved the total investment in the economy. Larger investment means better services and better supply of goods. Also, de-licensing has increased the scope for more and more industrial units to be set up. . Foreign Technological Agreements: In recent times there has been a great importance given for foreign technological agreements. Due to import of foreign technology into the country the efficiency of the domestic industries have improved. Also, this has helped the domestic companies flourish not only within the geographical boundaries of a country but also globally. f. Consumer is King: Due to the increase in competition for domestic industries the consumers have been benefited a lot. The consumers have a vast range of products to choose from and also globalization has put a stop for the expansion of Monopolies. . Autonomy to Private Sector: Over the years there has been many measures adopted in order to give more autonomy for private enterprises. Some of the measures are disinvestment, privatization, etc. h. Importance of Small Scale Industries: The importance of the small and cottage industries are highlighted in all the industrial policy resolutions. The small scale industries are encouraged for the numerous benefits they provide the economy with such as, employment, increase in the national income, increase in exports, etc. i.

Importance of Information Technology

In recent years the importance of IT sector has increased tremendously. This has led to flourishing of Business Process Outsourcing (BPOs) and Knowledge Process Outsourcing (KPOs). Thus, these were some of the recent development or trends in the Industrial Policy of India.

Reference

1.  Essentials of Business Environment – K. Aswathappa
2.  en. wikipedia. org
3. Study on Industrial Policy and Services – European Commission
4.  What is the importance of industries to our country? – Saptarshi Dutta (PreserveArticles. com)