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BBA 1st Year Business Environment Industrial Policy Short Question Answer

(iii) Third category comprised certain basic industries. It was facilitated that though private sector would be allowed to develop them, the government may plan and regulate them.

(iv) Fourth category of all the remaining industries. These industries were left to private entrepreneurs individual and co-operatives.

3. Attitude towards Foreign Capital: The policy recognised the importance of foreign capital and enterprise to accde—te e rze ci industrial isation in the country.

4. Rate of Small Sce d Cottage Industries The policy provided that all the best efforts would be made for the development of small scale industries.

Q. 4. What is industrial policy, 1991 7 Give its features.

Ans. New Industrial Policy, 1991: A draft of new industrial policy was presented in Parliament of July 24, 1991. Salient features of this policy are as under:

1. De-reservation of Industries for Public Sector: Only 8 industries will continue to be so reserved:

(i) Defence equipments,(ii) Atomic power, (iii) Coal, (iv) Mineral oil, (v) Iron-ore, manganese, gold, silver, etc. (vi) Copper, zinc, etc.  (now only 3)

2. Abolition of Industrial Licensing: New policy has abolished all industrial licensing, irrespective of the level of investment except 18 industries related to security and strategic concerns. (now only 6)

3. Freedom of Production According to Demand: Under new policy, firms will be free to manufacture any article i – :rse to market demand.

4. Abolition of Phased Manufacturing Programmes: There is no longer any need for enforcing the requirements under phased manufacturing programmers. However, various incentives currently available will continue.

5. Removal of Mandatory Convertibility Clause: Banks and financial institutions have so far been including a convertibility clause in their lending operation for new projects (option of converting part of their loans zto equity if necessary)..Hence further, financial institutions will not be allowed to impose the clause.

6. Removal of Investment Control of Large Business Houses: Since the enactment of MRTP Act, all firms with assets above a certain size 100 crores (since 1985) have been classified as MRTP firms. Now these firms will require prior approval for investment in licensed industries.

7. Automatic Approval for Foreign Technological Agreements • In case of foreign technology and foreign investment agreements, except for a specified list, firms will receive automatic approval with certain guidelines..

8. Automatic Approval for Foreign Equity upto 51%: In case of foreign investment automatic permission will be available for foreign equity upto 51% equity shares in high priority industries.

Q. 5. Write a short note on industrial policy, 1980 with its features.

Ans. Industrial Policy 1980 : Congress (I) after coming to power in 1980, rejected the industrial policy of Janta Party’s Government and announced, its industrial policy on July 23, 1980.

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