What was the objective of Licensing Policy in India?

The aim of Licensing Policy was to keep the private sector under control. No new industry was allowed unless a license was obtained from the government. This policy was used for promoting industries in backward regions. Even an existing industry had to obtain a license for expanding output or for diversifying production. For producing a new commodity the license was compulsory. This was to ensure that the quantity of goods produced was not more than what the economy required. License to expand production was given only if the government was convinced that the economy required the larger quantity of goods.