What economic changes were initiated by the Government under the Industrial Policy, 1991? What impact have these changes made on business and industry?

Or

Discuss in brief, the various aspects of 'New Industrial Policy'.

Or

What changes were made in the industrial policy in the recent past?

Some important points of the new industrial policy have been highlighted in the following details:

(i) Abolition of Licensing: Before the advent of the new industrial policy, the Indian industries were operating under strict licensing system. Now, mostly the industries have been freed from the licensing and other restrictions.

(ii) Freedom to Import Technology: The use of high technology has been given prominence in the new industrial policy. Therefore, foreign technique collaboration has been allowed.

(iii) Contraction of Public Sector: A policy of not expanding unprofitable industrial units in the public sector has been adopted. Apart from this policy, the government is following the course of disinvestment in such public sector undertaking. (Selling some share of public sector enterprises to private sector entrepreneurs is called disinvestment. This is a medium of privatisation.)

(iv) Free Entry of Foreign Investment: Many steps have been taken to attract foreign investment:

(a) In the year 1991, 51% of foreign investment in 34 high priority industries was allowed without seeking government permission.

(b) Non-Resident Indians (NRls) were allowed to invest 100% in the Export Houses, Hospitals, Hotels, etc.

(c) Foreign Investment Promotion Board (FIPB) was established with a view to speedily clearing foreign investment proposals.

(d) Restrictions which were previously in operation to regulate dividends repatriation by the foreign investors have been removed. They can now take dividends to their native countries.

(v) MRTPC Restrictions Removed: Monopolies and Restrictive Trade Practices Act has been done away with. Now the companies do not need to seek government permission to issue shares, extend their area of operation, and establish a new unit.

(vi) FERA Restrictions Removed: Foreign Exchange Regulation Act has been replaced by Foreign Exchange Management Act. It regulates the foreign transactions. These transactions have now become simple.

(vii) Increase in the Importance of Role of Small Industries: Efforts have been made to give importance to the role of the small industries in the economic development of the country.
Increasing Competition, More Demanding Customers, Rapidly Changing Technological Environment, Necessity for Change, Need for Developing Human Resource are some of the impacts on Business and Industry.