The Industrial Policy Resolution of 1956 and the Statement on Industrial Policy of 1991 provide the basic framework for the overall industrial policy of the Government in regard to the manufacturing industries. In the initial stages of the country's development, growth of industry was regulated through the granting of industrial licences and other industrial approvals. The Industries (Development and Regulation) Act, 1951 was the principal legislation providing the legal basis for industrial licencing. The industrial policy announced on 24th July, 1991 substantially dispensed with industrial licensing, announced measures facilitating foreign investment and technology transfers, and threw open the areas hitherto reserved for the public sector.
The private sector can now operate in all areas except those of strategic concern such as defence, railway transport and atomic energy. The list of industries reserved for the public sector now stands reduced to 6. Private participation is permitted in some specific areas in this list as well, such as mining; oil exploration, refining and marketing; and parts of the railway transport sectors.
The requirement of obtaining an industrial license for manufacturing activity is limited to:
All other industries are exempt from licensing, and only subject to the locational restrictions of metropolitan areas.
Centre for Monitoring Indian Economy, Bombay
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Last updated: May 1995.