The industrial policy landscape underwent significant changes in many countries, particularly in India, since the early 1990s. The year 1991 marked a crucial turning point in India’s economic policies with the introduction of economic liberalization, deregulation, and reforms aimed at opening up the economy, attracting foreign investment, and integrating into the global economy. Here’s an overview of the industrial policy developments in India since 1991:
- Liberalization and Deregulation (1991-1999):
- In 1991, India initiated economic liberalization and reforms, dismantling the License Raj, reducing industrial licensing, and opening up various sectors to domestic and foreign investment.
- The Industrial Policy Resolution of 1991 introduced significant reforms, including delicensing of most industries, automatic approval for foreign direct investment (FDI) in many sectors, reduction in tariffs, and simplification of industrial regulations to promote competitiveness, efficiency, and private sector participation.
- Foreign Direct Investment (FDI) Policy:
- India progressively liberalized its FDI policy, allowing greater foreign investment, technology transfer, and participation in various sectors, including manufacturing, services, infrastructure, and retail, through automatic routes and government approvals, with sector-specific regulations, restrictions, and conditions.
- Promotion of Special Economic Zones (SEZs):
- India promoted the development of Special Economic Zones (SEZs) to attract investment, boost exports, and create employment opportunities, offering fiscal incentives, streamlined regulations, and infrastructure facilities for businesses operating in designated SEZs.
- Infrastructure Development and Public-Private Partnerships (PPPs):
- India focused on infrastructure development, including transportation, energy, telecommunications, and urban infrastructure, leveraging public-private partnerships (PPPs), foreign investment, and innovative financing mechanisms to address infrastructure gaps, enhance connectivity, and support industrial growth.
- Industrial and Manufacturing Policy Initiatives:
- India introduced various industrial and manufacturing policy initiatives, including the National Manufacturing Policy (NMP) and Make in India initiative, to promote manufacturing competitiveness, enhance value addition, attract investment in manufacturing sectors, facilitate technology adoption and upgradation, foster innovation, and create a conducive ecosystem for industrial development, job creation, and economic growth.
- Sectoral Policies and Initiatives:
- India formulated sector-specific policies, incentives, and initiatives to support key industries, sectors, and clusters, including automotive, electronics, pharmaceuticals, textiles, aerospace, defense, renewable energy, and information technology, to enhance competitiveness, productivity, and global market presence through technological advancement, quality improvement, skill development, and market access initiatives.
- Regulatory Reforms and Ease of Doing Business:
- India undertook regulatory reforms, simplification of procedures, and initiatives to improve the ease of doing business, facilitate business operations, expedite approvals, reduce compliance burdens, and enhance regulatory transparency, predictability, and accountability for businesses, investors, and stakeholders.
since 1991, India’s industrial policy framework has evolved significantly, embracing liberalization, deregulation, reforms, and initiatives to foster industrial development, competitiveness, innovation, investment, and integration into the global economy, while also addressing challenges, constraints, and opportunities in the dynamic and competitive global landscape.