explain industrial policy

• feature and strategy of new industrial policy
• evaluate the impact of new industrial policy

The following are the major features of the New Industrial Policy 1991.

(i) Abolition of Licensing- Under the new industrial policy 1991, the system of obtaining licenses for the setting up of a new firm or for the expansion of the firm was abolished. However, the system of licensing was retained in only six industries namely, liquor, cigarette, defence equipment, dangerous chemicals, industrial explosives, and drugs and pharmaceuticals. 

(ii) Dereservation- The number of industries exclusively reserved for the public sector was considerably reduced to only 8 industries. Later this number was further reduced to 3 namely, railways, atomic mineral and atomic energy.

(iii) Augmentation of Production Capacity- Under the New Industrial Policy, the MRTP companies (companies having assets worth more than Rs 100 crore) were free to expand the scale of their business according to the market conditions.

(iv) Freedom in Importing Capital Goods- Industrialists were also permitted to import capital goods from the foreign countries. This implied modernisation and improvement in the techniques of production.

(v) Reforms in the Small Scale Industries- The maximum limit for the small scale industries has been increased from Rs 5 lakh to Rs 1 crore. This encouraged development and modernisation of the industries. Further, the number of products reserved for the small scale industries was reduced.