9.6 ndian onom
was to benefit the poor in the form of cheaper (iii) For the redressal of the prohibited
goods). Similarly, the older and well-established and restricted practices of trade, the
industrial houses were capable of creating hurdles government did set up an MRTP
for the newer ones with the help of different kinds Commission.
of trade practices forcing the latter to agree for
sell-outs and takeovers. A number of committees inDustriAl Policy stAtement, 1973
were set up by the government to look into the The Industrial Policy Statement of 1973
matter and suggest remedies.11 The committees on introduced some new thinking into the economy
industrial licencing policy review not only pointed with major ones being as follows:
out several shortcomings of the policy, but also (i) A new classificatory term i.e., core
accepted the useful role of industrial licencing.12 industries was created. The industries
Finally, it was in 1969 that the new industrial which were of fundamental importance
licencing policy was announced which affected for the development of industries were
the following major changes in the area: put in this category such as iron and steel,
(i) The Monopolistic and Restrictive Trade cement, coal, crude oil, oil refining and
Practices (MRTP) Act was passed. The electricity. In the future, these industries
Act intended to regulate the trading and came to be known as basic industries,
commercial practices of the firms and infrastructure industries in the country.
checking monopoly and concentration of (ii) Out of the six core industries defined by
economic power. the policy, the private sector may apply
(ii) The firms with assets of Rs. 25 crore or for licences for the industries which were
more were put under obligation of taking not a part of schedule A of the Industrial
permission from the Government of Policy, 1956.14 The private firms eligible
India before any expansion, greenfield to apply for such licences were supposed
venture and takeover of other firms (as to have their total assets at Rs. 20 crore or
per the MRTP Act). Such firms came to more.
be known as the ‘MRTP Companies’. (iii) Some industries were put under the
The upper limit (known as the ‘MRTP reserved list in which only the small or
limit’) for such companies was revised medium industries could be set up.15
upward to Rs. 50 crore in 1980 and Rs. (iv) The concept of ‘joint sector’ was
100 crore in 1985.13 developed which allowed partnership
among the Centre, state and the private
11. here were four specific committees set up on this issue,
namely Swaminathan Committee (1964), Mahalanobis
sector while setting up some industries.
Committee (1964), R.K. Hazari Committee (1967) and The governments had the discretionary
S. Dutt Committee (1969). The Administrative Reform power to exit such ventures in future.
Commission also pointed out the short comings
of the industrial licencing policy perpetuated since 14. Out of the six core industries only the cement and iron
1956. & steel industries were open for private investment
12. Dutt Committee ew elhi overnment of ndia, with the rest fully reserved for the central public sector
13. The upward revision was logical as it was hindering 15. This is considered a follow up to such suggestions
the organic growth of such companies—neither the forwarded by the Industrial Licensing Policy
capacity addition was possible nor an investment for Inquiry Committee S. utt, Chairman ew elhi
technological upgrading. overnment of ndia, .