nd str and n rastr t re 9.7
Here, the government wanted to promote In practice, there was a complete ‘no’ to
the private sector with state support. foreign investment.18
(v) The Government of India had been facing (ii) Emphasis on village industries with a
the foreign exchange crunch during redefinition of the small and cottage
that time. To regulate foreign exchange industries.
the Foreign Exchange Regulation Act (iii) Decentralised industrialisation was given
(FERA) was passed in 1973.16 Experts attention with the objective of linking the
have called it a ‘draconian’ Act which masses to the process of industrialisation.
hampered the growth and modernisation The District Industries Centres (DICs)
of Indian industries. were set to promote the expansion of
(vi) A limited permission to foreign investment small and cottage industries at a mass
was given, with the multinational scale.
corporations (MNCs) being allowed to (iv) Democratic decentralisation got
set up subsidiaries in the country.17 emphasised and the khadi and village
industries were restructured.
inDustriAl Policy stAtement, 1977 (v) Serious attention was given on the level
The Industrial Policy Statement of 1977 was of production and the prices of essential
chalked out by a different political set up from commodities of everyday use.
the past with a different political fervour—the
dominant voice in the government was having an inDustriAl Policy resolution, 1980
anti-Indira stance with an inclination towards the The year 1980 saw the return of the same political
Gandhian-socialistic views towards the economy. party at the Centre. The new government revised
We see such elements in this policy statement: the Industrial Policy of 1977 with few exceptions
(i) Foreign investment in the unnecessary in the Industrial Policy Resolution, 1980. The
areas were prohibited (opposite to the major initiatives of the policy were as given below:
IPS of 1973 which promoted foreign (i) Foreign investment via the technology
investment via technology transfer in the transfer route was allowed again (similar
areas of lack of capital or technology). to the provisions of the IPS, 1973).
(ii) The ‘MRTP Limit’ was revised upward to
16. The FERA got executed on 1 January, 1974. The private
sector in the country always complained against this act Rs. 50 crore to promote setting of bigger
and dou ted its official intentions. companies.
17. This limited permission was restricted to the areas
where there was a need of foreign capital. Such MNCs
(iii) The DICs were continued with.
entered the Indian economy with the help of a partner (iv) Industrial licencing was simplified.
from India—the partner being the major one with 74
per cent shares in the subsidiaries set up for by the (v) Overall liberal attitude followed towards
MNCs. The MNCs invested via technology transfer the expansion of private industries.
route. Basically, this was an attempt to make up for the
loss being incurred by the FERA. This was the period 18. The permission of working was withdrawn in the case
when most of the MNCs had the chances to enter India. of the already functioning soft drink MNC the Coca
Once economic reforms started by 1991, many of them Cola. The ongoing process of entry to the computer
increased their holdings in the Indian subsidiaries with giant IBM and automobile major Chrysller was soon
the Indian partner getting the minority shares or a total called off. These instances played a highly negative role
exit. when India invited FDI in the post-1991 reform era.