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.