9.8 ndian onom
inDustriAl Policy resolution, 1985 & 1986 foreign exchange was permitted so that
essential technology could be assimilated
The industrial policy resolutions announced by the
into Indian industries and international
governments in 1985 and 1986 were very much
standard could be achieved.
similar in nature and the latter tried to promote
the initiative of the former. The main highlights (viii) The agriculture sector was attended with
of the policies are: a new scientific approach with many
technology missions being launched by the
(i) Foreign investment was further simplified
government.
with more industrial areas being open for
their entries. The dominant method of These industrial policies were mooted out by
foreign investment remained as in the the government when the developed world was
past, i.e., technology transfer, but now pushing for the formation of the WTO and a
the equity holding of the MNCs in the new world economic order looked like a reality.
Indian subsidiaries could be upto 49 per Once the world had become one market, only
cent with the Indian partner holding the bigger industrial firms could have managed to
rest of the 51 per cent shares. cater to such a big market. Side by side sorting
out the historical hurdles to industrial expansion
(ii) The ‘MRTP Limit’ was revised upward
perpetuated by the past industrial policies, these
to Rs. 100 crore—promoting the idea of
new industrial policy resolutions were basically a
bigger companies.
preparation for the globalised future world.
(iii) The provision of industrial licencing was
These industrial provisions were attempted
simplified. Compulsory licencing now
at liberalising the economy without any slogan of
remained for 64 industries only.19
‘economic reforms’. The government of the time
(iv) High level attention on the sunrise had the mood and willingness of going for the
industries such as telecommunication, kind of economic reforms which India pursued
computerisation and electronics. post-1991 but it lacked the required political
(v) Modernisation and the profitability support.21
aspects of public sector undertakings The industrial policies conjoined with the
were emphasised. overall micro-economic policy followed by the
(vi) Industries based on imported raw government had one major loophole that it was
materials got a boost.20 more dependent on foreign capital with a big part
(vii) Under the overall regime of FERA, being costlier ones. Once the economy could not
some relaxations concerning the use of meet industrial performance, it became tough
for India to service the external borrowings—the
19. A total number of 95 industries had the compulsions
of licencing till then. These industries belonged to 21. The Seventh Five Year Plan (1985–90) as well as the
Schedules B and C of the Industrial Policy Resolution, Sixth Five Year Plan (1980–85) had already suggested
1956. the government to re define the role of the state in the
. This was similar to the policy being followed by economy and permit the private sector into those areas
or achev in the SS with the similar fiscal of industries where the presence of the government was
results a severe alance of payment o crisis y non-essential, etc. But such a radical approach might
end s and the early s . ar ley osser in not be digested by the country as it was like ‘rolling
and Marina V. Rosser, Comparative Economics in A back’ the state. This is why the government of the time
Transforming World, ew elhi H ress, looks not going for full-scale economic reforms or vocal
, pp. . moves of liberalisation.