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
                  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.