Industrial Policy — 1948, 1956 & 1991
Evolution of India’s industrial policy, three categories of industries, shift from state control to liberalisation.
📋 In This Article
1. Industrial Policy Resolution 1948
The first Industrial Policy Resolution was announced in April 1948. It divided industries into four categories:
| Category | Industries | Ownership |
|---|---|---|
| Schedule A (Exclusive State Monopoly) | Arms, ammunition, atomic energy, railways | State only |
| Schedule B (State Expansion) | Coal, iron & steel, aircraft, shipbuilding, telephones | State + existing private |
| Schedule C (Regulated Private) | 18 industries including automobiles, chemicals, fertilisers | Private (regulated) |
| Remaining Industries | All other industries | Private sector |
2. Industrial Policy Resolution 1956
The 1956 IPR was the most comprehensive industrial policy. It was called the “Economic Constitution of India.” It divided industries into three schedules:
| Schedule | Industries | Ownership |
|---|---|---|
| Schedule A (17 industries) | Defence, atomic energy, railways, coal, iron & steel, oil, electricity | State monopoly |
| Schedule B (12 industries) | Chemicals, fertilisers, road transport, sea transport, machine tools | State + private (state dominant) |
| Schedule C (Remaining) | All other industries | Private sector |
3. New Industrial Policy 1991
The New Industrial Policy of July 24, 1991 was a watershed moment — it dismantled the Licence Raj and opened India’s economy:
- Industrial delicensing: Abolished industrial licensing for most industries (except 18 specified industries)
- Dereservation of public sector: Reduced industries reserved for public sector from 17 to 8 (later to 2)
- FDI liberalisation: Automatic approval for FDI up to 51% in priority industries
- MRTP Act: Removed asset limit for large companies under MRTP Act
- Disinvestment: Began disinvestment of PSUs
4. Licence Raj — What Was It?
The Licence Raj (1947-1991) was a system where businesses needed government licences for almost every activity:
- Licence to start a business
- Licence to expand capacity
- Licence to import raw materials
- Licence to hire workers
- Licence to change product mix
1. Industrial licence from Ministry of Industry
2. Import licence for machinery
3. Foreign exchange allocation from RBI
4. Land clearance from state government
5. Environmental clearance
6. Labour department approval
This process could take 5-7 years! By the time you got all licences, the market had changed. This is why India’s industrial growth was slow before 1991.
5. Key Points for Exam
🔑 Must-Remember Facts
- IPR 1948: First industrial policy; 4 categories
- IPR 1956: “Economic Constitution of India”; 3 schedules; 17 industries for state monopoly
- New Industrial Policy: July 24, 1991
- 1991 NIP: Abolished industrial licensing for most industries
- Currently only 2 industries reserved for public sector: Atomic energy + Railway operations
- Licence Raj: System of excessive government licensing (1947-1991)
- MRTP Act = Monopolies and Restrictive Trade Practices Act (1969)
- MRTP Act replaced by Competition Act 2002
- FDI automatic approval: 51% in priority industries (1991)