General Studies Manual

for
UPSC and State Public Services
Examinations

Indian Economy
Module-2: Indian Industry, Manufacturing Policy, SEZ


www.gktoday.in

First Published in 2010

Last Updated: November 2013

2010-2013 Suresh Soni | All Rights Reserved

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Member Name: sunil kumar Member's Email address: tripathisunilkumar21@gmail.com 120.56.225.142

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 General Studies Manual for UPSC and State
 
P bli S i E i ti
Indian Economy--2 : Indian Industry, Manufacturing Policy, SEZ

Contents
Chapter 1. Industrial Policy .....................................................................................................................3
Types of Industries at the time of Independence.........................................................................3
Industrial Policy Resolution 1948 ................................................................................................3
Industrial (Department and Regulation) Act 1951 ......................................................................3
Industrial Policy Resolution 1956 .............................................................................................3
Mahalanobis Committee ..............................................................................................................5
Monopolies Inquiries Commission ................................................................................................6
Hazari Committee ........................................................................................................................6
Dutt Committee............................................................................................................................6
The Monopolies and Restrictive Trade Practices Act 1970 ..........................................................7
New Industrial License Policy 1970..............................................................................................8
Industry Policy Statement 1973...................................................................................................8
Industrial Policy Statement 1977 ................................................................................................9
Industrial Licensing Policy 1975 & further policies......................................................................9
Chapter 2. Liberalization and Industrial Policy Today ......................................................................... 10
Industrial Policy 1991 ............................................................................................................... 10
Industrial Licensing Today ........................................................................................................ 11
Chapter 3. Index of Industrial Production ............................................................................................ 12
Index of Industrial Production (IIP) ...................................................................................................... 12
Base Year ............................................................................................................................................. 12
Sector wise Weightage Patten............................................................................................................. 13
Use wise Weightage Pattern................................................................................................................ 13
Manufacturing Subsectors ................................................................................................................... 14
Current IIP Growth ............................................................................................................................... 15
Current growth and employment data of Industries .......................................................................... 15
Chapter 4. Capital Goods Sector .......................................................................................................... 16
Chapter 5. National Manufacturing Policy ........................................................................................... 17
Summary of the Policy ........................................................................................................................ 17
How the Policy would achieve the above objectives? ......................................................................... 18
Which Industry verticals will be give special attention?..................................................................... 18
How they want to rationalize the Business Regulations?................................................................... 19
Technology Acquisition and Development Fund ................................................................................. 19
Skill Development: .............................................................................................................................. 20
National Investment and Manufacturing Zones.................................................................................. 20
What is major difference from SEZ? .................................................................................................... 20
Who will own NIMZ? ............................................................................................................................ 21
How NIMZ will be administered?......................................................................................................... 21
Role of Central Government................................................................................................................ 22
How many NIMZ will be established? ................................................................................................. 22
Conclusion: .......................................................................................................................................... 22
Viability Gap Funding for NIMZ............................................................................................................ 23
Chapter 6. Special Economic Zones ...................................................................................................... 23
Salient Features................................................................................................................................... 23
How a SEZ is created? ......................................................................................................................... 24
Minimum Land Area Requirements ..................................................................................................... 24
Minimum Built-up Criteria: ................................................................................................................. 25
Fiscal benefits for a SEZ in a nutshell ................................................................................................. 25
Customs and Excise ............................................................................................................................. 25
Income Tax........................................................................................................................................... 25
Foreign Direct Investment (FDI)............................................................................................................ 26
Banking / Insurance / External Commercial Borrowings .................................................................... 26
Central Sales Tax Act .......................................................................................................................... 26
Service Tax ........................................................................................................................................... 26
Environment......................................................................................................................................... 26
Companies Act ..................................................................................................................................... 26
Member Name: sunil kumar Member's Email address: tripathisunilkumar21@gmail.com 120.56.225.142
Monitoring............................................................................................................................................ 27
Can SEZ units sell to other units in SEZ? ............................................................................................. 27
Current Number of Special Economic Zones in India........................................................................... 27
Statewise Distribution of SEZ in India.................................................................................................. 27



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2|P a g e 

 General Studies Manual for UPSC and State
 
P bli S i E i ti
Indian Economy--2 : Indian Industry, Manufacturing Policy, SEZ

     
-     

          - 



Chapter 1. Industrial Policy
Types of Industries at the time of Independence




:

            

-
 

Industrial Policy Resolution 1948



             

 .
Industrial (Department and Regulation) Act 1951

                
           
Actor
              

Industrial Policy Resolution 1956
of


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-



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 General Studies Manual for UPSC and State
 
P bli S i E i ti
Indian Economy--2 : Indian Industry, Manufacturing Policy, SEZ

Re-





        
     
;

Schedule A
          
 



Schedule B:


     
    
   
  

    
Monopoly  
Governments   
    
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 General Studies Manual for UPSC and State
 
P bli S i E i ti
Indian Economy--2 : Indian Industry, Manufacturing Policy, SEZ

            
 
Schedule C
 

Outcome of the Industrial Policy Resolution
              
licensing


Impact of License Raj
          



             




            


              






              


Mahalanobis Committee

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 General Studies Manual for UPSC and State
 
P bli S i E i ti
Indian Economy--2 : Indian Industry, Manufacturing Policy, SEZ

           

B
          
          
      
   

ent.
Monopolies Inquiries Commission
           
            
       Dasguta      
Commission.
               
            


          

I         
-
Hazari Committee


             
development
 



              

Dutt Committee
"

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Committee

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 General Studies Manual for UPSC and State
 
P bli S i E i ti
Indian Economy--2 : Indian Industry, Manufacturing Policy, SEZ

L              




            


D            
             

`
`

The Monopolies and Restrictive Trade Practices Act 1970

     Monopolistic Trade Practice, Unfair Trade Practice and Restrictive Trade
Practice
1984.     
Any practice which indicates misuse of ones power to abuse the
    market in terms of production and sales of goods and services was
defined as Monopolistic Trade Practice.
     The objective of such practices is to eliminate competition, take
2  advantage of monopoly and charge unreasonably high prices.
This practice also deteriorates the product quality, limit technical
    development, prevent competition and adopt unfair trade practices"
     Monopolistic trade practice is different from unfair trade practice. Unfair trade
practice is the false representation and misleading advertisement of goods and
    services. It also includes falsely representing second-hand goods as new and
misleading representation regarding usefulness, need, quality, standard, style etc

of goods and services.
 Restrictive Trade Practice is when the traders, in order to maximize their profits
and to gain power in the market, often indulge in activities that tend to block the
 flow of capital into production. Such traders also bring in conditions of delivery to
    affect the flow of supplies leading to unjustified costs."

 

           
 
 
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`
            `   
``


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 General Studies Manual for UPSC and State
 
P bli S i E i ti
Indian Economy--2 : Indian Industry, Manufacturing Policy, SEZ

             

          
quasi-
body.              

           


New Industrial License Policy 1970


            
             
`

``
Non-           
`
`
licen
         confined       
sectors.

Industry Policy Statement 1973

              
              

                 

1. 
2. Cement,
3. Coal,
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4. 
5. 
6. Electricity

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 General Studies Manual for UPSC and State
 
P bli S i E i ti
Indian Economy--2 : Indian Industry, Manufacturing Policy, SEZ


Partnership               
            

Industrial Policy Statement 1977
        
   
      (        
   )           
investment
       
This policy is also remembered for a very important
   provision. The statement stated that foreign
500.  companies that diluted their foreign equity up to 40
per cent under Foreign Exchange Regulation Act
          (FERA) 1973 were to be treated at par with the
Indian companies. The Industry Minister was George
       ` 
Fernandez. Companies like Coca Cola and IBM did
Lakh        
              
           

Industrial Licensing Policy 1975 & further policies

    -by-          
           

                



 


   -       
          The Broad-
              
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         `     
`


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9|P a g e 

 General Studies Manual for UPSC and State
 
P bli S i E i ti
Indian Economy--2 : Indian Industry, Manufacturing Policy, SEZ

`
`


- 
`

Chapter 2. Liberalization and Industrial Policy Today
Industrial Policy 1991



governmentcontrol.





` 
`


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Member Name: sunil kumar Member's Email address: tripathisunilkumar21@gmail.com
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 General Studies Manual for UPSC and State
 
P bli S i E i ti
Indian Economy--2 : Indian Industry, Manufacturing Policy, SEZ

13. 'NGEVTQPKE CGTQURCEG CPF FGHGPEG GSWKROGPV #NN V[RGU 17. 'PVGTVCKPOGPV GNGEVTQPKEU
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`
Industrial Licensing Today
Please note the following points:
          
         

       -    - 

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 General Studies Manual for UPSC and State
 
P bli S i E i ti
Indian Economy--2 : Indian Industry, Manufacturing Policy, SEZ

L             

    
    
  



      
       
       
     
     
  -  
     
     
            

of
Chapter 3. Index of Industrial Production
Index of Industrial Production (IIP)

               
      
The IIP is released by Central Statistical Organization.
 Please note that first IIP was published in 1950 by
Office of Economic Advisor, Ministry of Commerce.
 So, First IIP was NOT released by CSO because CSO
        did not exist at that time. The base year in the First IIP
was 1937. CSO was set up in 1951.
        



Base Year
 Member
Name:
 
sunil kumar  Email
Member's  
address:   
tripathisunilkumar21@gmail.com   
120.56.225.142

              


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 General Studies Manual for UPSC and State
 
P bli S i E i ti
Indian Economy--2 : Indian Industry, Manufacturing Policy, SEZ

---

-

Sector wise Weightage Patten
               
  
      
       



-


2004-
1993-94 2004-05 Change
Sector wise
Mining 104.7 141.6 36.9
Manufacturing 793.6 755.3 38.3
Electricity 101.7 103.2 1.5
IIP 1000.0 1000.0



        -      

Use wise Weightage Pattern
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120.56.225.142
        
 
 

  
  
      

Change in IIP Sector Weights

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 General Studies Manual for UPSC and State
 
P bli S i E i ti
Indian Economy--2 : Indian Industry, Manufacturing Policy, SEZ

Use based 1993-94 2004-05 Chan

ge
Basic Goods 355.7 456.8 101.1
Capital Goods 92.6 88.3 4.3
Intermediate Goods 265.1 156.9 108.2
Consumer Goods 286.6 298.08 11.48
~Consumer Durables 53.7 84.6 30.9
~Consumer Non 233 213.5 19.5
Durables
IIP 1000 1000

Source: CSO
-


non-
-series.
Manufacturing Subsectors
-
Appendix 1: Manufacturing Subsectors (Weights in %)
2004-05 series 1993-94 series
1 Food Products & Beverages 72. 1 Food Products 90.
76 83
2 Tobacco Products 15. 2 Beverages, Tobacco and related Products 23.
7 82
3 Textiles 61. 3 Cotton Textiles 55.
64 18
4 Wearing apparel; dressing and dyeing of fur 27. 4 Wool, silk and man made fibre textiles 22.
82
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58
5 Luggage, handbags, saddlery, harness & 5.8 5 Jute and other veritable fibre textils 5.9
footwear; tanning and dressing of leather 2
products
6 Wood and products of wood & cork except 10. 6 Textile products including wearing 25.
furniture; articles of straw & plating materials 51 apparel 37
7 Paper and paper products 9.9 7 Wood and wood products (furniture & 27.

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 General Studies Manual for UPSC and State
 
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Indian Economy--2 : Indian Industry, Manufacturing Policy, SEZ

9 fixtures) 01
8 Publishing, printing & reproduction of recorded 10. 8 Paper, paper products, printing and 26.
media 78 allied industries 52
9 Coke, refined petroleum products & nuclear fuel 67. 9 Leather and leather and fur products 11.
15 39
1 Chemicals and chemical products 10 1 Basic Chemicals & Chemical Products 14
0 0.5 0 (except products of Petroleum & Coal) 0.0
9 2
1 Rubber and plastics products 20. 1 Rubber, Plastic, Petroleum and Coal 57.
1 25 1 Products 28
1 Other nonmetallic mineral products 43. 1 NonMetallic Mineral Products 43.
2 14 2 97
1 Basic metals 11 1 Basic Metal and Alloy Industries 74.
3 3.3 3 53
5
1 Fabricated metal products, except machinery & 30. 1 Metal Products and Parts, except 28.
4 equipment 85 4 Machinery and Equipment 1
1 Machinery and equipment n.e.c. 37. 1 Machinery and Equipment other than 95.
5 63 5 Transport equipment 65
1 Office, accounting & computing machinery 3.0 1 Transport Equipment and Parts 39.
6 5 6 84
1 Electrical machinery & apparatus n.e.c. 19. 1 Other Manufacturing Industries 25.
7 8 7 59
1 Radio, TV and communication equipment & 9.8
8 apparatus 9
1 Medical, precision & optical instruments, 5.6
9 watches and clocks 7
2 Motor vehicles, trailers & semitrailers 40.
0 64
2 Other transport equipment 18.
1 25
2 Furniture; manufacturing n.e.c. 29.
2 97
Manufacturing 75 79
5.3 3.6

Largest


Current IIP Growth
                
    -month-            
                

Current growth and employment data of Industries
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.

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 General Studies Manual for UPSC and State
 
P bli S i E i ti
Indian Economy--2 : Indian Industry, Manufacturing Policy, SEZ



-

Th           

            
conside
-

 
Chapter 4. Capital Goods Sector



         
         





-

               





 

     
         


 




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 General Studies Manual for UPSC and State
 
P bli S i E i ti
Indian Economy--2 : Indian Industry, Manufacturing Policy, SEZ


          


           
-a-
          

Chapter 5. National Manufacturing Policy
             

       -  

Summary of the Policy






decade.
        
Zones(NIMZ)-
self-
Each


land.










 
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 General Studies Manual for UPSC and State
 
P bli S i E i ti
Indian Economy--2 : Indian Industry, Manufacturing Policy, SEZ

         
             

           
states.
How the Policy would achieve the above objectives?
          
           





          

-
Which Industry verticals will be give special attention?
         


         

         

        

          
              
           





 Member

Name:  
sunil kumar Member's 
Email address:  
tripathisunilkumar21@gmail.com     
120.56.225.142


 

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 General Studies Manual for UPSC and State
 
P bli S i E i ti
Indian Economy--2 : Indian Industry, Manufacturing Policy, SEZ

How they want to rationalize the Business Regulations?


            

     -        



     
     

Mechanisms           

         

               

            

            
 


Technology Acquisition and Development Fund
          
         
           

           
 

       





 
           

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 General Studies Manual for UPSC and State
 
P bli S i E i ti
Indian Economy--2 : Indian Industry, Manufacturing Policy, SEZ

Skill Development:
         -    
 
 



              
            


             
           -


National Investment and Manufacturing Zones

-of-
          
            


-

T


              - 

What is major difference from SEZ?
              
policies.
Size:

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Land Availability:
The 
 


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 General Studies Manual for UPSC and State
 
P bli S i E i ti
Indian Economy--2 : Indian Industry, Manufacturing Policy, SEZ


  
        


cultivation.
The



Who will own NIMZ?
     
           

              

 
            

How NIMZ will be administered?
            


nment.
A      
     





          

The
                 

               
       
      

             

Member Name: sunil kumar Member's Email address: tripathisunilkumar21@gmail.com 120.56.225.142

       
    


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P bli S i E i ti
Indian Economy--2 : Indian Industry, Manufacturing Policy, SEZ

Role of Central Government






   -            


               
            



 


Thi          

 

How many NIMZ will be established?



              

Ahmedabad-

Shendra-
Manesar-
Khushkhera-Bhiwadi-

Dadri-Noida-

Pithampur-Dhar--
Conclusion:


   
Member Name:  
sunil kumar 
Member's Email-in-  
address: tripathisunilkumar21@gmail.com   
120.56.225.142

             
             
cheap

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22|P a g e 

 General Studies Manual for UPSC and State
 
P bli S i E i ti
Indian Economy--2 : Indian Industry, Manufacturing Policy, SEZ

       -        
-
              
 


Viability Gap Funding for NIMZ


             
              

          


Chapter 6. Special Economic Zones
             
 
            

Salient Features






                





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 General Studies Manual for UPSC and State
 
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Indian Economy--2 : Indian Industry, Manufacturing Policy, SEZ



                



               


alon
How a SEZ is created?
              




`






                

               
               
              
concerne          

Minimum Land Area Requirements

Type of SEZ Minimum Area Requirements
Multi Sector SEZ 500 hectares*
Sector Specific SEZ 50 hectares*
*Effective April 2013

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          -    
   
           

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24|P a g e 

 General Studies Manual for UPSC and State
 
P bli S i E i ti
Indian Economy--2 : Indian Industry, Manufacturing Policy, SEZ

               


-

pre-               
            -  


Minimum Built-up Criteria:
-
 
B-- -

              
               
land.
Fiscal benefits for a SEZ in a nutshell

Customs and Excise
             



-

-

Income Tax

---

 

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25|P a g e 

 General Studies Manual for UPSC and State
 
P bli S i E i ti
Indian Economy--2 : Indian Industry, Manufacturing Policy, SEZ

Foreign Direct Investment (FDI)

              




Banking / Insurance / External Commercial Borrowings
-




Entre
              



-
Central Sales Tax Act
                

Service Tax
                 

Environment



Companies Act


Sub- 
-
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-

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26|P a g e 

 General Studies Manual for UPSC and State
 
P bli S i E i ti
Indian Economy--2 : Indian Industry, Manufacturing Policy, SEZ



Monitoring
 Developmen
    
          


--
               



Can SEZ units sell to other units in SEZ?
Yes.
 y.
                 
                
zone.
Current Number of Special Economic Zones in India
T


-
2012-                


Statewise Distribution of SEZ in India
SEZs : State wise Distribution
Sectors Formal approvals In-principle approvals Notified SEZs
Andhra Pradesh 109 6 76
Maharashtra 103 16 64
Tamil Nadu 69 6 53
Karnataka 62 1 41
Haryana 46 3 35
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7 32
120.56.225.142
Uttar Pradesh 34 1 21
Kerala 29 0 20
West Bengal 20 3 11
Rajasthan 10 1 10
Madhya Pradesh 19 2 6
Orissa 10 1 5

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Indian Economy--2 : Indian Industry, Manufacturing Policy, SEZ

Goa 7 0 3
Chandigarh 2 0 2
Punjab 8 0 2
Chattisgarh 2 1 1
Dadra & Nagar Haveli 2 0 1
Jharkhand 1 0 1
Nagaland 2 0 1
Uttarakhand 2 0 1
Delhi 3 0 0
Pondicherry 1 1 0
GRAND TOTAL 588 49 386*
In April 2013, this number stands 389


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