INDUSTRIAL POLICY 1991 & IT’S Parth Bansal

EFFECT ON “ENGINEERING Ankit Panwar

P Giridhar Shashank
MANUFACTURING” Neel Choudhary
B Vamsee Krishna Vyas
 ABOUT BHEL
 Bharat Heavy Electricals Limited (BHEL) possessed and established by the
Government of India
 Built up in 1964, BHEL is India's biggest power age gear producer.
 It was allowed the lofty Maharatna (huge jewel) status in 2013 by Govt. of
India for its exceptional reputation and tremendous size of activities.
 It built up the ability to create an assortment of electrical, electronic and
mechanical types of gear for all parts, including transmission, transportation, oil
and gas and other associated enterprises.
INDUSTRIAL POLICY

Industrial policy is a policy of government intervention which is sector

specific and is aimed at giving preferential treatment to a particular
sector over others.
WHY INDUSTRIAL POLICY IS
DESIRABLE?
 Knowledge Spill over

 Infant Industry

 Coordination Failure

 Informational Externalities
ARGUMENTS AGAINST
INDUSTRIAL POLICY
 Influenced by Special Interests

 Knowledge Deficit

 Distortion of markets and production patterns

 ADVOCACY
• Capacity utilization.
• Non - performing
assets.
• Credit availability
RECOMMENDATIONS
Preferential policies.
•Decrease in royalty rates
•Increase in ease of doing business.

Credit availability
•Giving security for big players .
CRITIQUE
 The prime objective behind the the new industrial policy was to
unshackle the Indian industries from long standing manacles of
licensing system.
 Foreign investment, technology and industrialization were main
tenets behind the economic and political change that took place.
 However the implementation of the industrial policy has not been so
smooth. As the government failed to translate major development
projects into reality.
 The expectation from the new licensing policy was increase in
manufacturing and production sector to create jobs. But it failed
drastically. Instead it expanded the service sector which did not
create enough jobs.
 Thus, despite having immense potential to lead India into the path
of development, the Industrial policy change in 1991 has not been a
success in its entirety. Low capital formation, differential sectoral
allocations, poor performance of the agricultural sector, lack of skilled
labour, concentration of wealth, industrial sickness and regional
imbalances made it difficult for India to speed up the process of
Industrialisation.
 NEW INDUSTRIAL POLICY, 2018
 Industry 4.0 mainly deals with technology and automation of systems

 Artificial Intelligence, Robotics, Big Data, Internet of Things, Automation etc..

 Government has recognized 6 thematic groups

 MSME & Manufacturing

 Technology & Innovation
 Ease of doing Business
 Infrastructure, Investment, Trade & Fiscal Policy
 Skills & Employability
 Sustainability & Responsible Industrialization
 OTHER KEY AREAS
 Single ID & digital platform for Government to Business services across the business
life-cycle

 Self-certification and third-party certification

 Increase infrastructure facilities for small and medium firms

 Giving private partnership / licenses & maintenance of industrial estates

 Establishing “National Research and Development Vision”

OBJECTIVES OF THE “NEW
INDUSTRIAL POLICY (2018)”

 Increase Indian firms under “Fortune 500” category

 FDI should raise to $100 billion / year

 Increase job opportunities

 Develop new “credit rating” mechanism for SME’s

 Increase usage of “peer – to – peer” lending & “crowd funding”

Business Problem of Bharat Heavy Electronics Limited

 Technological transformation is costly

 Reduces the role of SME’s

 Existing employees don’t carry the necessary skills, to deal with

technology
 RECOMMENDATIONS
 Skill Development centers should be established in a more extensive manner

 Research & Development investments should increase

 Development of efficient “ecosystem” for suppliers, technology, value chain

 Partnerships between Government, companies, universities, SME’s, technology

providers should be developed. Technology should be priced in acceptable
manner.

 Necessary infrastructure should be developed