In March 1977, the Congress Party was thrown out and the Janata Party assumed power at the Centre. In December 1977 the Janata Government announced its new Industrial Policy by way of a Statement in the Parliament. The main elements of this new policy were:

1. Development of small-scale Sector. The list of items reserved for small scale industries was expanded from 180 to 504 and then to 807 in May 1978.

2. District industrial centers were to be set up in each district to beep in the development of small scale and cottage industries.

3. Handloom sector was given preference over power-loom and mill sectors, the latter two were not to add to their weaving capacity.

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4. For reduction in regional imbalances, shift­ing of industries to backward areas was to be assisted and establishment of new industries in urban areas was to be avoided.

5. Special fiscal concessions were proposed for export oriented units.

6. Takeover of sick units would be on a selective basis.

7. Special attention was to be given to the promotion of “tiny sector”, namely units with in­vestment of Rs. 1 lakh and situated in towns/villages with a population not exceeding 50,000.

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8. Large houses would have to rely on their own internally generated resources for financing new projects or expansion of the existing ones.

9. The public sector would be charged with the responsibility of encouraging the development of a wide range of ancillary industries, and contrib­uting to the growth of decentralised production by making available its expertise in technology and management to small-scale and cottage industry sectors.

10. In order to promote technological self- reliance, the policy recognised the necessity for continued inflow of technology in sophisticated and high priority areas where Indian skills and technol­ogy were not adequately developed.