The Janata Dal Government announced its new Industrial Policy on May 31, 1990. Its salient features are as follows:
1. The investment ceiling in plant and machinery for small-scale industries (fixed in 1985) was raised from the present Rs.35 lakhs to Rs.60 lakhs and correspondingly, for ancillary units from Rs. 45 lakhs to Rs.75 lakhs. Units with at least 30 per cent of annual production for export would be permitted to step up their investment in plant and machinery to Rs. 75 lakhs.
2. Investment ceiling in respect of tiny units would be increased from present Rs.2 lakhs to Rs.5 lakhs.
3. (i) Presently 836 items have been reserved for exclusive manufacture in the small-scale sector. Efforts would be made to identify more items amenable to similar reservation.
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(ii) A new scheme of Central Investment Subsidy exclusively for the small-scale sector in rural and backward areas capable of generating higher level of employment at lower capital cost would be implemented.
(iii) With a view to improve the competitiveness of the products manufactured in the small-scale sector; programmes for modernisation and up gradation of technology would be implemented.
(iv) A new apex bank SIDBI has been established to ensure adequate and timely flow of credit for the small-scale industries.
(v) The existing regime of fiscal concessions would be reviewed to provide sustained support to the units in the small-scale sector and to remove the disincentive for their graduation and further growth.
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An exercise will be undertaken to identify locations in rural areas endowed with adequate power supply and intensive campaigns would be launched to attract suitable entrepreneurs, provide all other inputs and foster small-scale and tiny industries.
(vii) Bureaucratic controls will be reduced on small-scale units to avoid unnecessary interference and harassment.
4. In order to assist the large number of artisans engaged in the rural and cottage industries, the activities of the KVIC and KVI would be strengthened to discharge the responsibility more effectively. Special marketing organisations at the Centre and State levels shall be created to assist rural artisans in marketing their products and also in supply of raw materials.
5. In agro-processing industries greater success has been achieved where growers and processors have been integrated, as in the case of sugar. The industrial policy would especially promote such projects which are organised in close co-operation on the basis of joint ownership.
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6. In sectors where units require licensing, the policy would also encourage location of processing units in rural areas where growers are concentrated. It would help in dispersal of industry and increasing employment in rural areas.
7. Agro processing industry would receive high priority in credit allocation from the financial institutions.
8. All new units up to an investment of Rs.25 crores in fixed assets in non-backward areas and Rs.75 crores in centrally notified backward areas would be exempted from requirement of obtaining license/registration.
9. For the import of capital goods, the entrepreneur would have entitlement to import up to a landed value of 30 per cent of the total value of plant and machinery required for the unit.
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10. For imports of raw materials and components, imports would be permissible up to a landed value of 30 per cent of the ex-factory value of annual production.
11. Entrepreneur can directly conclude an agreement with the foreign collaborator without any clearance from the government in respect of import of technology.
12. Investment up to 40 per cent of equity will be allowed on an automatic basis to foreign investors.
13. The location policy would not be applied to such industries by the Centre except for location in and around metropolitan cities with population above four million. For these cities location will not be permissible within 20 km.
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14. Export oriented units (EOUs) and units to be set up in export processing zones (EPZs) will be relicensed up to an investment limit of Rs.75 crores.