What are the Main Features of the Industrial Policy of 1956 (India)?

What are the Main Features of the Industrial Policy of 1956 (India)?

1. Classification of Industries:

The government of India has classified industries into three categories. These categories are as under:

(a) Government Enterprises:

In schedule ‘A’, 17 industries have been kept. These industries are reserved for public sector. The industries that have been put under this category are of basic and strategic importance. They need enormous capital for development. The government has the exclusive control over these industries. The industries under the Schedule ‘A’ are as follows:

(i) Arms, ammunitions and allied items of defense equipment; (ii) Atomic energy; (iii) Heavy casting and forging of iron and steel; (iv) Iron and Steel; (v) Heavy plants and machinery required for basic industries; (vi) Heavy electrical plants including large hydraulic and steam turbines; (vii) Coal and Lignite; (viii) Mineral Oils; (ix) Mining of iron ore, manganese ore, gypsum, sulphur, gold and diamond; (x) Minerals for atomic energy; (xi) Mining and processing of copper; (xii) Aircraft; (xiii) Air transport; (xiv) Railway transport; (xv) Ship-building; (xvi) Telephones and telephone cables; (xvii) Generation and distribution of electricity.

(b) Mixed Enterprises:

In the second category, there are twelve industries shown in schedule ‘B’ which will be progressively state owned and in which the state will generally take the initiative in establishing these new undertakings. At the same time, private enterprise will also have the opportunity to develop in these fields. Under Schedule ‘B’, the industries are:

(i) All minerals except minor minerals as defined in Section 3 of the Minerals Concession Rules, 1949; (ii) Aluminum and other non-ferrous metals not included in Schedule ‘A’; (iii) Machine tools ; (iv) Ferro alloys and tool steels; (v) Basic and intermediate products required by chemical industries like drugs, dye-stuffs and plastics; (vi) Antibiotics and other essential drugs; (vii) Fertilizers; (viii) Synthetic rubber; (ix) Carbonization of coal; (x) Chemical pulp; (xi) Road transport and (xii) Sea transport.

(c) Private Enterprises:

All the remaining industries come under the third category and their development, in general, has been left open though it will be up to the state government to start any industry in this category.

The state has proposed to facilitate and encourage the development of these industries in accordance with the programmes formulated in successive five year plans. They also ensured the facilities of transport, power and other services and all other appropriate fiscal measures.

2. Role of Cottage and Small Scale Industries:

The Industrial Policy has laid special emphasis on giving every encouragement to cottage and small scale industries. The role of such industries has been approved by the resolution in the development of the national economy since they provide immediate large-scale employment, equitable distribution of the national income and facilitate an effective mobilization of resources and skill which might otherwise remain unutilized.

The new policy supports the idea of establishing the industrial estates and the rural community workshops to eliminate their deficiencies.

The state has been endeavoring to foster by restricting the value of production in large scale industries by giving incentives, facilities of raw material, marketing facilities, cheap electricity and finance etc.

3. Private Sector Assistance and Control:

The policy of 1956 will facilitate and encourage the private enterprise in the development of industries according to the programmes and policies of the successive five-year plans.

Industrial undertakings in the private sector are required to fit into the framework of the social and economic environment of the state.

This will be strictly to the subject of control and regulation of the State Development and Regulation Act 1951 and other relevant legislations.

The policy further added that the state would continue to provide fair and non-discriminatory treatment to both public and private enterprises when both exist side by side in a particular industry.

4. Reduction of Regional Disparities:

The industrial policy resolution stresses the reduction of disparities in levels of development between different regions. It aims at industrialization which may benefit the economy of the country as a whole.

The resolution supports the idea of a balanced and coordinated development of the industrial and the agricultural sectors in each region for attaining higher standards of living. To achieve this aim, transport, power supply and other facilities will be made available to the backward sector.

5. No Water-tight Compartments:

The division of industries into different categories does not imply that they are placed in water-tight compartments. Towards this end, the private sector might produce an item for meeting the requirements of the industry.

Similarly, heavy industries in the public sector may obtain some of their requirements of lighter components from the private sector.

Therefore, the public and private enterprises are expected to operate closely together in spite of the fact that the major partner is the public sector.

6. Technical and Managerial Personnel:

The industrial policy of 1956 emphasizes on the provision of managerial and technical personnel in public services to meet the rapidly growing needs of the public sector and for the development of the cottage and small scale industries.

This includes setting up of technical staff cells in the public sector and to organize apprenticeship schemes on a large scale. They also laid down the stress on the training in business management.

7. Decentralization of Powers:

The industrial policy recognizes that with the growing participation of the state in industry and trade, the management of these activities will assume considerable importance. Thus, government recommends that there should be decentralization of authority and the management of the state undertakings.

In their working, public enterprises should be given the largest possible place of freedom and their success should be judged on the basis of total performance.

8. Labour Participation in Management:

The resolution accepted that in a socialist democracy, labour participation is very essential. Thus, they must be provided a share in management i.e. the facility of joint consultation of workers with management. Some laws governing industrial relations have been enacted. The entrepreneurs in public sector have been asked to set an example in this regard.

9. Attitude towards Foreign Capital:

The attitude regarding foreign capital remained unchanged. The government suggested following the directions of Industrial Policy of 1948.