What is ‘new’ in India’s New Industrial Policy of 1991?

Through this ‘Industrial Policy of 1991’ major changes have been introduced during the last few years is ‘new’ to Indian economy such as:

i. Industrial licensing system has been almost abolish. No license is required from the government.

ii. Producers are free to decide their scale and level of production.

iii. Whole of the economy has been left open to the private capital. Exclusive reservation for the public sector has been cut down to only areas of strategic importance.

iv. Doors have been left open for MNC’s. These are given automatic approval.

v. MRTP Act has been liberalised.

vi. Foreign exchange regulation has been almost totally dispensed with.

vii. Imports of almost all the goods are freely allowed without any restrictions.

viii. All price and distribution controls have been removed.

ix. Liberal incentives are being given to private enterprise to enter infrastructure industries. In short, we can say, the economic policy in post -1991 period has taken U-turn. The new economic policy revolves around the following liberalisation, privatization and globalization (LPG) policy of Government.

Economic liberalisation after 1991 came to forefront giving greater freedom to economic agent to take their own decisions.

Thus, making a sharp departure from the Industrial Policy Resolution, 1956, the Government announced a new industry policy, heralding a new objectives to be set out by Indian economy.