Another important change in the industrial policy was in the form of changes in licensing policy in 1970 which had the following broad features:
1. Industries considered basic, critical and strategic were classified as ‘core’ sector. Additionally any industry that needed an investment of over Rs. 5 crores, whether in core sector or not, was put in the “heavy investment” sector. Out of these core industries those which also happened to be in IPR schedule A were reserved for the public sector. The rest of the core and heavy investment industries could be taken up by larger industrial houses, foreign concerns and subsidiaries or branches of foreign concerns.
2. Investments between Rs. 1 and 5 crores were classified as the ‘middle sector’. Here licenses were to be given liberally to parties other than larger industrial houses.
3. The requirement of getting a license was waived of if the following conditions were satisfied: the investment involved was for an expansion of the unit and the investment did not exceed Rs.l crore. The existing assets of the applicant did not exceed Rs. 5 crores.
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it did not belong to a large industrial house or a dominant undertaking as defined under MRTP Act, or was not a foreign concern, and it did not require foreign exchange except for marginal import of components of its requirements of foreign exchange which did not exceed Rs. 10 lakhs.
4. The existing policy of reservation for small scale industry would not only continue but could even be extended if it could be expected to meet the entire demand.