The Indian Government has announced certain industrial policy measures and undertaken procedural simplifications to attain industrial growth which are as follows:
Liberalisation of Industrial Licensing Policy
The items which require compulsory licensing is continuously reviewed. Presently six industries are under compulsory licensing, mainly due to environmental, safety and strategic considerations. Similarly, there are only three industries reserved for the public sector. The lists of industries reserved for the public sector and of items under compulsory licensing are at Appendix III and IV respectively.
Introduction of Industrial Entrepreneurs’ Memorandum (IEM)
The Industries which do not require compulsory licensing need to file an Industrial Entrepreneurs’ Memorandum (IEM) to the Secretariat for Industrial Assistance (SIA). Industrial approval is not required for such exempted industries. Amendments are also allowed to IEM proposals filed after 1.7.1998.
Liberalisation of the Locational Policy
A significant locational policy has been framed in compliance with the liberlised licensing policy. Industrial approval is not required from the Government for locations beyond 25 kms of the periphery of cities having a population of more than one million except for those industries where industrial licensing is compulsory. Non-polluting industries such as electronics, computer software and printing can be located within 25 kms of the periphery of cities with a population of more than one million.
Policy for Small Scale Industries
As a measure of protecting the sector of small scale industries, the industrial policy of India focuses on reservation of items of manufacture exclusively for the small scale sector. Since 24th December 1999, industrial undertakings with an investment upto rupees one crore are within the small scale and ancillary sector. A differential investment limit has been adopted since 9th October 2001 for 41 reserved items where the investment limit upto rupees five crore is prescribed for qualifying as a small scale unit. The investment limit for tiny units is Rs.25 lakhs. There are 749 items which are reserved for manufacture in the small scale sector. All undertakings other than the small scale industrial undertakings engaged in the manufacture of items reserved for manufacture in the small scale sector need to obtain an industrial licence and undertake an export obligation of 50% of the annual production. This condition of licensing is, however, not applicable to those undertakings which operate under 100% Export Oriented Undertakings Scheme, the Export Processing Zone (EPZ) or the Special Economic Zone Schemes (SEZs).
Non-Resident Indian’s Scheme
The general policy and facilities for Foreign Direct Investment as available to foreign investors or company are fully applicable to NRIs as well. The Government of India has also extended some concessions especially for NRIs and overseas corporate bodies having more than 60% stake by the NRIs. These inter-alia includes (i) NRI/OCB investment in the real estate and housing sectors upto 100% and (ii) NRI/OCB investment in domestic airlines sector upto 100%. The Government of India permits NRI/OCBs to invest upto 100% equity on non-repatriation basis in all activities except for a small negative list. Besides this, NRI/OCBs are also allowed to invest on repatriation/non-repatriation under the portfolio investment scheme.
Electronic Hardware Technology Park/Software Technology Park Scheme
For building up strong electronics industry and with a view to enhancing export, two schemes viz. Electronic Hardware Technology Park (EHTP) and Software Technology Park (STP) are in operation. Under EHTP/STP scheme, the inputs are allowed to be procured free of duties.
The Directors of STPs have powers to approve fresh STP/EHTP proposals and also grant post-approval amendment in repsect of EHTP/STP projects as have been given to the Development Commissioners of Export Processing Zones in the case of Export Oriented Units. All other application for setting up projects under these schemes, are considered by the Inter-Ministerial Standing Committee (IMSC) Chaired by Secretary (Information Technology). The IMSC is serviced by the SIA.
