🏭 Overview
India's industrial and trade policy has moved through three broad phases: state-led, protectionist industrialisation (1948–1991), the post-1991 liberalisation era, and the current phase emphasising domestic manufacturing competitiveness and strategic trade positioning.
📋 Industrial Policy Resolutions
- IPR 1948: Mixed economy approach — some industries reserved for the State, others for private/joint participation.
- IPR 1956: Regarded as the "economic constitution" of India for decades; classified industries into three schedules (exclusive state monopoly, state-led with private participation permitted, and the rest left to private enterprise), reflecting the Second Five-Year Plan's heavy-industry, socialistic pattern of society.
- IPR 1977 & 1980: Emphasis shifted towards small-scale and cottage industries (1977), then towards promoting competition and modernisation (1980).
- New Industrial Policy, 1991: The watershed reform — abolished industrial licensing for most industries, reduced the list of industries reserved for the public sector, removed the MRTP Act's asset-size threshold for pre-approval, and opened the door to foreign investment and technology.
🛠️ Licence-Permit Raj and Liberalisation (LPG Reforms, 1991)
Prior to 1991, industrial activity required extensive government licences (the "Licence-Permit-Quota Raj"), which constrained capacity expansion and competition. Facing a severe balance of payments crisis in 1991, India undertook Liberalisation, Privatisation and Globalisation (LPG) reforms — delicensing most industries, devaluing the rupee, reducing tariffs, and opening sectors to FDI — fundamentally reorienting industrial and trade policy towards market-based competition.
🏭 Recent Manufacturing Push
- Make in India (2014): Flagship initiative to boost domestic manufacturing, ease of doing business, and attract FDI across 25+ sectors.
- Production Linked Incentive (PLI) Scheme: Financial incentives tied to incremental production/sales, covering sectors such as electronics, pharmaceuticals, telecom, automobiles, textiles and solar PV manufacturing — aimed at building domestic manufacturing scale and reducing import dependence.
- National Manufacturing Policy and National Infrastructure Pipeline — complementary efforts targeting manufacturing's share of GDP and logistics competitiveness.
- Atmanirbhar Bharat Abhiyan: Self-reliance push (launched 2020) combining PLI, MSME support, and strategic sector reforms.
🌐 Foreign Trade Policy
India's Foreign Trade Policy (FTP), administered by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce & Industry, sets the framework for export promotion (schemes like RoDTEP — Remission of Duties and Taxes on Exported Products) and import regulation, alongside participation in multilateral (WTO) and bilateral/regional Free Trade Agreements (FTAs).
🎯 Exam Angle
Prelims frequently tests dates/provisions of the Industrial Policy Resolutions and features of the 1991 reforms. Mains rewards linking industrial policy to broader macroeconomic themes — e.g. why manufacturing's share of GDP has remained sticky despite Make in India, or how PLI differs structurally from earlier subsidy-based industrial promotion.
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