Steps Taken by Government for Industrial Development

Steps Taken by Government for Industrial Development

After independence, the government set up a smart plan in 1948 to help factories grow. They made rules in 1951 to guide how industries should grow. These rules were changed a few times, like in 1956, 1977, 1980, and 1991. In 1991, they made some big changes that really helped factories grow a lot. Then, in 2011, they made a new plan called the National Manufacturing Policy, and in 2014, they started a program called Make in India to help factories even more. All these steps have made factories in India grow a lot.

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Production of Important Industries

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The table shows that back in 1950-51, India didn’t make many things like machines, tractors, or scooters. But now, we make plenty of them. Thanks to industrial growth, India now stands tenth in the world for making stuff. The government has done a lot to help industries grow. The Government of India has taken the following steps for industrial development

• 1) Establishment of Basic and Heavy Industries: Before independence, India lacked heavy and basic industries due to the high investment required and long waiting periods for profits. Hence, the private sector was hesitant to invest. The 1956 industrial policy led to the establishment of numerous heavy and basic industries in the public sector by organizations like RCAR. Large steel industries were set up in Bhilai (Madhya Pradesh), Durgapur (West Bengal), Rourkela (Odisha), and Bokaro (Jharkhand). Additionally, heavy machinery, electricity, chemicals, and fertilizers were produced, significantly boosting industrial development.
• 2) Establishment of New Industries: The government initiated various new industries in both the public and joint sectors, including pharmaceuticals, telecommunications, railway engines, automobiles, and television manufacturing. Encouragement was given for the establishment of private sector industries, resulting in a balanced industrial growth with the production of engineering goods, computers, and electronic products.
• 3) Establishment of Financial Institutions: To facilitate financial support for industries, the government established several financial institutions such as the Industrial Financial Corporation of India, Export-Import Bank of India, Public Sector Banks, State Finance Corporations, State Industrial Development Corporations, and the Small Industries Development Bank of India Ltd. These institutions provide short, medium, and long-term loans at low-interest rates, leading to rapid industrial development. In the fiscal year 2020-21, these institutions provided financial assistance amounting to ₹2,22,164 crore to industries. The outstanding loan amount from banks to various industrial units as of March 25, 2022, stood at ₹31,71,909 crore.
• 4) Liberalization of Foreign Capital: The government adopted a liberal policy for foreign capital investment in industrial development, even in the public sector, with steel factories in Rourkela, Durgapur, and Bhilai established with foreign capital assistance. The Industrial Policy of 1991 encouraged foreign investment, leading to the establishment of numerous high-tech industries. The ‘Foreign Investment Facilitation Portal’ was set up to promote foreign capital investment. From April 2000 to March 2022, India received a total foreign direct investment inflow of ₹36,12,201 crore, facilitating the establishment of advanced industries.
• 5) Foreign Technological Agreements: India approved various foreign technological agreements to enable industries to import modern technology from abroad. These agreements allow Indian industrialists to pay foreign companies in the form of royalty or lump sums in foreign currency for acquiring high technology. The government permits payments in foreign currency for technical agreements, enabling Indian industries to acquire modern production technology at relatively low costs.
• 6) Electricity Facilities: The government has made significant efforts to increase electricity production for industrial development. Various multipurpose projects such as Bhakra Nagal, Damodar Valley Project, Paugh Dam, Tehri Dam Scheme, etc., have been initiated. Additionally, numerous thermal power plants and hydroelectric houses have been established. In 1951, the electricity generation capacity was only 5.1 billion kilowatts, which increased to 1384 billion kilowatts in 2020, marking a 271-fold increase. This surge in electricity production has significantly propelled industrial development.
• 7) Transport and Communication Facilities: Government initiatives aimed at accelerating industrial development have led to considerable advancements in transportation and communication infrastructure. Improved roadways, railways, waterways, air transport, and communication channels have facilitated the transportation of raw materials to industries and the distribution of finished goods to markets and ports. This has enhanced decentralization opportunities in industries and boosted efficiency. For instance, the total length of roads increased from 1,57,000 thousand kilometers in 1951 to 63.86 lakh kilometers in 2018-19, the highest globally. Similarly, there have been substantial developments in air transport in recent years.
• 8) Support for Inventions and Technological Development: The government has taken extensive measures to facilitate inventions and technological advancements to foster Indian industrial development. The Department of Scientific and Industrial Research provides vital information on technological advancements and innovations to industries. Additionally, various national laboratories and research and development centers have been established to promote research in industries. Tax exemptions and national awards are granted to incentivize research and development activities. Moreover, a special board for technology development was established in 1996, providing financial aid to industrial units for indigenous technology development.
• 9) Rehabilitation of Sick Industrial Units: The government has made concerted efforts to rehabilitate ailing industrial units. The Industrial Reconstruction Bank of India, now known as the Industrial Investment Bank of India Limited, was established for this purpose. The bank facilitates the revival of sick industries, and the government has taken over many such units to prevent closure and restart operations. The Board for Industrial and Financial Reconstruction (BIFR) was established to address the rehabilitation of sick industries, with commercial banks also providing guidance in this regard.
• 10) Industrialization of Backward Areas: Special provisions have been made by the government to promote industrialization in economically disadvantaged areas and villages. Measures such as the establishment of industrial settlements in backward regions like Bihar and Odisha, financial subsidies for industries in such areas, and tax concessions on Goods and Services Tax (GST), Customs Duty, and Income Tax have been implemented. Priority is given to the import of essential raw materials and machinery, with concessions granted for several years. Additionally, technical, managerial, and sales-related guidance is provided to industries in these areas, along with loans at favorable interest rates for small-scale industries.
• 11) Standardization of Industrial Goods: To ensure the quality and standardization of industrial goods, the government established the Bureau of Indian Standards in 1947. This bureau sets standards for industrial equipment at both national and international levels, and products meeting these standards are awarded the ISI mark. The bureau promotes quality control, standardization, and simplification in the industry sector. ISI-marked products enjoy a good reputation in the market and inspire customer confidence. Moreover, the bureau provides training to personnel involved in quality assurance. To further promote quality, the government offers various advisory services to industries seeking international quality certification from the International Standards Organization (ISO).

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Conclusion

In conclusion, the comprehensive approach outlined in “Steps Taken by Government for Industrial Development” underscores the government’s commitment to fostering economic growth and prosperity. Through strategic initiatives and policy reforms, the government has laid the foundation for a thriving industrial sector, driving innovation, employment, and sustainable development. Moving forward, continued collaboration and proactive measures will be key to sustaining and enhancing India’s industrial landscape.

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