India's Industrial Landscape: Policies, Practices and Progress

India’s Industrial Landscape: Policies, Practices and Progress #

Industry: Types, Classifications, and Operations Across Various Industrial Sectors #

Industry refers to an economic activity that is concerned with production of goods, extraction of minerals or the provision of services. E.g.-Iron and Steel industry (production of goods), Coal mining industry (extraction of coal) and tourism industry (service provider) etc.
CLASSIFICATION OF INDUSTRIES: Industries can be classified on the basis of raw materials, size and ownership.

Industrial Diversity: Raw Material Classifications and Applications Across Various Sectors #

Agro based Industries	Use plant and animal-based products as their raw materials. Examples- Food processing, vegetable oil, cotton textile, dairy products and leather industries.
Mineral based Industries	are primary industries that use mineral ores as their raw materials. The products of these industries feed other industries. Iron made from iron ore is the product of mineral based industry. This is used as raw material for the manufacture of a number of other products, such as heavy machinery etc.
Marine based Industries	Use products from the sea and oceans as raw materials. Industries processing seafood or manufacturing fish oil are some examples
Forest based Industries	Forest based industries utilize forest produce as raw materials. The industries associated with forests are pulp and paper, pharmaceuticals, furniture and buildings.

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Industrial Size Comparison: Small vs. Large Scale? #

It refers to the amount of capital invested, number of people employed and the volume of production.

Small scale Industries

Small scale industries use lesser amounts of capital and technology as compared to large scale industries that produce large volumes of products. E.g. – cottage and household industries. It comprises of Micro, Small and Medium enterprises:

For Micro-enterprises, the investment limit will be Rs 1 crore and turnover Rs 5 crores.
For Small enterprises, the investment limit will be Rs 10 crores and the turnover Rs 50 crores.
For the Medium enterprise, the investment limit will be Rs 50 crores and turnover Rs 250 crores.

Large scale industries

Investment of capital is higher and the technology used is superior in large scale industries e.g. – automobiles and heavy machinery industries.

Ownership Structures in Industrial Sectors: Private, Public, Joint, and Cooperative? #

Private sector industries	Are owned and operated by individuals or a group of individuals.
Public sector industries	These are owned and operated by the government, such as Hindustan Aeronautics Limited.
Joint sector industries	Owned and operated by the state and individuals or a group of individuals. Maruti Udyog Limited is an example of joint sector industry
Co-operative sector industries	are owned and operated by the producers or suppliers of raw materials, workers or both. Anand Milk Union Limited and Sudha Dairy are a success stories of a co-operative venture

Factors Affecting Location of Industries: Raw material, Capital, Energy, Labour, Market, Water, Communication, Transport, Land, Power etc.

Where are key Industrial hubs and what sectors thrive there? #

INDUSTRY	PLACES
Iron And Steel Industry	Bhilai, Durgapur, Jamshedpur, Rourkela, Bokaro are spread in 4 states — West Bengal, Jharkhand, Odisha and Chhattisgarh. Bhadravati and Vijay Nagar in Karnataka, Visakhapatnam in Andhra Pradesh, Salem in Tamil Nadu Pittsburg, USA.
Cotton Textile Industry	Coimbatore, Kanpur, Chennai, Ahmedabad, Mumbai, Kolkata, Ludhiana, Puducherry and Panipat
Information Technology	Silicon Valley, California and Bangalore, Hyderabad in India.
Automobile Industry	Tends to locate near the iron and steel producing centres. Mumbai, Chennai, Jamshedpur, Jabalpur, and Kolkata
Fertiliser Industry	Gujarat, Tamil Nadu, Uttar Pradesh, Maharashtra, Andhra Pradesh, Punjab, Kerala.
Cement Industry	Andhra Pradesh and Telangana, Rajasthan, Madhya Pradesh, Tamil Nadu, Gujarat, Maharashtra, Jharkhand, Maharashtra, Karnataka etc.

Evolution of Industrial Policies in India: From 1948 to the LPG Reforms of 1991 #

1948	First Industrial policy of India
1956	Industrial policy resolution. Focus was on Public sector led heavy industries
1991	LPG reforms and New Industrial policy under the backdrop of Balance of Payment Crisis.

Analyzing India’s Industrial Policy Resolution of 1948 #

Role of the State in industrial development both as an entrepreneur and authority.
India’s model- Mixed Economic Model.
It classified industries into four broad areas:

Strategic Industries (Public Sector): Central Government had monopoly-Arms and ammunition, Atomic energy and Rail transport.
Basic/Key Industries (Public-cum-Private Sector): like coal, iron & steel, aircraft manufacturing, ship-building. To be set-up by the Central Government.
Important Industries (Controlled Private Sector): continue under private sector however, the central government, in consultation with the state government, had general control over them.
Other Industries (Private and Cooperative Sector): All other industries which were not included in the above mentioned three categories were left open for the private sector.

The Industries (Development and Regulation) Act was passed in 1951 to implement the Industrial Policy Resolution, 1948.

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India’s 1991 New Industrial Policy (Economic Reforms): #

De-reservation of Public sector- Presently, only two sectors- Atomic Energy and Railway operations- are reserved exclusively for the public sector.
De-licensing-Abolition of Industrial Licensing except for Electronic aerospace and defence equipment, Specified hazardous chemicals, Industrial explosives, Cigars and cigarettes of tobacco and manufactured tobacco substitutes.
Disinvestment of Public Sector– Government stakes in Public Sector Enterprises were reduced to enhance their efficiency and competitiveness.
Liberalization of Foreign Investment

Disinvestment Strategies in Public Sector Undertakings Across Industrial Sectors #

Disinvestment means sale or liquidation of assets by the government, usually Central and state public sector enterprises, projects, or other fixed assets.
Disinvestment in PSU’s means the Government selling/ diluting its stake (share) in Public Sector Undertakings in which it has a majority holding.
Disinvestment is carried out as a budgetary exercise, under which the government announces yearly targets for disinvestment for selected PSUs.

Main Objectives Of Disinvestment In India:

Reducing the fiscal burden on the exchequer
Improving public finances
Encouraging private ownership
Funding growth and development programmes
Maintaining and promoting competition in the market

The Department of Investment and Public Asset Management (DIPAM) under the Ministry of Finance has been made the nodal department for the strategic stake sale in the Public Sector Undertakings (PSUs).

Types of Disinvestment:	Token Disinvestment: Selling minority shares of Public Enterprises, to another entity be it public or private is disinvestment. In this the government retains ownership of the enterprise.
	Strategic Disinvestment: When the government sells majority shares in an enterprise, that is strategic disinvestment/sale. Here, the government gives up the ownership of the entity as well.

Strategic Autonomy in Public Sector Enterprises #

MINIRATNA COMPANIES

Category I Miniratna:

Those PSEs which have made profits continuously for the last 3 years and earned net profit of rupees 30 crores are more in one of the three years.
These miniratnas are granted certain autonomy like incurring capital expenditure without government approval up to rupees 500 crores or equal to their net worth whichever is lower.

Category II Miniratna:

Those PSEs which have made profit for the last 3 years continuously and should have a positive net worth.
These mini ratnas have autonomy to incurring the capital expenditure without government approval up to rupees 300 crores or upto 50% of their net worth whichever is lower.

NAVRATNA

In the Navratna concept in 1997, it granted enhanced autonomy to nine selected PSEs referred to as “Navratnas”.
These navratnas were subject to certain guidelines now they have freedom to Incur capital expenditure, decide upon joint ventures, set up subsidiaries/ offices abroad, enter into technological and strategic alliances.
They can raise funds from capital markets (International and Domestic) enjoy substantial operational and managerial autonomy.
Invest up to rupees 1000 crores or 15% of their net-worth on a single project without seeking government approval.

MAHARATNAS

The category of PSEs was created in 2011.
To be eligible for the grant of the Maharatna status the company should have
An average turnover of over RS 25000 crores average,
Annual net worth of more than 15000 crores and
Average annual net profit of over rupees 5,000 crore during the last 3 years.
Maharatna status’s board would not be required to take the government permission for investments up to rupees 5000 crores in a joint venture project or wholly owned subsidiary.

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MISCELLANEOUS #

CIRCULAR ECONOMY: Resources are kept in use for as long as possible, the maximum value is extracted from them, and ultimately waste is recovered and regenerated in the end.
India is already on its path to the circular economy; Initiatives of the National Productivity Council (NPC) and government show that. NPC is an autonomous organisation under the Ministry of Commerce and Industry.
Key Initiatives: Productivity Week 2019’s theme was ‘Circular Economy for Productivity and Sustainability’. Digital India contains a significant component of the recycling of electronic wastes. Swachh Bharat Mission is also about making wealth out of wastes.
LINEAR ECONOMY:

Role of National Investment & Manufacturing Zones (NIMZs) in Industrial Growth and Development #

They are one of the important instruments of the National Manufacturing Policy, 2011.
NIMZs are envisaged as large areas of developed land with the requisite eco-system for promoting world class manufacturing activity.
NIMZs are different from SEZs in terms of size, level of infrastructure planning, governance structures related to regulatory procedures, and exit policies.

Distinctions Between NIMZ and SEZ: Implications for Various Industries #

BASIS	NIMZ	SEZ
Under	National Manufacturing Policy, 2011.	SEZ Act, 2005
Minimum Area	5000 hectare	10-1000 hectare
Maximum Area	Not specific	5000 hectare
Environmental Impact Assessment	State Government	Project Developer
What Are They?	They will be self-sustained townships encompassing all support systems like schools, electricity etc.	They are” Deemed Foreign Territories” and are exclusively for export oriented industries.

India’s Industrial Corridors and their impact on manufacturing Industries #

It is a package of infrastructure consisting of multi-modal transport services with the intent to stimulate industrial development that would pass through the states.
Projects will be implemented through National Industrial Corridor Development and Implementation Trust (NICDIT)- an apex body under the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry.
Manufacturing is a key economic driver in these projects.
There are 5 Industrial Corridors-

INDUSTRIAL CORRIDORS	COVERS	ASSISTANCE OF
Delhi-Mumbai Industrial Corridor (DMIC)	Uttar Pradesh, Haryana, Rajasthan, Madhya Pradesh, Gujarat and Maharashtra.	Japan
Chennai-Bengaluru Industrial Corridor (CBIC)	Tamil Nadu, Andhra Pradesh and Karnataka.	Japan
Bengaluru-Mumbai Economic Corridor (BMEC)	Maharashtra and Karnataka.	UK
Amritsar-Kolkata Industrial Corridor (AKIC)	Punjab, Haryana, Uttarakhand, Uttar Pradesh, Bihar, Jharkhand and West Bengal.	—
East Coast Economic Corridor (ECEC)	West Bengal, Odisha, Andhra Pradesh and Tamil Nadu. Vizag-Chennai Industrial Corridor (VCIC) is the first coastal economic corridor in the country.	Asian Development Bank (ADB)

Impacts of the ‘Make in India’ Initiative on Industrial Sectors (2014): #

To encourage manufacturing in India and galvanize the economy with dedicated investments in manufacturing and services.

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TARGETS:

To increase the manufacturing sector’s growth rate to 12-14% per annum
To create 100 million additional manufacturing jobs in the economy by 2022
To ensure that the manufacturing sector’s contribution to GDP is increased to 25% by 2022 (revised to 2025) from the current 15-16%.

RESULT:

FDI has increased from $16 billion in 2013-14 to $36 billion in 2015-16 but it has not increased further.
FDIs in the manufacturing sector are becoming weaker than before. It has come down to $7 billion in 2017-18 as compared to $9.6 billion in 2014-15.
FDIs in the service sector is $23.5 billion, more than three times that of the manufacturing sector
India’s share in the global exports of manufactured products remains around 2% which is far less than 18% share of China.

MSME (Micro, Small, and Medium Enterprises) in Manufacturing and Service Industries: #

In accordance with the Micro, Small, and Medium Enterprises Development (MSMED) Act in 2006, the enterprises are classified into two divisions:
Manufacturing enterprises – engaged in the manufacturing or production of goods in any industry
Service enterprises – engaged in providing or rendering services

Manufacturing Enterprises and Enterprises rendering Services are classified as following: #

Micro enterprises	Investments not exceeding Rs one crore and turnover of Rs 5 crore.
Small enterprises	investment up to Rs 10 crore and turnover of up to Rs 50 crore.
Medium enterprises	investments not exceeding Rs 50 crore and turnover of Rs 250 crore.

MSME ministry has set a target to up its contribution to GDP to 50% by 2025 as India becomes a $5 trillion economy.
A person willing to establish a micro, medium or small enterprise shall file registration at the Udyam registration portal. The registration is based on self-declaration. Upon registration, the enterprise is provided with a unique number called the “Udyam Registration Number” (URN).
Udyam Sakhi portal was launched for women entrepreneurs separately.

What are Intellectual Property Rights (IPR) and how do they impact Industrial Development? #

MEANING:	eator an exclusive right over the use of his/her creation for a certain period of time.
OUTLINED IN:	Article 27 of the Universal Declaration of Human Rights
RELATED TREATIES	Paris Convention for the Protection of Industrial Property (1883) Berne Convention for the Protection of Literary and Artistic Works (1886). Both treaties are administered by the World Intellectual Property Organization (WIPO)
DIVIDED INTO 2:	Copyright and rights related to copyright– The rights of authors of literary and artistic works (such as books and other writings, musical compositions, paintings, sculpture, computer programs and films) are protected by copyright, for a minimum period of 50 years after the death of the author. Industrial property– Trademarks and Geographical Indications. Industrial designs and trade secrets.
INDIA AND IPR	India is a member of the WTO and committed to the Agreement on Trade Related Aspects of Intellectual Property (TRIPS Agreement). India is also a member of WIPO, a body responsible for the promotion of the protection of intellectual property rights throughout the world.
NATIONAL IPR POLICY, 2016	Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce, – the nodal department to coordinate, guide and oversee the implementation of IPRs in India. ‘Cell for IPR Promotion & Management (CIPAM)’, setup under DIPP, for implementation of the National IPR Policy.
RELATED TERMS	COMPULSORY LICENSING– When a government allows someone else to produce a patented product or process without the consent of the patent owner or plans to use the patent-protected invention itself. EVERGREENING OF PATENTS– When producers extend the lifetime of their patents in order to retain royalties from them, by either taking out new patents or by buying out, or frustrating competitors, for longer periods of time than would normally be permissible under the law
KAPILA Programme	The Union Education Ministry has launched ‘KAPILA’ (Kalam Program for IP Literacy and Awareness).
GLOBAL INNOVATION INDEX by WIPO	India is at the 48th position in 2020. And was in 52nd position in 2019.
RELATED AGREEMENTS	Nice Agreement-International classification of Goods and Services for the purposes of registration of marks Vienna Agreement Locarno Agreement-establishing an International classification for industrial designs.

4TH INDUSTRIAL REVOLUTION-It includes emerging technologies like robotics, artificial intelligence, quantum computing, biotechnology, Internet of Things (IoT), 3D printing, etc. It merges physical, digital and biological spheres.

How does the Patent Prosecution Highway (PPH) Programme accelerate Patent processes and benefit Industries? #

PPH is a set of initiatives for providing accelerated patent prosecution procedures by sharing information between some patent offices. Example- between Japan Patent Office (JPO) and Indian Patent Office
This would allow a patent applicant to demand fast-tracking of his patent application by showing that his product or process has already been granted a patent in Japan.

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Reports on Intellectual Property, Business Environment, and Industrial Development Across Industrial Sectors #

REPORT	GIVEN BY	INDIA’S POSITION
Global Intellectual Property Index 2020	Global Innovation Policy Center or GIPC of the US Chambers of Commerce.	India has slipped to 40th position in 2020 from the 36th position in 2019.
Ease of Doing Business, 2020	World Bank	India was at 63rd position (2019) out of 190 countries It improved 14 places from its 77th position in 2018. India continues to maintain its first position among South Asian countries. 10 parameters considered- 1. Starting a Business, 2. Dealing with Construction permits, 3. Electricity availability, 4. Property registration, 5. Credit availability, 6. Protecting minority Investors, 7. Paying Taxes, 8. Trading across borders, 9. Contracts enforcement, and 10. Resolving Insolvency. It ranks countries on the basis of Distance to Frontier (DTF) score that highlights the gap of an economy with respect to the global best practice.
Industrial Development Report	United Nation’s Industrial Development Organization (UNIDO)	—
World Intellectual Property Report	World Intellectual Property Organisation (WIPO)	Published every two years, India ranks 10th in the number of patents given according to 2018 report.
Index of Economic Freedom	Heritage Foundation& Wall Street Journal	Economic freedom is measured broadly on 4 pillars- Rule of Law, Government- fiscal health, tax burden Regulatory efficiency, and Open Markets
Travel and Tourism Competitiveness Index	World Economic Forum (WEF).	It measures the factors and policies that make a country a viable place to invest within the Travel and Tourism sector. India has secured 34th place in the Index.

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