Industrial Policy in India

Meaning of Industrial Policy:

Let us begin with a simple question:
👉 What does the Government do to guide or control the functioning of industries in a country?
The answer to this is: Industrial Policy.

Definition:

Industrial Policy refers to all those actions and decisions taken by a government to:

• Influence ownership (who owns industries),
• Influence structure (how industries are organized), and
• Improve performance (how well industries function).

Think of it like this: If the economy is a car, then the industries are the engine, and industrial policy is the steering and fuel system that ensures the car runs smoothly in the right direction.

Forms of Industrial Policy:

It comes in two broad forms:

1. Supportive Actions – For example,
   • Subsidies to industries (like discount coupons),
   • Financial support like soft loans or tax exemptions.
2. Regulatory Actions – This includes
   • Rules and regulations industries must follow,
   • Control mechanisms like licensing, quotas, inspections, etc.

It Covers:

• Procedures & principles – the ideology or philosophy behind policies (e.g., socialism, liberalism).
• Policy framework – actual government decisions.
• Rules & regulations – legal boundaries industries must operate within.
• Incentives & punishments – “Carrot and stick” approach.
• Tariff policy – Taxes on imports/exports.
• Labour policy – Rules regarding employment and wages.
• Foreign capital – Whether foreign investment is welcomed or restricted.

Objectives of Industrial Policy:

Now, let’s understand the purpose – why does the Government have an industrial policy at all?

Here are the 5 main objectives, explained simply:

1. Sustained Growth in Productivity

Just like a student aims to improve their marks year after year, the government wants industries to keep improving their efficiency and output steadily over time.

2. Enhance Gainful Employment

Not just more jobs—but meaningful jobs where people earn well and grow professionally.

3. Optimal Utilisation of Human Resources

India has a large population—a huge asset if used wisely. The policy aims to ensure people’s skills and talents are fully used, not wasted.

4. Achieve International Competitiveness

Industries should not only cater to Indian markets but also compete globally—like our IT sector, pharmaceuticals, or even steel.

5. Transform India into a Major Global Player

The long-term goal is strategic:
India should become a key player in global industrial supply chains, a reliable manufacturing hub, and an economic power.

To sum up

👉 Industrial Policy is not a single document, but a basket of government actions that aim to shape the industrial landscape of the country.

It ensures that:

• Industries grow sustainably,
• People get jobs,
• Resources are used wisely,
• We compete globally, and
• India earns respect and revenue as a major industrial nation.