24. Industry: Policy, Reforms, Globalization, Liberalization, Privatization, MSMEs — Full Notes

CORE Key Points at a Glance

1. 1

   Industrial Policy of 1991 — LPG Reforms

   • Abolished industrial licensing for most sectors
   • Reduced reserved public-sector industries from 17 to 2 (defence and atomic energy)
   • Opened FDI and dismantled trade barriers
   • Architect: Finance Minister Dr. Manmohan Singh under PM Narasimha Rao
2. 2

   Liberalisation — Removing Controls

   • Licence Raj ended: industrial licensing abolished
   • MRTP Act restrictions eased; import licensing dismantled
   • Quantitative restrictions replaced by tariffs
   • GDP growth rose from ~3.5% (Hindu rate) to 6–8% post-1991
3. 3

   Make in India — Launched September 25, 2014

   • Target: raise manufacturing to 25% of GDP by 2025 (from ~16%)
   • Aims to create 100 million additional manufacturing jobs
   • Covers 27 sectors with online investment facilitation and task forces
   • Nodal ministry: DPIIT
4. 4

   PLI Schemes — Production Linked Incentive

   • Launched 2021 for 14 sectors; total outlay: ₹1.97 lakh crore over 5–7 years
   • Mechanism: 4–6% incentive on incremental sales above a base year
   • Key sectors: mobile phones, pharma APIs, medical devices, automobiles, telecom, solar PV
   • Goal: build manufacturing capacity, attract FDI, boost exports
5. 5

   MSME Definition — Revised 2020

   • Micro: investment ≤ ₹1 crore + turnover ≤ ₹5 crore
   • Small: investment ≤ ₹10 crore + turnover ≤ ₹50 crore
   • Medium: investment ≤ ₹50 crore + turnover ≤ ₹250 crore
   • MSMEs employ ~11.1 crore persons; contribute ~30% of GDP and ~45% of exports
6. 6

   Privatisation — Disinvestment and NMP

   • Air India privatised and transferred to Tata Sons in January 2022 — first major airline privatisation
   • BPCL, Shipping Corporation, Pawan Hans in disinvestment pipeline
   • National Monetisation Pipeline (NMP): target ₹6 lakh crore by monetising infrastructure (2021–25)
   • Mechanism: leasing/concessioning roads, pipelines, power lines to private operators
7. 7

   Atmanirbhar Bharat Abhiyan — Announced May 2020

   • COVID-response package of ₹20 lakh crore (~10% of GDP)
   • Key components: PLI schemes, defence import substitution (509 items banned), ECLGS for MSMEs
   • Five pillars: Economy, Infrastructure, System, Vibrant Demographics, Demand
   • Target: shift from supply-chain dependence (especially on China) to self-sufficient manufacturing
8. 8

   India's Industrial Structure (2024–25)

   • Manufacturing: ~16% of GDP; services: ~54%; agriculture: ~17–18%
   • India lags manufacturing targets — China's manufacturing is ~28% of GDP
   • Largest employer: textiles (4.5 crore workers)
   • Other key sectors: steel, automobiles, chemicals, pharmaceuticals, IT hardware
9. 9

   Globalisation — India's Integration

   • FDI flows exceeded $70 billion in 2023–24; India is the 5th largest FDI destination globally
   • Import tariffs reduced from ~300% (pre-1991) to average ~13% (2024)
   • Exports grew from $18 billion (1991) to $776 billion (goods + services, 2023–24)
   • India is 5th largest FDI recipient (UNCTAD 2023)
10. 10

    India's Industrial Policy History

    • IPR 1956: Classified industries into Schedule A (public monopoly), B (mixed), C (private)
    • Licence Raj prevailed until 1991; required industrial, import, and forex licences
    • MRTP Act 1969: Curbed monopoly capital; barred large firms from expanding without approval
    • Replaced by Competition Act 2002 (enforced by CCI from 2009)
11. 11

    Industrial Corridors and PM Gati Shakti

    • PM Gati Shakti National Master Plan (2021): Digital platform integrating 16 ministries for infrastructure
    • Coordinates multi-modal planning for 5 industrial corridors
    • DMIC (Delhi-Mumbai Industrial Corridor): 1,483 km, spans 6 states, planned investment ₹1 lakh crore+
    • Logistics cost target: reduce from ~13% of GDP to 8% by 2030
12. 12

    Ease of Doing Business

    • India improved from rank 142 (2014) to 63 (2019–20) in World Bank's EoDB index
    • EoDB index discontinued 2021; replaced by B-READY Index (launched 2024)
    • DPIIT's State Reform Action Plan drives state-level EoDB improvements
    • Key reforms: single-window clearance, e-filing, reduced inspection burden