Introduction:

The Industrial Policy of 1991 was a landmark reform in India’s economic policy, marking a shift from protectionism and government control to liberalization, privatization, and globalization. Announced on July 24, 1991, by then-Finance Minister Dr. Manmohan Singh under the leadership of Prime Minister P.V. Narasimha Rao, this policy aimed to dissolve the License method, reduce the role of the state in business, and open the Indian economy to global markets. A new industrial policy was adopted on July 24, 1991 it has been designed to achieve some objectives and features. The features of industrial policy 1991 are.

1. To correct disturbances in the pattern of industrial growth
2. To maintain a continuous growth in production and employment
3. To attend technological dynamism and international competition.

Features of Industrial Policy 1991:

• Abolition of industrial licensing: The industrial licensing would be abolished for all projects except for those which are important for security, strategic, social and environmental reasons and items of Elite consumption. with this almost 85% of the industries were taken out of the licensing framework now there are only 15 industries for which licensing is compulsory these are coal, alcohol, petroleum, sugar, cigarettes, hazardous chemical, drug, and pharmaceutical, paper, news print, plywood and other based product.
• Automatic clearance of  imports of capital goods: If the foreign exchange availability was ensured through foreign equity or if CIF value of imported capital goods was less than 25% of total value of plant and equipment up to a maximum value of rupees 2 crores the atomic clearance of imports of capital goods would be given.
• Abolition of registration schemes: All existing registration schemes such as delicensed registration, exempted industries regulation and registration and DGTG registration would be abolished. The policy allowed domestic and foreign investors to set up industries with few restrictions, facilitating capital inflow and entrepreneurship.
• Automatic approval of foreign investment: Approval would be given for direct foreign investment up to 51% foreign equity in 34 high priority industries provided foreign equity cover the foreign exchange requirement of capital goods. The 1991 policy allowed foreign investments in several sectors, making it easier for multinational companies to establish a presence in India. FDI was seen as a channel for accessing advanced technology, encouraging innovation and modernization in Indian industries.
• Public sector role diluted: The number of industries reserve for the public sector since 1956 was 17 this number was reduce to 6, the new industrial policy remove the industries of iron and steel, electricity, air, transport, ship building, heavy machinery industries from the reserve list the government also announce its intention to offer a part of government share holdings in the public sector enterprises.
• MRTP Act: Under this act the firms whose assets is above a certain size of rupees in 1985 were classified as MRTP firms. Such firms were permitted to enter selected industries and new industrial policies scrapped the threshold limit of assets in respect of MRTP and dominant undertaking these firms would now be at par with others and not require prior approval from the government for investment in the delicensed. industries the MRTP act was accordingly amended
• Industrial location policy liberalization: In a departure from the prevailing location policy for industry the new industrial policy provided that in location other than 23 cities of more than 10 lakhs population there would be no requirement of obtaining industrial approval from the Centre. To promote balanced regional development and decongest cities, the policy encouraged industries to establish units in less developed areas.
• Remove of mandatory convertibility clause: A large part of industrial investment in India is financed by loans from banks and financial institutions. These institutions have followed a mandatory practice of including a convertibility clause in their lending operations. The new industrial policy provided the financial institutions would be not impose the mandatory convertible clause.

also read: explain the Industrial Policy 1956 of India.