The new industrial policy aims to focus on One Nation-One Standard

GS Paper 3

Syllabus: Effects of Liberalisation on the Economy, Changes in Industrial Policy and their Effects on Industrial Growth

Source: BS

Direction: The article highlights objectives, proposals/suggestions in the new Industrial Policy.

Context:

• The Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce & Industry, is working on a new industrial policy.
• This will be the third industrial policy (after 1956 and 1991), which is likely to replace the 1991 policy, which was prepared against the backdrop of the balance of payment crisis.

Objectives of the New Industrial Policy:

• In order to address issues and challenges of the industry, the policy has identified the following objectives –
  • Focus on competitiveness and capability;
  • Economic integration and moving up the global value chain;
  • Promoting India as an attractive investment destination;
  • Nurturing innovation and entrepreneurship; and
  • Achieving global scale and standards.

The proposals of the New Industrial Policy:

• It seeks to achieve –
  • One Nation-One Standard,
  • Promote startups in every district,
  • Create startup innovation zones at the level of urban local bodies,
  • Formulation of a national capacity development program, and
  • Incentivise Indian speciality products by creating premium international brands.
• To increase financing sources, promote the Made in India brand, enhance local value addition and the country’s credibility as a source of quality products.
• It has suggested various ways for wider access to finance for the industry such as setting up –
  • A development finance institution to provide finance at competitive rates and
  • Considering using some part of forex reserves for such funding.
• An integrated investment promotion strategy involving district, state, national and international market synergies.
• Creating a national digital grid, developing a robust data protection regime, setting up a technology fund, and creating a task force to continuously identify skill gaps.
• Strengthening of the export finance systems for enhancing export competitiveness.

Other suggestions in the proposed policy:

• Providing performance-based loans and incentives for innovation and green growth;
• Leveraging fintech;
• Encouraging MSMEs to choose the corporate bond market;
• Accepting intellectual property rights as collaterals for loans;
• Enabling supply chain financing;
• Encouraging microfinance institutions to form cooperative groups and finance micro-enterprises at affordable rates.
• Rolling out social security schemes for women workers
• Inclusion of labour-intensive industries under the production-linked incentive scheme.

Insta Links:

Why an industrial policy is crucial

Mains Links:

Q. “Industrial growth rate has lagged behind in the overall growth of Gross-Domestic-Product (GDP) in the post-reform period” Give reasons. How far are the recent changes in Industrial Policy capable of increasing the industrial growth rate? (UPSC 2017)

Prelims Links: (UPSC 2018)