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India has succeeded in preventing the concentration of economic power through MRTP and protection to small scale industry. Is it true?

India has succeeded in preventing the concentration of economic power through MRTP and protection to small scale industry. Is it true?


1 Answer

The principal objectives achieved through the MRTP Act are as follows:

  • Prevention of concentration of economic power, control of monopolies.
  • Prohibition of monopolistic and unfair trade practices.

With the growing complexity of industrial structure and the need for achieving economies of scale for ensuring higher productivity and competitive advantage in the international market, the interference of the Government through the MRTP Act in investment decisions of large companies has become deleterious in its effects on Indian industrial growth.

The pre-entry scrutiny of investment decision by so called MRTP companies will no longer be required. Emphasis will be on controlling and regulating monopolistic, restrictive and unfair trade practices rather than making it necessary for the monopoly houses to obtain prior approval of the Central Government for expansion, establishment of new undertakings, merger, amalgamation and take over and appointment of certain directors. The thrust of policy will be more on controlling unfair or restrictive business practices. The MRTP Act will be restructured by eliminating the legal requirement for prior government approval or expansion of present undertakings. The newly empowered MRTP commission will be encouraged to require investigation on complaints received from individual consumers or classes of consumers.

The word “small-scale” used to describe industrial units refers to the scale of investment in plant and machinery. The investment limits on plant and machinery for the small-scale industries have been raised from Rs. 60 lakh-75 lakh to Rs. 3 crore in 1996-97. As compare to the village and cottage industries, the growth of small scale sector is very satisfactory In the following ways the government’s intervention for industrial growth of India has succeed.

Generation of employment, Avoidance of further concentration of wealth and industrial power in the hands of big industrial houses and Regional dispersal in the location of new industrial units preferring backward regions. Government has also initiated some promotional measures for the small-scale sector.

  • A number of products are specially reserved for the small scale units.
  • The produce of the large scale industries in the purchase policy of the governments.

The small-scale units would enjoy a host of tax and duty reliefs as well as other financial incentives that would not be available to the larger units.

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July 11, 2019