In July 1980 the industrial policy was announced by Congress Government in India. The principal element of industrial policy of 1980 were:
- Promotion of the Concept of Economic Federalism: The concept of economic federalism support with the setting up of a few nucleus plant in each district, identified as industrially backward, to generate as many ancillaries and small and cottage industries.
- Revised Definition of Small Units: For the encouragement and development of small units the government decided in case of: (a) Tiny units investment limit increased from Rs. 1 lakhs to Rs. 2 lakhs. (b) D mall scale units investment limit increased from Rs. 10 lakh to Rs. 20 lakhs. (c) Ancillaries — investment limit increased from Rs. 15 lakhs to Rs. 25 lakhs.
- Promotion of rural industries for their faster growth without disturbing the ecological balance.
- Encouragement of industrial units in industrially backward areas in order to remove regional imbalances.
- On grounds of public interest, management of sick units would be taken over only in exceptional cases. To merge with healthy units, sick units with adequate potential for revival would be encouraged.
- Regulation of unauthorized excess capacity.
Capacity expansion upto 25% of installed capacity would be made available to the overall capacity including regularized excess capacity. FERA and MRTP Companies considered on a selected basis. The industrial policy of 1980 has been criticised for its internal inconsistency. The IPR 1956 intended to support small and village industries: (a) by restricting the volume of production in large scale sector (b) by differential taxation or (c) by direct subsidies.
The main aim of IPR 1956 was to maximize employment along with maximization of output. Reversing this policy by IPR 1980 was unjustified. IPR 1980 attempted to help large sectors by various measures of liberalization. It underplayed the employment objective. The industrial policy of 1980 has been criticized for its internal inconsistency. Industrial Policy 1980 attempted to help large sectors by various measures of liberalization. Policy of 1980 followed a Pragmatic approach. Policy of 1980 accused the. Janta Party to create artificial divisions between the small and large sector and proclaims that the interest of the small and large are net essentially conflicting. The main aim of IPR 1956 was to maximize employment along with maximization of output. Reversing this policy by IPR 19S0 was unjustified.
Regularization of unauthorized excess capacities for all industries was not justified, it was stated by critics. In high priority areas, the government should have regularized excess capacities, but should have denied regularization in low priority areas. The more desirable thing is a selective approach. Therefore, IPR 1980 attempted to help large sectors by various measures of liberalization and underplayed the employment objective.
Assessment of Industrial Policy 1980.
The industrial policy of 1980 claimed a Pragmatic approach. It underplayed the employment objective. It favored a More capital-intensive pattern of development and attempted various measures of liberalization for helping the large sector.