Fiscal Policy

Objectives:
To mobilise resources for economic
development
To raise the level of savings ang investment to
increase capital formation.
Optimum use of resources
To eradicate poverty and unemployment
To reduce regional disparity
To control inflationary pressure
Techniques of Fiscal Policy
Taxation policy
Public debt policy
Public expenditure policy
Deficit financing policy
Shortcomings:
Negative return to public sector
Inflation
Growing inequality
Defective tax structure
3
Introduction
Trade is not an end in itself, but a means to economic
growth and national development. The primary
purpose is not the mere earning of foreign exchange,
but the stimulation of greater economic activity.
For I ndia to become a major player in world trade, an
all encompassing, comprehensive view needs to be
taken for the overall development of the country's
foreign trade.

Before 1947 when I ndia was a colony of the British,
the pattern of her foreign trade was typically colonial.
With the dawn of independence, the colonial pattern of
trade had to change to suit the needs of a developing
economy. An economy which decides to embark on
program of development is required to extend its
productive capacity at a fast rate.
UIAMS
Indias Trade Policy
4
Main Features of Indias Trade Policy
Restricted foreign competition through- import
licensing, import quotas, import duties, extreme
cases banning the import of specific goods.
Strategy of economic development
Banning or keeping to the minimum the import of
non-essential consumer goods
Comprehensive control of various items of imports
Liberal import of machinery, equipment and other
development goods to support heavy industries-
based economic growth
Favorable climate for the policy of import
substitution
Minimise dependence on foreign countries
UIAMS
Indias Trade Policy
5
Phases of Indias Trade Policy
Distinct phases in Indias trade policy
First phase pertains to the period 1947-48 to
1951-52
The second phase covers the period 1952-53 to
1956-57
The third phase after 1956-57 to June 1966
The fourth phase started after devaluation of the
rupee in June 1966
Phase after 1975-76
Export-Import Policy 1985
Indias Foreign Trade Policy 1991
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Indias Trade Policy
6
Indias Foreign Trade Policy 1991
Introduction
Beginning mid-1991, the government of I ndia
introduced a series of reforms to liberalise and
globalise the I ndian economy. Reforms in the external
sector of I ndia were intended to integrate the I ndian
economy with the world economy. I ndia's approach to
openness has been cautious, contingent on achieving
certain preconditions to ensure an orderly process of
liberalisation and ensuring macroeconomic stability.
This approach has been vindicated in recent years with
the growing incidence of financial crises elsewhere in
the world. All the same, the policy regime in I ndia in
regard to liberalisation of the foreign sector has
witnessed very significant change.
UIAMS
Indias Trade Policy
7
Indias Foreign Trade Policy of 1991
Commerce Minister P.Chidambaram annouced a
major overhaul of trade policy on July 4,1991,
entailing
1. suspension of cash compensatory support
2. An enlarged and uniform Rupee rate of 30% of
f.o.b. value
3. Abolition of all supplementary licences except in
the case of small-scale sectors
4. Removal of all import licensing for capital goods
and raw material
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Indias Trade Policy
8
Important Aspect of New Trade Policy of 1991
Promotion of exports
Advance licensing system
Transferable advance license
Exporters allowed to dispose of the material
imported
Reduction in the licensing
Procedure for obtaining bank guarantee and legal
undertaking liberalised
Export houses and trading house given leeway
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Indias Trade Policy
9
Assessment of the new Trade Policy
Cut down administrative controls and Barriers
Permit imports to the extent of 30% on 100%
realisation of export proceeds
Streamlined procedures for licenses
Decanalisation of imports
UIAMS
Indias Trade Policy
10
FOREIGN TRADE POLICY
1st September 2004-31st March 2009

PREAMBLE
The Foreign Trade Policy is rooted in this belief
and built around two major objectives. These
are:
(i) To double our percentage share of global
merchandise trade within the next five years
(ii) To act as an effective instrument of
economic growth by giving a thrust to
employment generation.

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Indias Trade Policy
11
STRATEGY

(i) Unshackling of controls and creating an atmosphere of trust and transparency to
unleash the innate entrepreneurship of our businessmen, industrialists and traders.

(ii) Simplifying procedures and bringing down transaction costs.

(iii) Neutralizing incidence of all levies and duties on inputs used in export products,
based on the fundamental principle that duties and levies should not be exported.

(iv) Facilitating development of India as a global hub for manufacturing, trading and
services.

(v) Identifying and nurturing special focus areas which would generate additional employment opportunities,
particularly in semi-urban and rural areas, and developing
a series of Initiatives for each of these.


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12
STRATEGY

(vi) Facilitating technological and infrastructural upgradation of all the sectors of the
Indian economy, especially through import of capital goods and equipment, thereby
increasing value addition and productivity, while attaining internationally accepted
standards of quality.

(vii) Avoiding inverted duty structures and ensuring that our domestic sectors are not
disadvantaged in the Free Trade Agreements/Regional Trade Agreements/Preferential
Trade Agreements that we enter into in order to enhance our exports.

(viii) Upgrading our infrastructural network, both physical and virtual, related to the entire
Foreign Trade chain, to international standards.

(ix) Revitalising the Board of Trade by redefining its role, giving it due recognition and
inducting experts on Trade Policy.

(x) Activating our Embassies as key players in our export strategy and linking our
Commercial Wings abroad through an electronic platform for real time trade
intelligence and enquiry dissemination.

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Indias Trade Policy
13
Special Focus Initiatives
Doubling percentage share of global trade within
5 years
Expanding employment opportunities, especially
in semi urban and rural areas,
focus on agriculture, handlooms, handicraft,
gems & jewellery, leather and Marine sectors.
Promote exports in these sectors by specific
sectoral strategies that shall be notified from time
to time.

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Indias Trade Policy
14
New Sectoral Initiatives
The thrust sectors indicated below shall be extended the following facilities:

(i) Agriculture and Village Industry
(a) Vishesh Krishi and Gram Udyog Yojana (Special Agricultural and Village Industry
Scheme) for promoting export of fruits, Vegetables, Flowers, Minor Forest produce, Dairy,
Poultry and their value added products and Gram Udyog products introduced
(b) Funds earmarked under ASIDE for development of Agri Export Zones (AEZ)
(c) Capital goods imported under EPCG permitted to be installed anywhere in the AEZ.
(d) Import of restricted items, such as panels, allowed under the various export promotion
schemes
(e) Import of inputs such as pesticides permitted under the Advance Authorisation for agro
exports
(f) New towns of export excellence with a threshold limit of Rs. 250 crore notified

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15
New Sectoral Initiatives
(ii) Handlooms :
(a) Specific funds earmarked under MAI/ MDA Scheme for promoting handloom exports.
(b) Duty free import entitlement of specified trimmings and embellishments to be 5% of FOB
value of exports during the previous financial year.
(c) Duty free import entitlement of hand knotted carpet samples be 1% of FOB value of exports
during the previous financial year.
(d) Duty free import of old pieces of hand knotted carpets on consignment basis for re-export
after repair permitted.
(e) New towns of export excellence with a threshold limit of Rs. 250 crore notified.
(f) Government has decided to develop a trade mark for Handloom on lines similar to
Woolmark and Silkmark. This will enable handloom products to develop a niche market with a
distinct identity.

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New Sectoral Initiatives
(iii) Handicrafts:
(a) New Handicraft SEZs established to procure products from the cottage sector and do the
finishing for exports.
(b) Duty free import entitlement of trimmings and embellishments tol be 5% of the FOB value of
exports during the previous financial year. The entitlement broad banded, and extended also to
merchant exporters tied up with supporting manufacturers.
(c) The Handicraft Export Promotion Council authorized to import trimmings, embellishments
and consumables on behalf of those exporters for whom directly importing may not be viable.
(d) Specific funds earmarked under MAI & MDA Schemes for promoting Handicraft exports.
(e) CVD exempted on duty free import of trimmings, embellishments and consumables.
(f) New towns of export excellence with a reduced threshold limit of Rs. 250 crore notified.


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New Sectoral Initiatives
(iv) Gems & Jewellery
(a) Import of gold of 8k and above allowed under the replenishment scheme subject to the
import being accompanied by an Assay Certificate specifying the purity, weight and alloy
content.
(b) Duty free import entitlement of consumables for metals other than Gold, Platinum be
2% of FOB value of exports during the previous financial year.
(c) Duty free import entitlement of commercial samples to be Rs. 300,000.
(d) Duty free re-import entitlement for rejected jewellery to be 2% of the FOB value of
exports
(e) Cutting and polishing of gems and jewellery, treated as manufacturing for the purposes
of exemption under Section 10A of the Income Tax Act
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Indias Trade Policy
18
New Sectoral Initiatives
(v) Leather and Footwear
(a) Duty free import entitlement of specified items be 5% of FOB value of exports during the
preceding financial year.
(b) The duty free entitlement for the import of trimmings, embellishments and footwear
components for footwear (leather as well as synthetic), gloves, travel bags and handbags as 3%
of FOB value of exports of the previous financial year. Entitlement covers packing material, such
as printed and non printed shoeboxes, small cartons made of wood, tin or plastic materials for
packing footwear.
(c) Machinery and equipment for Effluent Treatment Plants exempted from basic customs duty.
(d) Re-export of unsuitable imported materials such as raw hides & skins and wet blue leathers
is permitted.
(e) CVD is exempted on lining and interlining material notified at S.No 168 of Customs
Notification No 21/2002 dated 01.03.2002.
(f) CVD is exempted on raw, tanned and dressed fur skins falling under Chapter 43 of ITC (HS).

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New Sectoral Initiatives
(vi) Package for Marine Sector
(a) Duty free import of specified specialised inputs /
chemicals and flavouring oils etc. allowed to the
extent of 1% of FOB value of preceding financial
years export.
(b) To allow import of monofilament long line
system for tuna fishing at a concessional rate of
duty.
(c) A self removal procedure for clearance of
seafood waste prescribed wastage norms.

UIAMS
Indias Trade Policy
FOREIGN EXCHANGE
MANAGEMENT ACT-1999
FEMA is an act to consolidate and amend the law relating to
foreign exchange with the objective of facilitating external
trade and payments and for promoting the orderly
development and maintainence of foreign exchange market in
India.

This act was enacted by Parliament in the Fiftieth Year of
the Republic of India.

The law extends to the whole of India. It also extends to all
branches , offices and agencies outside India, owned or
controlled by a person resident in India.
THE FEMA ACT STATES:

1) Adjudicating Authority means an officer authorised under sub
section (1) of section 16.

2) Appellate Tribunal means the appellate tribunal for foreign
exchange established under section 18.

3) Authorised Person means an authorised dealer , money
changer , off-shore banking unit or any other person authorised
under sub section (1) of section 10.

4) Bench means a bench for the Appellate Tribunal.
5) Capital Account Transaction means a transaction which
alerts the assets or liabilities, outside India of persons
resident in India or assets or liabilities in India of persons
resident outside India.

6) Chairperson means the chairperson of the Appellate
Tribunal.

7) Chartered Accountant shall have the meaning assigned to it
in the clause (b) of sub section (1) of section (2).


8) Currency includes all currency notes, postal notes , postal
orders , money orders , cheques , drafts , letters of credit ,
bills of exchange and promissory notes , credit cards , notified
by the Reserve Bank.

9) Currency Notes means cash in the form of coins and bank
notes.

10) Currency Account Transaction means a transaction other
than a capital account transaction . It includes payments due in
connection with foreign trade , paymenst due as interest on
loans , remittances for expenses of living parents, spouse and
children and expenses in connection with foreign travel.
11) Director of Enforcement means the Director of
Enforcement appointed under sub section (1) of section (36).


12) Export means-
a) The taking goods from India to any place outside India.
b) Provision of services from India to any person outside India.


13) Foreign Currency means any currency other than Indian
currency.


14) Foreign Exchange means foreign currency and includes-
a) deposits, credits, and balances payable in any foreign
currency.
b) Drafts, travellers cheques, letters of credit, bills of
exchange, expressed or drawn in Indian currency but payable
in any foreign currency.
c) Drafts, travellers cheques , letters of credit , bills of
exchange drawn by banks, institutions , or persons outside
India, but payable in Indian currency.

15) Foreign Security means any security in the form of
shares, stocks, bonds, debentures or any other instrument
expressed in foreign currency but interest or dividends is
payable in Indian currency.
16) Import means bringing into India any goods or services.

17) Indian Currency means currency which is expressed or
drawn in Indian rupees but does not include special bank notes
and special one rupee notes issued under section 28A of the
Reserve Bank Act 1934.

18) Legal Practitioner shall have the meaning assigned to it
in the clause of sub section (1) of section (2) of the
Advocates Act, 1961.

19) Member means a member of the Appellate Tribunal and
includes the chairperson therof.
20) Notify means to notify in the Official Gazette.

21) Person includes an individual , a Hindu undivided family, an
association of persons or a body of individuals.

Person Resident in India means a person residing in India for
more than one hundred and eighty two days during the
course of the preceding financial year but does not include-
(A) A person who has gone outside India or who stays outside
India in either case-
(a) Taking up employment outside India.
(b) For carrying out a business or vocation outside India.
(c) For any other purpose, in which he would stay out of India
for an uncertain period.
(B) A person who has come or either stays in India, in either
case, otherwise than-
(a) For or taking up employment in India.
(b) For carrying on in India any business or vocation.
(c) For any other purpose, in which he would stay in India for an
uncertain period.

22) Person Resident outside India means a person who is not
resident in India.

23) Prescribed means prescribed by rules made under this Act.
24) Repatriate to India means bringing into India the realised
foreign exchange and the selling of such foreign exchange to an
authorised person in India in exchange for rupees.

25) Reserve Bank means the Reserve Bank of India
constituted under sub section (1) of section 3 of the Reserve
Bank of India Act, 1934:

-security means shares, stocks, bonds and debentures ,
government securities as defined in the Public Debt Act, 1944,
savings certificates to which the Government Savings
Certificates Act, 1959 applies etc.


-Service means service of any description which is made
available to potential users and includes the provision of
facilities in connection with banking, financing, insurance,
medical assistance, real estate, entertainment etc.

- Special Director means an officer appointed under section 18

- Specify means to specify by regulations made under this Act.

- Transfer includes sale, purchase, exchange, mortgage, gift,
loan or any other form of transfer of right, title, possession or
lien.
FEMA head office also known as Enforcement Directorate is
situated in New Delhi and is headed by a Director.

The Directorate is further divided into 5 zonal offices at Delhi,
Mumbai, Calcutta, Madras and Jalandhar and each office is
headed by a Deputy Director. Each zone is further divided into 7
sub-zonal offices headed by the Assistant Directors and 5 field
units headed by the Chief Enforcement Officers.
Exim Policy
33
The foreign trade of India is guided by the Export-
Import policy of the Government of India.
Regulated by The Foreign Trade Development and
Regulation Act 1992.
Exim policy contain various policy decisions with
respect to import and exports from the country.
Exim Policy is prepared and announced by the central
government.
Exim Policy of India aims to developing export
potential, improving export performance, encouraging
foreign trade and creating favorable balance of payment
position.
General Objectives of Exim Policy
34
To establish the framework for globalization.
To promote the productivity competitiveness of Indian
Industry.
To Encourage the attainment of high and
internationally accepted standards of quality.
To augment export by facilitating access to raw
material, intermediate, components, consumables and
capital goods from the international market.
To promote internationally competitive import
substitution and self-reliance.

Exim Policy of I ndia 2004-2009
35
Hon. Shri Kamal Nath minister for commerce and industry has
announced on 31
st
Aug 2004, Indias new Exim policy.
The duration of the policy from 1
st
Sept. 2004 to 31
st
March
2009.
It takes an integrated view of the overall development of Indias
foreign trade.
Objectives of Exim Policy 2004-2009
36
To double our percentage of share of global
merchandise trade within the five year.
To act as an effective instrument of economic growth
by giving a thrust to employment generation.
Highlights of the New Foreign Trade Policy
2004-2009
37
Special Focus Initiatives: Semi-urban and Rural Area
Agriculture : Vishesh Krishi Upaj Yojana and Agri Export
Zones
Handlooms and Handicrafts: Mark under Market Access
Initiatives Scheme and Proposed to Start new SEZ.
Gems and Jewellery: Import of gold of 18 carat and above
has been permitted under the replenishment scheme
Leather and Footwear : Duty free import entitlement of
specified items shall be 5% of FOB value of exports during the
preceding year

38
Export Promotion Schemes
Assistance to States for Infrastructure Development of
Exports [ASIDE]
Market Access Initiative [MAI]
Marketing Development Assistance [MDA]
Towns of Export Excellence
Target Plus Scheme.
Served from India Scheme
Service Export Promotion Council


39
New Status Holder Categorization

Category Total Performance (In
Rs)
One Star Export House 15 crore
Two Star Export House 100 crore
Three Star Export House 500 crore
Four Star Export House 1500crore
Five Star Export House 5000 Crore
40
Board of Trade: The role is to advising government on
relevant issues connected with Foreign Trade Policy.
I mplications of The Foreign Trade 2004-09
41
Implications on Indian Economy:
This policy propose to simplify procedures and develop
technology and infrastructure.
Implications on Agriculture:
Special Agricultural Product Scheme has been introduced for
promoting the export of fruits, vegetables, flowers, and their
value added products.
Implications on Handlooms and Handicraft:
Establishment of Handicraft SEZ and Handicraft Export
Promotion Council would promote development of
Handloom and Handicraft Industry.
42
Implications on Gem and Jewellery Sector :
This is special thrust area in this policy.
Duty free imports of other inputs would give a further boost
to this sector
Implications on Leather and Footwear Industry :
Duty free import as a specified percentage of exports.
Exemption on customs duty on equipment for effluent
treatment plants would help promoting export form this
sector.

43
Implications on Service Industry :
An exclusive service promotion council has been set up in
order to map the opportunities for key services in key market.
Develop strategic market access programmes like brand
building in co-ordination with sectoral players and recognize
nodal bodies of the service industry.

Annual Supplement to Foreign Trade Policy
2004-09
44
Minister for Commerce and Industry, Government of
India has announced Annual Supplement 2005, to the
Foreign Trade Policy 2004-09 on the 8
th
April 2005.
Highlights of the Supplement
45
Inter State Trade Council : To engage the State Government in
providing an enabling environment for boosting international
trade, by setting up an Inter State Trade Council.
Removal of Export Cess : Proposed to abolish cess on export of
all agricultural and plantation commodities levied under various
Commodity Board Acts.
Export Promotion Capital Goods Scheme (EPCG) : This
scheme is extended to Agricultural sector, SSI sector, Retail
Sectors in order to promote exports from them.
Service Export : To upgrade infrastructure in the service related
companies.
46
Agri Export : Benefits under Vishesh Krishi Upaj Yojana
have been extended to exports of poultry and dairy products in
addition to export of flowers, fruits, vegetables and their value
added products.
Package for Marine Sector : Duty free import of specified
specialized chemicals and flavoring oils as per a defined list
shall be allowed to the extent of 1% of FOB value of preceding
financial years export.
Advance Licensing Scheme : The Scope of Advance
License for annual requirement has been extended to all
categories of exporters having past export performance.
47
Duty Free Replenishment Certificate : Brass scrap,
Additives, paper board, and dye stuff have been removed from
the list of items prescribed for import under DFRC.
Procedural Simplification : Proposed to simplify
procedures and reduce the documentation requirements so as to
reduce the transaction cost of the exporters and thereby increase
their competitiveness.
EDI Initiatives : DGFT shall introduce an automated
electronic system for filing, retrieval and authentication of
documents based on agreed protocols and message exchange
with other authorities such including Customs and banks.
Negative List of Exports 2002-07
48
The negative list consists of goods, the import or export of which is ether
prohibited, restricted through licensing or otherwise to be canalized through a
designate government agency.
The negative list of exports, as per the EXIM Policy 2002-07
Prohibited Items : Which items completely banned from the exports.
All forms of wild animals including their parts and products.
Special Chemicals as notified by the DGFT.
Exotic birds as notified by the DGFT.
Beef.
Sea Shells, as specified
Human Skeleton.
Peacock Tail
Red sanders wood in any form.
49
Restricted Items : which items allowed for exports under
special license issued by the DGFT.
Dress materials, ready-made garments, fabrics or textile
items with imprints of excerpts or verses of the Holy Quran.
Horses Kathiawadi, Marwari, and Manipuri breeds.
Fresh and frozen silver prom frets of weight less than 300gm.
Paddy (Rice in husk).
Seaweeds of all types.
Chemical Fertilizer all types.

50
Canalized Items : can be exported without an export license through
designated State Trading Enterprise

Items Canalizing Agency
Onions (Except Bangalore Rose onion
and Krishnapuram Onion)
Export Permitted through Specified
STEs
Niger Seeds Tribal Cooperative Marketing
Federation of India (TRIFED) New Delhi
National Agricultural Cooperative
Marketing Federation of India(NAFED)
Gum Karaya Tribal Cooperative Marketing
Federation of India(TRIFED), New Delhi
Iron ore, Manganese ore, and Chrome
ore.
Metals and Minearals Trading
Corporation (MMTC).
Crude Oil Indian Oil Corporation Limited
51
Freely Exportable Items : can be exported without an export license
from DGFT. However export of such items is subject to certain
procedures or conditions.

Item Description Procedures or Conditions
Military Stores as notified by
DGFT
No objection certificate from the Department of
Deface Production and Supplies
Exotic Birds, such as Bangali
finches, White finches and
Zebra
Subject to Pre- shipment inspection.
Bones and bone products Subject to a certificate from chemical and
Allied Products Export Promotion Council
(CAPEXIL)
Basmati Rice Subject to registration of contracts with
Agriculture and Processed food Products
Export Development Authority.
Industrial Policy
Introduction
The Industrial Policy indicates the respective roles of the public, private,
joint and co-operative sectors; small, medium and large scale industries.

It underlines the national priorities and the economic development strategy.
It also spells the Governments policy towards industries- their
establishment, functioning, growth and management; foreign capital and
technology, labor policy, tariff policy etc. in respect of the industrial sector.

The Industrial Policy of India has determined the pattern of
economic and industrial development of the economy
The Industrial Policy reflected the socio-economic and political
ideology of development.
Industrial Policy upto 1991
The objective of the policy were to :
Reduce disparities in income and wealth
Prevent monopolies and concentration of economic power
Build a large and heavy public sector and manage the same effectively
Develop heavy and machine making industries
Accelerate the rate of industrialization and economic growth
Higher employment generation
Focus on development of small scale sector
Optimum utilization of installed capacity
Rural Industrialization
Promotion of export oriented units (Industrial Policy 1980)

The industrial policy of India prior to liberalization in 1991 was characterized by the following
features:

Dominance of Public Sector

Entry and Growth Restrictions

Restrictions on Foreign Capital and Technology


Industrial Policy upto 1991 (contd)
The New Industrial Policy 1991
The Industrial Policy announced on July 24, 1991

This policy expanded the scope of the private sector by opening up most of
the industries for the private sector and did away with the entry and
growth restrictions

The most important initiatives are with respect to the virtual scrapping of
industrial licensing and registration policies, an end to the monopoly law

Welcoming approach to foreign investments, apart from redefining the role
of the public sector

Words like dramatic, revolutionary and drastic have been used to
describe this policy.
.
The New Industrial Policy 1991 (contd)
Objectives of the Industrial Policy of the Government are
to maintain a sustained growth in productivity;
to enhance employment;
to achieve optimal utilization of human resources;
to attain international competitiveness
Development of indigenous technology through greater investment in R&D and bring
in new technology to help Indian manufacturing units Incentive for industrialization of
backward areas
Ensure running of PSUs on business lines and cut their losses
Protect the interests of workers
Abolish the monopoly of any sector in any field of manufacture except on strategic or
security grounds.
to transform India into a major partner and player in the global arena.


Policy focus is on

Deregulating Indian industry;

Allowing the industry freedom and flexibility in responding to
market forces and

Providing a policy regime that facilitates and fosters growth
of Indian industry.

The New Policy has four features:
Liberalisation; privatisation, globalisation and stabilisation
The New Industrial Policy 1991 (contd)
Redefinition of the role of the Public Sector:
The number of industries reserved for the public sector was reduced to eight and it was later
pruned to two ie atomic energy and railway transport.

Also, in respect of public sector enterprises, the following measures were adopted:

Portfolio of public sector investments to be reviewed periodically with a view to focus
the public sector on strategic, high tech and essential infrastructure.

Public enterprises which are chronically sick and unlikely to be turned around to be
referred to the Board for Industrial and Financial Reconstruction for formulation of
revival / rehabilitation schemes.

In order to encourage wider public participation, a part of the Governments
shareholding in the public sector would be offered to mutual funds, financial
institutions and the general public.

Board of PSU to be more professional and have greater powers

Thrust to be on performance improvement and management would be granted more
autonomy in operation.
The New Industrial Policy 1991 (contd)
Industrial Licensing:
Industrial Licensing was governed by the Industries Development &
Regulation Act, 1951.
Industrial licensing has been abolished for all projects except for a short
list of industries related to security and strategic concerns, social
reasons, hazardous chemicals and overriding environmental
reasons and items of elitist consumption.
All excepting 18 industries were freed from licensing. The number was
later reduced to six.
Industries are free to select the location of the industry

The New Industrial Policy 1991 (contd
Liberalization of Foreign Investment:
FDI is allowed in all industries, except industries falling in a small
negative list.
Approvals for FDI upto 51% in high priority industries requiring large
investments and advanced technology will be provided.
Since 1992-93, the Indian stock market is open for investment by
Foreign Institutional Investors (FIIS) and Indian companies satisfying
certain conditions may access foreign capital market

Removal of MRTP Restrictions:
Most of the MRTP restrictions pertaining to concentration of economic power
(those requiring permission for establishment of new undertaking, substantial
expansion, manufacture of new items and mergers and acquisitions) were
scrapped.
Existing units will be provided a new broad branding facility to enable them to
produce any article without additional investment.