Study Material

Industrial Policy 1980: Need, Objectives & Features

Industrial Policy 1980 was one of the major policy reforms for the approach to industrial growth and economic development in India. When it came into effect, this policy addressed a host of problems in the country, such as stagnant industrial growth, technological backwardness, and rising unemployment, which could help turn India into a modern industrialized country. This policy has struck a balance between the necessity for growth and social justice while aiming at creating an industrially more self-reliant and competitive environment. In this article, we will discuss the Industrial Policy 1980 in-depth, focusing on its needs, objectives, and features.

Need for Industrial Policy

The reason for the Industrial Policy 1980 was born from the economic challenges India was facing in the 1970s. The country faced low industrial growth, misuse of resources, and high dependency on foreign technology and investment. The decade of the 1970s also experienced a succession of economic shocks, including oil price shocks that hindered agricultural and industrial growth.

The government realized that for India to achieve long-term economic stability and self-sufficiency, it had to create an industrial environment that was capable of not just sustaining but also propelling growth. The earlier industrial policies of the 1940s and 1950s had laid the groundwork for industrialization, but they were now outdated and no longer adequate to meet the challenges of a rapidly changing global economy.

The policy was meant to solve many problems like technological stagnation, capital formation inadequacy, and the inability to compete on the global front. It was meant to give industrial growth a new direction through modernization, increasing domestic production, and reducing dependence on imports. Another major reason for the need was unemployment and poverty in the country, which were on the rise. It aimed to solve these problems through industrial growth that could bring in employment and improve the standard of living for millions of Indians.

Objectives of Industrial Policy Resolution 1980

The Industrial Policy Resolution 1980 set clear objectives to promote industrial growth, enhance technological capabilities, and make the Indian economy self-reliant. The key objectives of the policy were to:

  1. Increase Industrial Growth: The government wanted to accelerate the pace of industrialization in the country. The target was to promote industries that could increase production and contribute to economic growth.
  2. Reduce Dependence on Imports: One of the main goals was to reduce India’s reliance on foreign goods and technology. This was important for self-sufficiency and reducing the pressure on foreign exchange reserves.
  3. Promote Technological Development: Technological backwardness was a major issue facing Indian industries. The policy sought to encourage the adoption of modern technology and practices to improve productivity and efficiency.
  4. Increase Employment Opportunities: The policy aimed at creating jobs, particularly in the industrial and manufacturing sectors, to address the growing issue of unemployment and poverty.
  5. Encourage Regional Balance: Another important objective was to ensure that industrial development was balanced across regions, reducing the concentration of industries in certain areas and promoting growth in less developed regions.
  6. Promote Small and Medium Industries: The policy recognized the importance of small and medium enterprises (SMEs) in the Indian economy. It sought to create an enabling environment for SMEs to flourish.
  7. Boost Export Potential: The policy also aimed to make Indian industries more competitive in the global market by improving the quality and quantity of exports.

Features of Industrial Policy Resolution 1980

The Industrial Policy Resolution 1980 introduced several key features aimed at reshaping India’s industrial landscape. The policy focused on industrial growth, technological advancement, and making the Indian economy more self-reliant. Some of the most significant features of the policy included:

1. Focus on Self-Reliance and Technological Development

The Industrial Policy of 1980 emphasized the need for India to become self-reliant in terms of industrial production. This meant reducing dependency on foreign goods and technology. The policy encouraged industries to invest in research and development (R&D) to improve technological capabilities. The government also provided incentives for the adoption of advanced technologies to modernize Indian industries.

2. Role of Public and Private Sectors

The policy aimed to create a balance between the public and private sectors in industrial development. While the public sector was given a leading role in sectors like heavy industries, the private sector was encouraged to take part in consumer goods production and light industries. This was meant to promote a collaborative and competitive industrial environment.

3. Encouragement for Small and Medium Enterprises (SMEs)

The Industrial Policy of 1980 gave special importance to the development of small and medium industries. The policy recognized the significant role these industries played in generating employment and contributing to industrial output. The government provided financial support, training, and technology assistance to SMEs to help them grow and compete with larger industries.

4. Investment in Technology and Research

Technological progress was at the heart of the policy. The government encouraged industries to invest in technology and innovation, providing financial support for the development and adoption of new technologies. The policy also recognized the importance of foreign collaborations to bring in modern technology.

5. Industrial Licensing Policy

The policy introduced a more relaxed industrial licensing system. While certain sectors, such as defense and atomic energy, remained under government control, the policy liberalized the industrial licensing process for many sectors, allowing private companies more freedom to operate and invest in various industries.

6. Decentralization and Regional Development

The Industrial Policy of 1980 emphasized regional development. It aimed to reduce the concentration of industries in major urban areas like Mumbai, Kolkata, and Delhi and promote industrial growth in backward and rural areas. This was expected to reduce regional imbalances and create employment in underserved areas.

7. Promotion of Exports

The policy recognized that for Indian industries to grow and remain competitive, they had to increase their export potential. The government focused on industries that could contribute to export growth, such as textiles, chemicals, and engineering goods. Special incentives were provided to export-oriented industries.

Industrial Policy 1980 FAQs

What was the main objective of the Industrial Policy 1980?

The main objective of the Industrial Policy 1980 was to promote industrial growth, reduce dependence on imports, and make India self-reliant by encouraging technological development and increasing employment opportunities.

How did the Industrial Policy 1980 address technological backwardness in India?

The policy encouraged industries to adopt modern technologies, provided financial support for R&D, and facilitated foreign collaborations to overcome technological backwardness and improve productivity.

What role did small and medium enterprises (SMEs) play in the Industrial Policy 1980?

The Industrial Policy 1980 gave special importance to the development of SMEs. It recognized their contribution to employment and industrial output and provided financial and technological support to help them grow.

How did the Industrial Policy 1980 promote regional development?

The policy aimed to reduce the concentration of industries in major urban areas and promoted industrial growth in backward and rural areas. This helped create employment opportunities and reduce regional imbalances.

What were the key features of the Industrial Policy 1980?

The key features included a focus on self-reliance, encouragement for technological development, a balance between the public and private sectors, support for SMEs, and a more relaxed industrial licensing system. The policy also emphasized export promotion and regional industrial development.

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