What economic changes were initiated by the Government under the Industrial Policy, 1991? What impact have these changes made on business and industry?
The economic changes were initiated by the Government under the Industrial Policy, 1991 are:
a. Industrial licensing was abolished. The license was required only for the six industries of cigarettes, liquor, defense equipment, dangerous chemicals, industrial explosive, and drug and Pharmaceuticals.
b. The trade restrictions of quantitative terms, customs, duties, and tariffs were removed on the movement of goods and services.
c. The companies had the liberty to decide the size and scale of production along with the price of its products.
d. The government encouraged foreign direct investment and steps with taken to attract FDI from other countries.
e. The government also reduced the tax rates on various goods.
f. The procedure for import and export was simplified.
g. The government has reduced and eliminated many duties and taxes on the import and export of goods for the promotion of free trade.
h. The government had also reduced many tariffs and customs duties.
i. Many steps were also taken to encourage foreign capital investment such as the introduction of Foreign Exchange Management Act and setting up of Special Economic Zones.
The impact have these changes made on business and industry are:
h. a. The new economic policy of liberalization, privatisation, and globalization, the level of competition among the industries increased. This competition was mainly observed in the telecommunication, insurance sector
i. b. The customers had a wide range of goods and services to choose from due to the increased competition. The improved quality of goods increased the demands.
j. c. With access to new technology, the goods and products began to be improved as well. The customers benefited from the improved quality of the products.
k. d. A skilled and trained human personal was required to cope up with the rapid changes in the economic environment. The human resources also began to be developed
l. e. The detailed study of customer's demand, as well as the market, became extremely important. The companies begin to analyze both of them and make the products according to the needs of the market. The production had become market-oriented.
m. f. The public sector had to depend on their own generated resources to be more efficient because now they received less budgetary support from the central government.
n. g. The new market conditions had been extremely dynamic, so the companies had to continuously modify their operations for their survival.