Industrial Policy Resolution, 1956


The Industrial Policy Resolution, 1956 was shaped by the Mahalanobis Model of growth, which suggested that emphasis on heavy industries would lead the economy towards a long term higher growth path.

The Industrial Policy Resolution, 1956 classified industries into the following three categories.

 

[1] Schedule A Industries—

The category comprised 17 industries exclusively under the domain of the Government.

These industries were reserved for public sector.

In this sector the centre was given complete monopoly.

The industries under the Schedule ‘A’ were as follows:

[1] Defense equipment—Arms, ammunitions [2] Atomic energy [3] Heavy plants and machinery

[4] Heavy casting and forging of iron and steel [5] Iron and Steel [6] required for basic industries

[7] Heavy electrical plants [8] Coal and Lignite [9] Mineral Oils

[10] Mining of iron ore, manganese ore, gypsum, sulphur, gold and diamond

[11] Minerals for atomic energy [12] Mining and processing of copper

[13] Aircraft [14] Air transport [15] Railway transport [16] Ship-building

[17] Telephones and telephone cables

 

[2] Schedule B Industries—

This schedule carried the provisions of compulsory licencing.

The second category comprised 12 industries which were envisaged to be progressively State owned but private sector was expected to supplement the efforts of the State.

The schedule B industries included Aluminum and other non-ferrous metals not included in Schedule ‘A’, Machine tools, Ferro alloys and tool steels, Basic and intermediate products required by chemical industries like drugs, dye-stuffs and plastics, Antibiotics and other essential drugs, Fertilizers, Synthetic rubber, Carbonization of coal, Chemical pulp, Road transport and Sea transport.

 

Schedule C Industries—

All industries left out of Schedules A and B were put under this.

It was expected that private sector would initiate development of these industries.

These industries were open for the State as well.

 

The basic rationale of IPR, 1956 was that the state had to be given primary role for industrial development as capital was scarce and entrepreneurship was not strong.  The public sector was enlarged dramatically so as to allow it to hold commanding heights of the economy.