Industrial Policy Statement, 1977


The Janta Government announced a New Industrial Policy by way of a statement in the parliament in 1977.

This Statement emphasized decentralization of industrial sector with increased role for small scale, tiny and cottage industries.

It also provided for close interaction between industrial and agricultural sectors.

Highest priority was accorded to power generation and transmission.

It expanded the list of items reserved for exclusive production in the small scale sector from 180 to more than 500.

For the first time, within the small scale sector, a tiny unit was defined as a unit with investment in machinery and equipment up to Rs.0.1 million and situated in towns or villages with a population of less than 50,000 (as per 1971 census).

Basic goods, capital goods, high technology industries important for development of small scale and agriculture sectors were clearly delineated for large scale sector.

It was also stated that foreign companies that diluted their foreign equity up to 40 per cent under Foreign Exchange Regulation Act (FERA) 1973 were to be treated at par with the Indian companies.

The Policy Statement of 1977 also issued a list of industries where no foreign collaboration of financial or technical nature was allowed as indigenous technology was already available.

Fully owned foreign companies were allowed only in highly export oriented sectors or sophisticated technology areas.