HANDBOOK OF

INDUSTRIAL POLICY
AND STATISTICS
2003-2005

lR;eso t;rs

OFFICE OF THE ECONOMIC ADVISER

DEPARTMENT OF INDUSTRIAL POLICY & PROMOTION
MINISTRY OF COMMERCE & INDUSTRY
GOVERNMENT OF INDIA
NEW DELHI
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Deptt. of Industrial Policy and Promotion
Ministry of Commerce & Industry
Udyog Bhawan, New Delhi-110011
Tel. : 23011815, 23012667 Fax : 23016298
e-mail : ajay.dua@nic.in
lR;eso t;rs

vt; nqvk August 3, 2005

AJAY DUA

FOREWORD

The Handbook of Industrial Policy and Statistics is a comprehensive

documentation of various issues connected with industrial development
in India. A review of policy matters is combined with exhaustive data on
industrial production, both sectoral and aggregate, imports and exports,
wholesale prices and infrastructure industries. The evolution of industrial
reforms in India has been separately described in a chapter. This
publication would be found equally useful by policy-makers, researchers
and investors.

(Dr. Ajay Dua)

 PREFACE

This issue of the Handbook of Industrial Policy and Statistics is the

th
14 issue of the kind. The last issue before this publication pertained to
the year 2002 and was released in 2003. It combines development after
the previous issue and particularly during the years 2003, 2004 and
partially for 2005. It marks a departure from the previous issue(s) in so far
it covers data for 2003, 2004 and partly for 2005 and embodies several
new aspects like National Common Minimum Programme (NCMP) on
Industry, introduction to index number of industrial production, wholesale
price index, share of manufacturing in GDP of States, exports, trend of
customs duty rate since 1991-92 till 2005-06, census (2001-02) of small
scale industry, environmental clearance of industries/projects etc.
The contents in the 15 chapters in the Handbook are mentioned in
brief in the Introduction to the Handbook. The data and information for
the Handbook have been sourced from various Ministries/Departments
of the Government of India and other agencies. Their contribution in
providing updated information is gratefully acknowledged. Suggestions
for improvement in the quality of presentation and coverage are welcome
from Ministries/Departments, source agencies and users.
I am happy to record my appreciation for the efforts put in not only by
the officers and staff of Research & Publication Division in this office but
also by all others engaged in bringing out this Handbook.

(A.K. Neog)
Economic Adviser
Office of the Economic Adviser to the Government of India
Department of Industrial Policy & Promotion
Ministry of Commerce & Industry
 INTRODUCTION

Handbook of Industrial Policy and Statistics is an analytical

presentation of Indias industrial economy besides the policy. This issue
of the Handbook combines development during the years 2003, 2004
and partly for 2005. It marks departure from the previous issue(s) in so
far it covers data for 2003, 2004 and partly for 2005 and embodies the
following:
(i) Chapter I reproduces Industrial Policy of July 1991 and
developments since 2002; names of industries, which require
environmental clearance; and National Common Minimum
Programme (NCMP) on Industry.
(ii) Chapter II gives an introduction of the Index of Industrial Production
(IIP) with base year 1993-94=100, reforms in mining policy,
highlights of the Union Budget, FDI, Foreign Trade Policy, trend of
customs duty rate since 1991-92 till 2005-06, share of
manufacturing in exports, financial sector/capital market reform,
monetary & credit policy, reform in infrastructure sector and tax
reforms.
(iii) Chapter III presents a review of industrial performance sector wise,
groupwise (at 2- digit level), and planwise; production data of
selected items and some characteristics based on Annual Survey
of Industries.
(iv) Chapter IV deals with trend of growth of infrastructure industries,
comprising of crude, petroleum refinery products, electricity, coal,
finished steel and cement.
(v) Chapter V furnishes data on industrial investment intentions,
Foreign Direct Investment (FDI) with sectoral and country wise
break up, technology agreement, and financial assistances
rendered by Development Banks.
(vi) Chapter VI focuses on data in respect of Public Sector Enterprises
of the Government of India.
(vii) Chapter VII pertains to Small Scale Sector focusssing on its role
and contribution, incentives, facilities and other schemes for its
development, Census of SSI(2001-02) and the Prime Ministers
Rozgar Yojana.
(viii) Chapter VIII is about time series data on exports and imports, with
particular reference to manufacturing.
(ix) Chapter IX is about data on employment and industrial relations.
(x) Chapter X provides macro data on GDP, Capital Formation,
Consumption, Savings, Population etc.
(xi) Chapter XI gives the Tenth Plan (2002-07) targets, plan outlays/
expenditures.
(xii) Chapter XII presents trends in prices along with basic information
on Wholesale Price Index (WPI).
(xiii) Chapter XIII reproduces data on technical manpower and R&D
furnished by Department of Science & Technology.
(xiv) Chapter XIV is an exercise on basic industrial scenario of the States
presented along with some parameters bearing percentage share
to all-India total.
(xv) Chapter XV presents data on a historical perspective on WPI, IIP
at different base years, trade etc.
 OFFICERS AND STAFF OF
RESEARCH AND PUBLICATION DIVISION
ASSOCIATED WITH THE PUBLICATION
OF HANDBOOK OF INDUSTRIAL
POLICY AND STATISTICS,
2003-2005

Shri Samarendra Sahu

Additional Economic Adviser

Shri R.N. Kar

Deputy Director

Shri Raj Kumar

Economic Officer

Shri K.R. Meena

Junior Investigator

Shri N.K. Rustogi

Stenographer
 CONTENTS
SL. TITLE BOX PAGE
NO. NUMBER NUMBER

I. INDUSTRIAL POLICY HIGHLIGHTS

1. Statement on Industrial Policy, July 24, 1991 3
2. Environmental clearance for projects 12
3. National Common Minimum Programme 14
4. Revision of Form for Carry-On-Business Licence 1.1 15
5. Liberalization of Foreign Technology Agreement policy and procedures 1.2 15
6. Capitalisation of import payable-liberalisation of policy 1.3 16
7. Issue of Industrial Licence 1.4 16
8. Issue of shares against external commercial borrowings- liberalisation 1.5 17
9. Revision of existing sectoral guidelines and equity cap on Foreign 1.6 17
Direct Investment (FDI), including Investment by Non-Resident Indians
(NRIs) and Overseas Corporate Bodies (OCBs)
10. Revision of existing sectoral guidelines and equity cap on Foreign Direct Investment 1.7 18
(FDI), including Investment by Non-Resident Indians (NRIs) and Overseas
Corporate Bodies (OCBs)/Foreign Institutional Investors (FIIs) in the
Banking Sector
11. Guidelines pertaining to approval of Foreign/Technical Collaboration 1.8 20
under the Automatic Route with previous ventures/tie ups in India
12. Foreign Direct Investment (FDI) in Townships, Housing, Built-up Infrast 1.9 21
ructure and Construction-Development Project
13. Clarification regarding guidelines pertaining to approval of Foreign / Technical 1.10 22
Collaboration under the Automatic Route with previous
Ventures/Tie-Ups in India
II. AN UPDATE ON ECONOMIC REFORM
14. Index of Industrial Production 25
15. Reforms in Mining Policy 27
16. Highlights of the Union Budget 28
17. Foreign Direct Investment 30
18. Highlights of the Foreign Trade Policy 34
19. Reduction in India's Custom Tariff Rates 38
20. Share of Manufacturing to total Exports in India 39
21. Highlights of Capital Market Reforms 2002-03 40
22. Highlights of Financial Sector Reform 2003-04 41
23. Monetary and Credit Policy Reforms 51
24. National Renewal Fund (NRF) 56
25. Reforms in Infrastructure Sector 57
26. Tax Reforms 2004-05 60
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III. INDUSTRIAL PRODUCTION

27. Review of Industrial Perfoamance 3.1-3.5 65
28. Index of Industrial Production 3.6 67
29. Index of Industrial Production - Mining & Quarrying (Base : 1993-94) 3.7 68
30. Index of Industrial Production- Electricity (Base : 1993-94) 3.8 68
31. Index of Industrial Production - General Index (Base : 1993-94) 3.9 69
32. Group-wise and Month-wise Index of Industrial Production at 2-Digit Level 3.10 70
(Base : 1993-94)
33. Annual Industrial Growth Rates during Various Plan Periods 3.11 76
34. Year-wise Index Of Overall Industrial Production And Manufacturing Sector 3.12 77
35. Group-wise Index of Industrial Production (Base : 1993-94) 3.13 78
36. Groupwise Growth Rate of Index of Industrial Production (Base : 1993-94) 3.14 79
37. Annual Growth Rates (%) of Industrial Production (Use-based Classification) 3.15 80
38. Production of seclected Industries 3.16 81
39. Production Performance of Selected Industries 3.17 86
40. Domestic Product from Manufacturing - Registered 3.18 92
41. Domestic Product from Manufacturing - Unregistered 3.19 94
42. Principal Characteristics, All India 3.20 96
43. Principal Characteristics by Major Industry Groups for the year 2001-02 3.21 97
(Percentage Distribution)
44. Structural Ratios & Technical Coefficients by Major Industry Groups 3.22 99
IV. INFRASTRUCTURE INDUSTRIES
45. Review of Industrial Performance 4.1 103
46. Power Generation in the Country (1991-92 TO 2003-04) 4.2 104
47. Region-wise Generation of Electricity during (2001-02 To 2003-04)Utilities in MU 4.3 106
48. State-wise Generation of Electricity and Plant Load Factor of Thermal and 4.4 107
Nuclear Plants (Utilities)
49. Region-wise Profile of the Electricity Sector 4.5 108
50. Trends in Peoduction of Infrastructure Industries (Base : 1993-94=100) 4.6 112
51. Revenue earning Goods Traffic on Indian Railways 4.7 113
V. INVESTMENT SCENARIO
47. Review of Industrial Investment Scenario
48. Industrial Investment Intention 5.1 117
49. Foreign Direct Investment (FDI) approved and inflows of FDI received during the 5.2 118
year 1991 to 2004 (Rs. in Crore)
50. Foreign Technology Agreements Approved 5.3 119
51. Loans Sanctioned and Disbursed by All-India Financial Institutions 5.4 120
52. Number of Issues and amount raised 5.5 120
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53. Capital raised from International Capital Markets 5.6 121

54. State-wise break up FDI & FTC approval accorded August, 1991 to December 2004 5.7 122
55. Letters of Intent and Industrial Licences 5.8 123
56. Industry-wise break-up of letters of intent and Industrial Licences (In Numbers) 5.9 124
57. Type-wise letters of intent (LIs) and Industrial Licences (ILs) issued 5.10 127
since 1970 (In Numbers)
58. Country-wise/Year-wise approvals for FDI & FTC during August 1991 to 5.11 128
December 2004 (No. of Approvals)
59. Sector wise/Year wise break up of Financial Collaboration and FDI amouont 5.12 131
approved during August 1991 to December 2004 (Rs. Million)
60. Calendder year-wise Foreign direct investment (FDI) approved by 5.13 132
Government during August 1991 to December 2004 (Amt. Rs. Million)
61. Country-wise break-up of Foreign direct investment (FDI) inflows received 5.14 135
from August 1991 to December 2004 (Amount in Million)
62. Sector-wise inflows of FDI received from August 1991 to 5.15 138
December 2004 (Amt. in Rs. Million)
63. Country wise List of Joint Ventures (JVs) and wholly owned 5.16 139
subsidiaries (WOs)/Other under Implementation and implemented
(As on 31st March, 2004)
64. Intitution-wise assistance sanctioned and disbursed by AFIs (Rs. Crore) 5.17 142
65. Companies at work 1960 to 2002 (Capital in Rs. Crore) 5.18 143
VI. PUBLIC SECTOR ENTERPRISES
66. Plan wise Growth of Investment in Public Enterprises 6.1 147
67. Cognate group-wise Pattern of Investment 6.2 148
68. Statewise Distribution of Assets of CPEs 6.3 149
69. Statewise Distribution of Employment of Central Public Enterprises 6.4 150
70. Cognate Group-wise break-up of Turnover (in Rs. Crore) 6.5 151
VII. SMALL SCALE SECTOR IN INDIA
71. Incentives and Facilities for small scale Industries 155
72. Growth of SSI Production* 7.1 155
73. Production Growth of SSI Sector in Comparision to Industrial Sector as a whole 7.2 156
at 2-digit Industry Group
74. Employment Generation (Lakh Persons) 7.3 156
75. Export From SSI Sector 7.4 156
76. Summary Results of Third Census Reference period: 2001-02 157
77. Summary Result of Third Census 158
78. Prime Minister's Rozgar Yojana 160
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79. Capital subsidy under prime minister's Rozgar Yojana 162

80. Cumulative Status in respect of PMRY Scheme 7.5 162
81. Sickness in small scale sector 163
82. Sickness in SSI Sector* 7.6 163
83. World Trade organisation (WTO) 165
84. New Policy initiatives for SSI sector 166
85. Credit Guarantee Scheme 167
86. State /UT-wise No. of Units Operating in SSI Sector as per third census 2001-02 7.7 169
87. Performance of Industries at 2-digit NIC 98 level as per third census 7.8 170
(Registered SSIs)
88. Performance of Industries at 2-digit NIC 98 level as per sample survey of 7.9 173
unregistered SSIs 2001-02 conducted along with third census
89. Employment in Factory and Non Factory (Registered) from third census of SSI 7.10 176
90. Location Wise Fixed Investment as per third All India Census of SSIs 7.11 176
91. Export Performance of Industries at 2- Digit NIC lever among Registered 7.12 177
SSI Units as per the third All India Census of SSIs
92. Classification of Units of Manufacturing Reserved Items at 2-digit ASICC 7.13 179
(Product) Code 2000 as per Third Census of Registered SSIs
93. Estimated Number of Units and Production of Small Scale Sector 7.14 181
94. Share of Small Scale Industries in Total Exports 7.15 182
95. Export of Major Products Groups of Small Scale Industries 7.16 183
96. Estimated Employment in Small Scale Industries 7.17 184
97. Sample Survey of Registered SSI Units with the reference Year 1999-2000 7.18 185
98. Comparison of the Third Census with Second Census (Registred SSI Sector) 7.19 186
99. List of Top 100 Products/Services among Registered SSIs in terms of No. of Units 7.20 187
100. List of Top 100 Products among Registered SSIs in terms of Gross Output 7.21 189
101. List of Top 100 Products among Registeres SSIs in terms of Employment 7.22 191
102. Production of Khadi and Village Industries Since 1960-61 7.23 193
VIII. INDIA'S FOREIGN TRADE
103. Share of Manufacturing to total Exports in India 8.1 197
104. Trends in India's Foreign Trade 8.2 198
105. India's Imports of Principal Commodities 8.3 199
106. India's Exports of Principal Commodities 8.4 201
107. Indias Exports by Regions and Principal Countries 8.5 203
108. Indias Imports by Regions and Principal Countries 8.6 205
109. Index Numbers of Foreign Trade 8.7 207
110. Indias Share in World Exports by Commodity Divisions and Groups 8.8 208
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111. Export of Principal Commodities from India 8.9 210

112. Indias Import of Principal Commodities 8.10 212
113. Indias Exports of Principal Commodity Groups 8.11 214
114. Indias Imports of Principal Commodity Groups 8.12 215
IX. EMPLOYMENT AND INDUSTRIAL RELATIONS

115. Employment in the Public Sector by Industry 9.1 219

116. Employment in the Private Sector by Industry 9.2 220
117. Employment Generated by Khadi and Village Industries 9.3 221
118. Sectoral Employment Elasticity on CDS Basis and Projections in Tenth Plan 9.4 222
119. Number of Mandays Lost in Disputes Resulting in Work Stoppages 9.5 223
by Selected Industries
120. Mandays Lost in Disputes Resulting in Work Stoppages by States 9.6 225
121. Per Capita Emoluments of Public Sector Employees and the 9.7 226
Consumer Price Index
X. NATIONAL INCOME AND RELATED MACRO -
ECONOMIC AGGREGATES
122. Selected Economic Indicators 10.1 229
123. National Product, Consumption Expenditure, Saving and Capital Formation 10.2 231
124. Gross Domestic Product at Factor Cost by Industry 10.3 233
125. Gross Domestic Product at Factor Cost by Economic Activity 10.4 234
126. Gross National Product and Net National Product 10.5 235
127. National Income-Annual Growth Rates 10.6 236
128. Plan-wise National Income - Annual Growth Rates 10.7 237
129. Gross Domestic Product at Factor Cost by Industry 10.8 238
130. Private Final Consumption Expenditure by object in Domestic Market 10.9 239
131. Private Final Consumption Expenditure by object in Domestic Market 10.10 240
(Percentage Distribution)
132. Domestic Saving (at current prices) 10.11 241
133. Capital Formation by type of Assets and by type of Institution 10.12 242
134. Gross Capital Formation by Industrty of Use 10.13 243
135. Performance of Public Sector @@ 10.14 244
136. Growth of Population of India - 1901 to 2001 10.15 245
137. Proportion of Urban Population to Total Population - All India 10.16 246
138. Per Capita Availability of Certain Important Articles of Consumption 10.17 247
139. Index Numbers of Area, Production and yield of Foodgrains, Non-foodgrains 10.18 248
and All Crops in India
140. All India Final Estimates of Foodgrains Crops: 2002-2003 10.19 249
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XI. PLAN OUTLAY AND TARGETS

141. Saving and Investment 11.1 253
142. Public Sector Plan Outlay and Expenditure for the Tenth Five Year Plan (2002-07) 11.2 254
and Realisation of 1st 4 Years of Tenth Plan
143. Sectoral Investment Requirements 11.3 255
144. Sectoral Structure of GDP at factor cost 11.4 256
145. Sectoral Growth Rates and ICORs 11.5 257
146. Inter Sectoral Flow of Funds during Tenth Plan (% of GDP mp) 11.6 258
147. Central Sector Outlay and Expenditure for the Tenth Plan (2002-07) 11.7 259
and Annual Plans
148. Tenth Plan - 2002-07 Outlays proposed by States/UTs 11.8 260
(Major heads of development)
149. Statewise Growth Target for the Tenth Five Year Plan 11.9 264
150. Ministry/Department-wise Outlays for Tenth Plan (2002-07) 11.10 265
151. Macro Economic Aggregates for Tenth Plan (2002-07) 11.11 266
152. Socio-economic indicators of change (1992-2007) 11.12 267
153. Revised estimates of annual plan 2002-03 and Budget estimates of annual plan 11.13 268
2003-04
154. Annual Plan 2002-03 revised approved outlay - STATES/UTs 11.14 269
155. Physical performance of the VSE sector (Sub-sector-wise) 11.15 274
156. Financial performance of the VSE sector 11.16 276
XII. TRENDS IN PRICES
157. Basic Information about the current Wholesale Price Index (WPI) 279
158. Wholesale Price Index - Financial Average of Major Groups and Sub-groups 12.1 281
159. Index Numbers of Wholesale Price (Average of Months) 12.2 282
160. All India Consumer Price Index for Industrial Workers (Average of months) 12.3 283
161. Consumer Price Index Numbers (General) for Industrial 12.4 284
Workers - All India and Selected Centres
162. Consumer Price Index Numbers (General) for Agriculture Labourers (Average 12.5 285
of months)
163. Average Consumer Price Index Numbers for Agriculture Labourers 12.6 286
164. Average Consumer Price Index Numbers for Urban Non-manual Employees 12.7 287
165. Consumer Price Index Numbers for Urban Non-manual Employees 12.8 288
All India and Selected Centres
XIII. TECHNICAL MANPOWER AND R & D
166. Estimated World R&D Expenditure 13.1 291
167. R&D Expenditure and its Share in World Total by Continents 13.2 292
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168. R & D expenditure per Capita and as Percentage of GNP for Selected Countries 13.3 293
169. Sceintists, Engineers and Technicians for Selected Countries 13.4 294
170. Estimated Stock of S&T Personnel at the beginning of 13.5 295
171. National Expenditure on Research and Development 13.6 296
172. Expenditure on Research & Development by Major Scientific agencies under 13.7 297
Central Government
173. National Expenditure on Research and Development by sector 13.8 298
174. Expenditure on Research and Development by Objectives 13.9 299
175. Expenditure on Research & Development by Central Ministries / Departments 13.10 300
176. Expenditure on Research and Development by State Governments 13.11 301
177. National Expenditure on Research & Development in Relation to 13.12 302
Gross National Product
178. Industrial R&D Classified by Leading Industry Groups, 1998-99 13.13 303
179. Expenditure on Research & Development by Industry Groups for Public Sector 13.14 304
Industries
180. Expenditure on Research & Development by Industry Groups for 13.15 305
Private Sector Industries
181. Expenditure on Research & Development by Public/Joint 13.16 306
Sector Undertakings 1998-99
XIV. STATE PROFILES

182. Industrial Policies of the States 313

183. States wise Growth Rate (%) Gross state domestic product from manufacturing 14.1 319
sector at constant prices (1993-94 prices) during the Ninth Five Year Plan
184. Andhra Pradesh 14.2 320
185. Arunchal Pradesh 14.3 322
186. Assam 14.4 323
187. Bihar 14.5 325
188. Chhatishagarh 14.6 327
189. Goa 14.7 329
190. Gujarat 14.8 331
191. Haryana 14.9 333
192. Himachal Pradesh 14.10 335
193. Jammu & Kashmir 14.11 337
194. Jharkhand 14.12 339
195. Karnataka 14.13 341
196. Kerala 14.14 343
197. Madhya Pradesh 14.15 345
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198. Maharashtra 14.16 347

199. Manipur 14.17 349
200. Meghalaya 14.18 351
201. Mizoram 14.19 353
202. Nagaland 14.20 354
203. Orissa 14.21 356
204. Punjab 14.22 358
205. Rajasthan 14.23 360
206. Sikkim 14.24 362
207. Tamilnadu 14.25 363
208. Tripura 14.26 365
209. Uttar Pradesh 14.27 367
210. Uttaranchal 14.28 369
211. West Bengal 14.29 371
212. Andaman & Nicobar Island 14.30 373
213. Chandigarh 14.31 375
214. Dadra & Nagar Haveli 14.32 377
215. Daman & Diu 14.33 379
216. Delhi 14.34 381
217. Lakshadweep 14.35 383
218. Pondicherry 14.36 384
XV. TIME SERIES TABLES

219. Calender year and Finacial year Averages fof Index Number of Wholesale Price 15.1 389
in India -All Commoudities
220. Index Number of Wholesale Prices for Major Groups Financial Year Averages 15.2 392
(Base : 1952-53 = 100)
221. Index Numbers of Wholesale Prices for Major Groups Financial Year Averages 15.3 393
(Base : 1961-62= 100)
222. Index Numbers of Wholesale Prices for Major Groups & Groups Financial 15.4 394
Year Averages (Base : 1970-71= 100)
223. Index Numbers of Wholesale Prices for Major Groups & Groups 15.5 395
Financial Year Averages (Base : 1981-82 = 100)
224. Index of Industrial Production (Base : 1970 = 100) 15.6 396
225. Exports, Imports And Trade Balance 15.7 397
226. DGTD Registration : Statewise 15.8 398
227. DGTD Registrations Industry-wise 15.9 399
228. SIA Registration Under Delicensing Scheme 15.10 400
229. Year Wise Total Capital Goods Approvals Accorded by Capital Goods 15.11 401
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(Main Commitee) for Import of Plant and Machinery

230. Industry Wise Capital Goods Approvals Accorded by the C.G. (Main) Committee 15.12 402
for Import of Plant and Machinery
231. Registration and De-registration of M.R.T.P. Companies and their Assets 15.13 403
232. Capacity Utilisation of Selected Industries (In Numbers) 15.14 404
233. List of Research Studies on Industrial Development Released by the Office 15.15 406
of the Economic Adviser, Ministry of Commerce & Industry
/4)205
1. India's Tariff Rates 2.1
2. Share of Manufacturing to Total Export in India 2.2
3. Comparative indicies of overall Industrial Production and Manufacturing Production 3.2
(Base 1993-94=100)
4. Annual Growth Rate (%); Overall Six infrastrucutre industries wt. in IIP = 26.68%) 4.1
5. Electricity (wt. in IIP = 10.2%) Annual Growth Rate (%) 4.2
6. Coal (wt. in IIP = 3.2%) Annual Growth Rate (%) 4.3
7. Finished Steel (wt. in IIP = 5.13) Annual Growth Rate (%) 4.4
8. Cement (wt. in IIP = 2.0%) Annual Growth Rate (%) 4.5
9. Crude Petroleum (wt. in IIP = 4.2%) Annual Growth Rate (%) 4.6
10. Petroleum Refinery Products (wt. in IIP = 2.0%) Annual Growth Rate (%) 4.7
11. Estimated Production & Exports of Small Scale Sector (at Current Prices)
Year wise Production and Exports form SSI sector
 CHAPTER I

INDUSTRIAL POLICY HIGHLIGHTS

 CHAPTER - I 3

STATEMENT ON INDUSTRIAL POLICY, JULY 24, 1991

POLICY OBJECTIVES

Pandit Jawaharlal Nehru laid the foundations of modern India. His vision and determination have left a
lasting impression on every facet of national endeavour since Independence. It is due to his initiative that India now
has a strong and diversified industrial base and is a major industrial nation of the world. The goals and objectives set
out for the nation by Pandit Nehru on the eve of Independence, namely, the rapid agriculture and industrial develop-
ment of our country, rapid expansion of opportunities for gainful employment, progressive reduction of social and
economic disparities, removal of poverty and attainment of self-reliance remain as valid today as at the time Pandit
Nehru first set them out before the nation. Any industrial policy must contribute to the realisation of these goals and
objectives at an accelerated pace. The present statement of industrial policy is inspired by these very concerns, and
represents a renewed initiative towards consolidating the gains of national reconstruction at this crucial stage.

1.2 In 1948, immediately after Independence, Government introduced the Industrial Policy Resolution. This
outlined the approach to industrial growth and development. It emphasised the importance to the economy
of securing a continuous increase in production and ensuring its equitable distribution. After the adoption of
the Constitution and the socio-economic goals, the Industrial Policy was comprehensively revised and adopted
in 1956. To meet the challenges, from time to time, it was modified through statements in 1973, 1977 and
1980.

1.3 The Industrial Policy Resolution 1948 was followed by the Industrial Policy Resolution of 1956 which had as
its objective the acceleration of the rate of economic growth and the speeding up of industrialisation as a
means of achieving a socialist pattern of society. In 1956, capital was scarce and the base of entrepreneurship
was not strong enough. Hence, the 1956 Industrial Policy Resolution gave primacy to the role of the State to
assume a predominant and direct responsibility for industrial development.

1.4 The Industrial Policy Statement of 1973, inter alia, identified high-priority industries where investment from
large industrial houses and foreign companies would be permitted.

1.5 The Industrial Policy Statement of 1977 laid emphasis on decentralisation and on the role of small-scale, tiny
and cottage industries.

1.6 The Industrial Policy Statement of 1980 focused attention on the need for promoting competition in the
domestic market, technological upgradation and moderanisation. The policy laid the foundation for an
increasingly competitive export base and for encouraging foreign investment in high-technology areas. This
found expression in the Sixth Five Year Plan which bore the distinct stamp of Smt. Indira Gandhi. It was Smt.
Indira Gandhi who emphasised the need for productivity to be the central concern in all economic and
production activities.

1.7 These policies created a climate for rapid industrial growth in the country. Thus on the eve of the Seventh Five
Year Plan, 1985-86 to 1989-90 a broad-based infrastructure had been built up. Basic industries had been
established. A high degree of self-reliance in a large number of items raw materials, intermediates, finished
goods had been achieved. New growth centres of industrial activity had emerged, as had a new generation
of entrepreneurs. A large number of engineers, technicians and skilled workers had also been trained.

1.8 The Seventh Plan recognised the need to consolidate on these strengths and to take initiatives to prepare
Indian industry to respond effectively to the emerging challenges. A number of policy and procedural changes
were introduced in 1985 and 1986 under the leadership of Shri Rajiv Gandhi aimed at increasing productiv-
ity, reducing costs and improving quality. The accent was on opening the domestic market to increased
competition and readying our industry to stand on its own in the face of international competition. The
public sector was freed from a number of constraints and given a larger measure of autonomy. The techno-
logical and managerial modernisation of industry was pursued as the key instrument for increasing productiv-
ity and improving our competitiveness in the world. The net result of all these changes was that Indian
industry grew by an impressive average annual growth rate of 8.5% in the Seventh Plan period.
4 Industrial Policy Highlights

STATEMENT ON INDUSTRIAL POLICY, JULY 24, 1991

1.9 Government is pledged to launching a reinvigorated struggle for social and economic justice, to end poverty
and unemployment and to build a modern, democratic, socialist, prosperous and forward-looking India.
Such a society can be built if India grows as part of the world economy and not in isolation.

1.10 While Government will continue to follow the policy of self-reliance, there would be greater emphasis placed
on building up our ability to pay for imports through our own foreign exchange earnings. Government is also
committed to development and utilisation of indigenous capabilities in technology and manufacturing as well
as its upgradation to world standards.

1.11 Government will continue to pursue a sound policy framework encompassing encouragement of entrepre-
neurship, development of indigenous technology through investment in research and development, bringing
in new technology, dismantling of the regulatory system, development of the capital markets and increasing
competitiveness for the benefit of the common man. The spread of industrialisation to backward areas of the
country will be actively promoted through appropriate incentives, institutions and infrastructure investments.

1.12 Government will provide enhanced support to the small-scale sector so that it flourishes in an environment of
economic efficiency and continuous technological upgradation.

1.13 Foreign investment and technology collaboration will be welcomed to obtain higher technology, to increase
exports and to expand the production base.

1.14 Government will endeavour to abolish the monopoly of any sector or any individual enterprise in any field of
manufacture, except on strategic or military considerations and open all manufacturing activity to competi-
tion.

1.15 The Government will ensure that the public sector plays its rightful role in the evolving socio-economic
scenario of the country. Government will ensure that the public sector is run on business lines as envisaged in
the Industrial Policy Resolution of 1956 and would continue to innovate and lead in strategic areas of national
importance. In the 1950s and 1960s, the principal instrument for controlling the commanding heights of the
economy was investment in the capital of key industries. Today, the State has other instruments of interven-
tion, particularly fiscal and monetary instruments. The State also commands the bulk of the nations savings.
Banks and financial institutions are under State control. Where State intervention is necessary, these instru-
ments will prove more effective and decisive.

1.16 Government will fully protect the interests of labour, enhance their welfare and equip them in all respects to
deal with the inevitability of technological change. Government believes that no small section of society can
corner the gains of growth, leaving workers to bear its pains. Labour will be made an equal partner in progress
and prosperity. Workers participation in management will be promoted. Workers cooperation will be en-
couraged to participate in packages designed to turn around sick companies. Intensive training, skill develop-
ment and upgradation programmes will be launched.

1.17 Government will continue to visualise new horizons. The major objectives of the new industrial policy
package will be to build on the gains already made, correct the distortions or weaknesses that may have crept
in, maintain a sustained growth in productivity and gainful employment and attain international competi-
tiveness. The pursuit of these objectives will be tempered by the need to preserve the environment and ensure
the efficient use of available resources. All sectors of industry whether small, medium or large, belonging to
the public, private sector or cooperative sector will be encouraged to grow and improve on their past perfor-
mance.

1.18 Governments policy will be continuity with change.

1.19 In pursuit of the above objectives, Government have decided to take a series of initiatives in respect of the
policies relating to the following areas.
 CHAPTER - I 5

STATEMENT ON INDUSTRIAL POLICY, JULY 24, 1991

A. Industrial Licensing Policy

1.20 Industrial Licensing is governed by the Industries (Development & Regulation) Act, 1951. The Industrial
Policy Resolution of 1956 identified the following three categories of industries : those that would be reserved
for development in the public sector, those that would be permitted for development through private enter-
prise with or without State participation, and those in which investment initiatives would ordinarily emanate
from private entrepreneurs. Over the years, keeping in view the changing industrial scene in the country, the
policy has undergone modifications. Industrial licensing policies and procedures have also been liberalised
from time to time. A full realisation of the industrial potential of the country calls for a continuation of this
process of change.

1.21 In order to achieve the objectives of the strategy for the industrial sector for the 1990s and beyond it is
necessary to make a number of changes in the system of industrial approvals. Major policy initiatives and
procedural reforms are called for in order to actively encourage and assist Indian entrepreneurs to exploit and
meet the emerging domestic and global opportunities and challenges. The bedrock of any such package of
measures must be to let the entrepreneurs make investment decisions on the basis of their own commercial
judgement. The attainment of technological dynamism and international competitiveness requires that en-
terprises must be enabled to swiftly respond to fast changing external conditions that have become character-
istic of todays industrial world. Government policy and procedures must be geared to assisting entrepreneurs
in their efforts. This can be done only if the role played by the Government were to be changed from that of
only exercising control to one of providing help and guidance by making essential procedures fully transparent
and by eliminating delays.

1.22 The winds of change have been with us for some time. The industrial licensing system has been gradually
moving away from the concept of capacity licensing. The system of reservations for public sector undertak-
ings has been evolving towards an ethos of greater flexibility and private sector enterprise has been gradually
allowed to enter into may of these areas on a case by case basis. Further impetus must be provided to these
changes which alone can push this country towards the attainment of its entrepreneurial and industrial poten-
tial. This calls for bold and imaginative decisions designed to remove restraints on capacity creation, while at
the same time, ensuring that over-riding national interests are not jeopardised.

1.23 In the above context, industrial licensing will henceforth be abolished for all industries, except those specified,
irrespective of level of investment. These specified industries (Annex-II), will continue to be subject to compul-
sory licensing for reasons related to security and strategic concerns, social reasons, problems related to safety and
over-riding environmental issues, manufacture of products of hazardous nature and articles of elitist consump-
tion. The exemption from licensing will be particularly helpful to the many dynamic small and medium entre-
preneurs who have been unnecessarily hampered by the licensing system. As a whole the Indian economy will
benefit by becoming more competitive, more efficient and modern and will take its rightful place in the world of
industrial progress.

B. Foreign Investment
1.24 While freeing Indian industry from official controls, opportunities for promoting foreign investments in
India should also be fully exploited. In view of the significant development of Indias industrial economy in
the last 40 years, the general resilience, size and level of sophistication achieved, and the significant changes
that have also taken place in the world industrial economy, the relationship between domestic and foreign
industry needs to be much more dynamic than it has been in the past in terms of both technology and
investment. Foreign investment would bring attendant advantages of technology transfer, marketing exper-
tise, introduction of modern managerial techniques and new possibilities for promotion of exports. This is
particularly necessary in the changing global scenario of industrial and economic cooperation marked by
mobility of capital. The government will therefore welcome foreign investment which is in the interest of the
countrys industrial development.

1.25 In order to invite foreign investment in high priority industries, requiring large investments and advanced
technology, it has been decided to provide approval for direct foreign investment upto 51% foreign equity in
6 Industrial Policy Highlights

STATEMENT ON INDUSTRIAL POLICY, JULY 24, 1991

such industries. There shall be no bottlenecks of any kind in this process. This group of industries has
generally been known as the Appendix I industries and are areas in which FERA companies have already
been allowed to invest on a discretionary basis. This change will go a long way in making Indian policy on
foreign investment transparent. Such a framework will make it attractive for companies abroad to invest in
India.

1.26 Promotion of exports of Indian products calls for a systematic exploration of world markets possible only
through intensive and highly professional marketing activities. To the extent that expertise of this nature is
not well developed so far in India, Government will encourage foreign trading companies to assist us in our
export activities. Attraction of substantial investment and access to high technology, often closely held, and to
world markets, involves interaction with some of the worlds largest international manufacturing and market-
ing firms. The Government will appoint a special board to negotiate with such firms so that we can engage in
purposive negotiation with such large firms, and provide the avenues for large investments in the development
of industries and technology in the national interest.

C. Foreign Technology Agreements

1.27 There is a great need for promoting an industrial environment where the acquisition of technological capabil-
ity receives priority. In the fast changing world of technology the relationship between the suppliers and users
of technology must be a continuous one. Such a relationship becomes difficult to achieve when the approval
process includes unnecessary governmental interference on a case to case basis involving endemic delays and
fostering uncertainty. The Indian entrepreneur has now come of age so that he no longer needs such bureau-
cratic clearances of his commercial technology relationships with foreign technology suppliers. Indian indus-
try can scarcely be competitive with the rest of the world if it is to operate within such a regulatory environ-
ment.

1.28 With a view to injecting the desired level of technological dynamism in Indian industry, Government will
provide automatic approval for technology agreements related to high priority industries within specified
parameters. Similar facilities will be available for other industries as well if such agreements do not require the
expenditure of free foreign exchange. Indian companies will be free to negotiate the terms of technology
transfer with their foreign counterparts according to their own commercial judgement. The predictability and
independence of action that this measure is providing to Indian industry will induce them to develop indig-
enous competence for the efficient absorption of foreign technology. Greater competitive pressure will also
induce our industry to invest much more in research and development than they have been doing in the past.
In order to help this process, the hiring of foreign technicians and foreign testing of indigenously developed
technologies, will also not require prior clearance as prescribed so far, individually or as a part of industrial or
investment approvals.

D. Public Sector Policy

1.29 The public sector has been central to our philosophy of development. In the pursuit of our development
objectives, public ownership and control in critical sectors of the economy has played an important role in
preventing the concentration of economic power, reducing regional disparities and ensuring that planned
development serves the common good.

1.30 The Industrial Policy Resolution of 1956 gave the public sector a strategic role in the economy. Massive
investments have been made over the past four decades to build a public sector which has a commanding role
in the economy. Today key sectors of the economy are dominated by mature public enterprises that have
successfully expanded production, opened up new areas of technology and built up a reserve of technical
competence in a number of areas.

1.31 After the initial exuberance of the public sector entering new areas of industrial and technical competence, a
number of problems have begun to manifest themselves in many of the public enterprises. Serious problems
are observed in the insufficient growth in productivity, poor project management, over-manning, lack of
 CHAPTER - I 7

STATEMENT ON INDUSTRIAL POLICY, JULY 24, 1991

continuous technological upgradation, and inadequate attention to R&D and human resource development.
In addition, public enterprises have shown a very low rate of return on the capital investment. This has
inhibited their ability to re-generate themselves in terms of new investments as well as in technology develop-
ment. The result is that many of the public enterprises have become a burden rather than being an asset to the
government. The original concept of the public sector has also undergone considerable dilution. The most
striking example is the take over of sick units from the private sector. This category of public sector units
accounts for almost one third of the total losses of central public enterprises. Another category of public
enterprises, which does not fit into the original idea of the public sector being at the commanding heights of
the economy, is the plethora of public enterprises which are in the consumer goods and services sectors.

1.32 It is time therefore that the Government adopt a new approach to public enterprises. There must be a greater
commitment to the support of public enterprises which are essential for the operation of the industrial economy.
Measures must be taken to make these enterprises more growth oriented and technically dynamic. Units
which may be faltering at present but are potentially viable must be restructured and given a new lease of life.
The priority areas for growth of public enterprises in the future will be the followong :

l Essential infrastructure goods and services.

l Exploration and exploitation of oil and mineral resources.
l Technology development and building of manufacturing capabilities in areas which are crucial in the
long term development of the economy and where private sector investment is inadequate.
l Manufacture of products where strategic considerations predominate such as defence equipment.

At the same time the public sector will not be barred from entering areas not specifically reserved for it.

1.33 In view of these considerations, Government will review the existing portfolio of public investment with
greater realism. This review will be respect of industries based on low technology, small scale and not-strategic
areas, inefficient and unproductive areas, areas with low or nil social considerations or public purpose, and
areas where the private sector has developed sufficient expertise and resources.

1.34 Government will strengthen those public enterprises, which fall in the reserved areas of operation or are in
high priority areas or are generating good or reasonable profits. Such enterprises will be provided a much
greater degree of management autonomy through the system of memoranda of understanding. Competition
will also be introduced in these areas by inviting private sector participation. In the case of selected enter-
prises, part of Government holdings in the equity share capital of these enterprises will be disinvested in order
to provide further market discipline to the performance of public enterprises. There are a large number of
chronically sick public enterprises incurring heavy losses, operating in a competitive market and serve little or
no public purpose. These need to be attended to. The country must be proud of the public sector that it owns
and it must operate in the public interest.

E. Monopolies and Restrictive Trade Practices Act (MRTP Act)

1.35 The principle objectives sought to be achieved through the MRTP Act are as follows:

(i) Prevention of concentration of economic power to the common detriment, control of monopolies, and

(ii) Prohibition of monopolistic and restrictive and unfair trade practices.

1.36 The MRTP Act became effective in June, 1970. With the emphasis placed on productivity in the Sixth Plan,
major amendments to the MRTP Act were carried out in 1982 and 1984 in order to remove impediments to
industrial growth and expansion. This process of change was given a new momentum in 1985 by an increase
of threshold limit of assets.
8 Industrial Policy Highlights

STATEMENT ON INDUSTRIAL POLICY, JULY 24, 1991

1.37 With the growing complexity of industrial structure and the need for achieving economies of scale for ensur-
ing higher productivity and competitive advantage in the international market, the interference of the Gov-
ernment through the MRTP Act in investment decisions of large companies has become deleterious in its
effects on Indian Industrial growth. The pre-entry scrutiny of investment decisions by so called MRTP
companies will no longer be required. Instead, emphasis will be on controlling and regulating monopolistic,
restrictive and unfair trade practices rather than making it necessary for the monopoly houses to obtain prior
approval of Central Government for expansion, establishment of new undertakings, merger, amalgamation
and takeover and appointment of certain directors. The thrust of policy will be more on controlling unfair or
restrictive business practices. The MRTP Act will be restructures by eliminating the legal requirement for
prior governmental approval for expansion of present undertakings and establishment of new undertakings.
The provisions relating to merger, amalgamation, and takeover will also be repealed. Similarly, the provisions
regarding restrictions on acquisition of and transfer of shares will be appropriately incorporated in Companies
Act.

1.38 Simultaneously, provisions of the MRTP Act will be strengthened in order to enable MRTP Commission to
take appropriate action in respect of the monopolistic, restrictive and unfair trade practices. The newly
empowered MRTP Commission will be encouraged to require investigation suo moto or on complaints
received from individual consumers or classes of consumers.

F. Decisions of Government

1.39 In view of the consideration outlined above Government have decided to take a series of measures to un-
shackle the Indian industrial economy from the cobwebs of unnecessary bureaucratic control. These measures comple-
ment the other series of measures being taken by Government in the areas of trade policy, exchange rate management,
fiscal policy, financial sector reform and overall macro economic management.

A. Industrial Licensing Policy

i) Industrial Licensing will be abolished for all projects except for a short list of industries related to
security and strategic concerns, social reasons, hazardous chemicals and overriding environmental rea-
sons, and items of elitist consumption (list attached as Annex II). Industries reserved for the small
scale sector will continue to be so reserved.

ii) Areas where security and strategic concern predominate, will continue to be reserved for the public
sector. (List attached as Annex I).

iii) In projects where imported capital goods are required, automatic clearance will be given

a) in cases where foreign exchange availability is ensured through foreign equity.

Or
b) if the CIF value of imported capital goods required is less than 25% of total value (net of taxes)
of plant and equipment, upto a maximum value of Rs. 2 crore. In view of the current difficult
foreign exchange situation, this scheme (i.e (iii) b) will come into force from April, 1992

In other cases, imports of capital goods will require clearance from the Secretariat of Industrial
Approvals (SIA) in the Department of Industrial Development according to availability of
foreign exchange resources.

iv) In locations other than cities of more than 1 million population, there will be no requirement of obtain-
ing industrial approvals from the Central Government except for industries subject to compulsory licens-
ing. In respect of cities with population greater than 1 million, industries other than those of a non
polluting nature such as electronics, computer software and printing will be located outside 25 Kms. of
 CHAPTER - I 9

STATEMENT ON INDUSTRIAL POLICY, JULY 24, 1991

the periphery, except in prior designated industrial areas. A flexible location policy would be adopted in
respect of such cities (with population greater than 1 million) which require industrial re-generation.

Zoning and Land Use Regulation and Environmental Legislation will continue to regulate industrial
locations.

Appropriate incentives and the design of investments in infrastructure development will be used to
promote the dispersal of industry particularly to rural and backward areas and to reduce congestion
in cities.

v) The system of phased manufacturing programmes run on an administrative case by case basis will not
be applicable to new projects. Existing projects with such programmes will continue to be governed by
them.

vi) Existing units will be provided a new broad banding facility to enable them to produce any article
without additional investment.

vii) The exemption from licensing will apply to all substantial expansions of existing units.

viii) The mandatory convertibility clause will no longer be applicable for term loans from the financial
institutions for new projects.

Procedural consequences

ix) All existing registration schemes (Delicenced Registration, Exempted Industries Registration, DGTD
registration) will be abolished.

x) Entrepreneurs will henceforth only be required to file an information memorandum on new projects
and substantial expansions.

xi) The lists at Annex II and Annex III will be notified in the Indian Trade Classification (Harmonised
System).

B. Foreign Investment

i) Approval will be given for direct foreign investment upto 51 percent foreign equity in high priority
industries (Annex III). There shall be no bottlenecks of any kind in this process. Such clearance will
be available if foreign equity covers the foreign exchange requirement for imported capital goods.
Consequential amendments to the Foreign Exchange Regulation Act (1973) shall be carried out.

ii) While the import of components, raw materials and intermediate goods, and payment of knowhow
fees and royalties will be governed by the general policy applicable to other domestic units, the pay-
ment of dividends would be monitored through the Reserve Bank of India so as to ensure that outflow
on account of dividend payment are balanced by export earnings over a period of time.

iii) Other foreign equity proposals, including proposals involving 51% foreign equity which do not meet
the criteria under (i) above, will continue to need prior clearance. Foreign equity proposals need not
necessarily be accompanied by foreign technology agreements.

iv) To provide access to international markets, majority foreign equity holding upto 51% equity will be
allowed for trading companies primarily engaged in export activities. While the thrust would be on
export activities, such trading houses shall be at par with domestic trading and export houses in accor-
dance with Import-Export Policy.

v) A special Empowered Board would be constituted to negotiate with a number of large international
firms and approve direct foreign investment in select areas. This would be a special programme to
10 Industrial Policy Highlights

STATEMENT ON INDUSTRIAL POLICY, JULY 24, 1991

attract substantial investment in substantial investment that would provide access to high technology
and world markets. The investment programmes of such firms would be considered in totality, free
from pre-determined parameters or procedures.

C. Foreign Technology Agreements

i) Automatic permission will be given for foreign technology agreements in high priority industries (An-
nex III) upto a lumpsum payment of Rs. 1 crore, 5% royalty for domestic sales and 8% for exports,
subject to total payment of 8% of sales over a 10 years period from date of agreement of 7 years from
commencement of production.

The prescribed royalty rates are net of taxes and will be calculated according to standard procedures.

ii) In respect of industries other than those in Annex III, automatic permission will be given subject to the
same guidelines as above if no free foreign exchange is required for any payments.

iii) All other proposals will need specific approval under the general procedures in force.

iv) No permission will be necessary for hiring of foreign technicians, foreign testing of indigenously devel-
oped technologies. Payment may be made from blanket permits or free foreign exchange according to
RBI guidelines.

D. Public Sector

i) Portfolio of public sector investments will be reviewed with a view to focus the public sector on strate-
gic, high-tech and essential infrastructure. Whereas some reservation for the public sector is being
retained there would be no bar for areas of exclusivity to be opened up to the private sector selectively.
Similarly the public sector will also be allowed entry in areas not reserved for it.

ii) Public enterprises which are chronically sick and which are unlikely to be turned around will, for the
formulation of revival/rehabilitation schemes, be referred to the Board for Industrial and Financial
Reconstruction (BIFR), or other similar high level institutions created for the purpose. A social security
mechanism will be created to protect the interests of workers likely to be affected by such rehabilitation
packages.

iii) In order to raise resources and encourage wider public participation, a part of the governments
shareholding in the public sector would be offered to mutual funds, financial institutions, general
public and workers.

iv) Boards of public sector companies would be made more professional and given greater powers.

v) There will be greater thrust on performance improvement through the Memoranda of Understanding
(MOU) system through which managements would be granted greater autonomy and will be held
accountable. Technical expertise on the part of the Government would be upgraded to make the
MOU negotiations and implementation more effective.

vi) To facilitate a fuller discussion on performance, the MOU signed between Government and the public
enterprise would be placed in Parliament. While focussing on major management issues, this would
also help place matters on day to day operations of public enterprises in their correct perspective.

E. MRTP Act

i) The MRTP Act will be amended to remove the threshold limits of assets in respect of MRTP
companies and dominant undertakings. This eliminates the requirement of prior approval of Central
 CHAPTER - I 11

STATEMENT ON INDUSTRIAL POLICY, JULY 24, 1991

Government for establishment of new undertakings, expansion of undertakings, merger,

amalgamation and takeover and appointment of Directors under certain circumstances.

ii) Emphasis will be placed on controlling and regulating monopolistic, restrictive and unfair trade
practices. Simultaneously, the newly empowered MRTP Commission will be authorised to initiate
investigations suo moto or on complaints received from individual consumers or classes of consumers
in regard to monopolistic, restrictive and unfair trade practices.

iii) Necessary comprehensive amendments will be made in the MRTP Act in this regard for enabling the
MRTP Commission to exercise punitive and compensatory powers.
Source: Ministry of Commerce & Industry, Department of Industrial Policy and Promotion.
12 Industrial Policy Highlights

ENVIRONMENTAL CLEARANCE FOR PROJECTS

1.40 Any person who desires to undertake any new project in any part of India or the expansion or moderniza-
tion of any existing industry or project specified in Schedule 1 of the Environment Impact Assessment
Notification S.O. 60(E), dated 27.01.1994, has to submit an application to the Ministry of Environment
& Forest for seeking environmental clearance of projects. The number of industries listed in Schedule 1 is
32 (30 originally notified on 27.01.1994 and 2 added vide notification S.O. 801(E) dated 07.07.2004)
and are mostly chemical based, raw skin and hides, pulp paper and newsprint, cement, power projects etc,
new industrial estates and new construction projects.

As per this Notification, environmental clearance is needed for new projects to be set up/expanded/modernised
in any part of India. It does not distinguish between backward district or otherwise

SCHEDULE-I

LIST OF PROJECTS REQUIRING ENVIRONMENTAL CLEARANCE FROM THE CENTRAL

GOVERNMENT

1. Nuclear Power and related projects such as Heavy Water Plants, nuclear fuel complex, Rare Earths.
2. River Valley projects including hydel power, major Irrigation and their combination including flood
control.
3. Ports, Harbours, Airports (except minor ports and harbours).
4. Petroleum Refineries including crude and product pipelines.
5. Chemical Fertilizers (Nitrogenous and Phosphatic other than single superphosphate).
6. Pesticides (Technical).
7. Petrochemical complexes (Both Olefinic and Aromatic) and Petro-chemical intermediates such as DMT,
Caprolactam, LAB etc.and production of basic plastics such as LLDPE, HDPE, PP, PVC.
8. Bulk drugs and pharmaceuticals.
9. Exploration for oil and gas and their production, transportation and storage.
10. Synthetic Rubber.
11. Asbestos and Asbestos products.
12. Hydrocyanic acid and its derivatives.
13. (a) Primary metallurgical industries (such as production of Iron and Steel, Aluminium, Copper, Zinc,
Lead and Ferro Alloys).
(b) Electric arc furnaces (Mini Steel Plants).
14. Chlor alkali industry.
15. Integrated paint complex including manufacture of resins and basic raw materials required in the manufacture
of paints.
16. Viscose Staple fibre and filament yarn.
17. Storage batteries integrated with manufacture of oxides of lead and lead antimony alloys.
18. All tourism projects between 200m500 metres of High Water Line and at locations with an elevation of
more than 1000 metres with investment of more than Rs.5 crores.
19. Thermal Power Plants.
20. Mining projects *(major minerals)* with leases more than 5 hectares.
21. Highway Projects **except projects relating to improvement work including widening and strengthening of
roads with marginal land acquisition along the existing alignments provided it does not pass through ecologically
sensitive areas such as National Parks, Sanctuaries, Tiger Reserves, Reserve Forests**
22. Tarred Roads in the Himalayas and or Forest areas.
 CHAPTER - I 13

ENVIRONMENTAL CLEARANCE FOR PROJECTS

23. Distilleries.
24. Raw Skins and Hides
25. Pulp, paper and newsprint.
26. Dyes.
27. Cement.
28. Foundries (individual)
29. Electroplating
30. Meta amino phenol
31. New Construction projects
32. New industrial estates.

Source : Ministry of Environment & Forests website www.envfor.nic.in accessed on 12th August 2005