Industry and Infrastructure D evelopment in India Since 1947 Incorporating An Exhaustive Analytical Account of Various Policies and Programmes for Development of Industry and Infrastructure with Focus on a Post-Independence Industrial Policy Public Sector Enterprises D Micro, Small, and Medium Enterprises a Industrial Finance a Industrial Sickness o Tax Incentives for Industrialisation/Infrastructure Development D Industrial Relations and Labour Laws D Indian Industry and WTO D Energy Needs and Sources o Transport Infrastructure and Services Communications and Information Technology a Special Economic Zones D Urban Infrastructure and Services Rural Infrastructure and Services Plan-wise Review of Industrial Policy and Development: I to Xi Plan Year-wise Review of Developments in Industry/Infrastructure in India: 1947-48 to 2008-09 22 Appendices Containing Information on Indian Industry and Infrastructure Glossary of Industrial/lnfrastructural Terms By Anup Chatterjee K. Narindar Jetli NEW 'CENTURY New Century Publications New Delhi, India
Authors' Note on the Book vii-xvi Part I: Development of Industry in India 1. Indian Industry: An Introduction 1-20 1.1 Pre-Independence Industrial Scene 1.1.1 Self-sufficient Village Economy 1.1.2 Well-knit Urban Economy 1.1.3 Consequences of British Rule 1.1.4 Unbalanced Occupational Structure 1.1.5 Modern Factory System 1.1.6 Introduction of Railways 1.1.7 Other Developments 1.1.8 Critical Appraisal 1.2 Legal Framework for Industrialisation 1.2.1 Constitutional Provisions 1.2.2 Industrial (Development and Regulation) Act, 1951 1.2.3 Monopolies and Restrictive Trade Practices (MRTP) Act, 1969 1.2.4 Consumer Protection Act, 1986 1.2.5 Foreign Exchange Management Act (FEMA), 1999 1.2.6 Competition Act, 2003 and Competition Policy 1.3 Consumer Protection in India 1.3.1 Need for Consumer Protection 1.3.2 United Nations and Consumer Protection 1.3.3 Role of Standards 1.3.4 Central Consumer Protection Council 1.3.5 Quality Council of India 2. Post-Independence Industrial Policy: A General Review 21-35 2.1 Industrial Policy Resolution, 1948 2.2 Industrial Policy Resolution, 1956 2.2.1 Categorisation of Industries 2.2.2 Other Features 2.3 Devaluation of the Rupee and Industrial Liberalization, 1966 2.4 Industrial Licensing Policy Inquiry Committee (ILPIC), 1969 2.5 Secretariat for Industrial Approvals (SIA), 1973
xxi 2.6 Industrial Policy Statements 1973,1977 and 1980 " 2.7 Industrial Policy, 1950-80: A Critique 2.7.1 Expansion of Public Sector 2.7.2 Regulation and Controls of Private Sector 2.7.3 Absence of Internal Competition 2.7.4 Absence of Foreign Competition 2.8 Disillusionment and Rethinking ; 2.9 Pressure for Industrial Liberalisation 2.9.1 Internal Factors 2.9.2 External Factors 2.10 New Economic Policy and Industrial Liberalisation, 1985 2.11 Industrial Policy Statement, 1991: The Turning Point 2.12 Industrial Policy Outlook 2.13 Conclusion 3. Plan-wise Review of Industrial Policy and Development: I to XI Plan 36-61 3.1 First Five Year Plan: 1951-52 to 1955-56 3.2 Second Five Year Plan: 1956-57 to 1960-61 3.3 Third Five Year Plan: 1961-62 to 1965-66 3.4 Annual Plans 3.4.1 Annual Plan: 1966-67 3.4.2 Annual Plan: 1967-68 3.4.3 Annual Plan: 1968-69 3.5 Fourth Five Year Plan: 1969-70 to 1973-74 3.6 Fifth Five Year Plan: 1974-75 to 1978-79 3.7 Sixth Five Year Plan: 1980-81 to 1984-85 3.8 Seventh Five Year Plan: 1985-86 to 1989-90 3.9 Eighth Five Year Plan: 1992-93 to 1996-97 3.10 Ninth Five Year Plan: 1997-98 to 2001-02 3.11 Tenth Five Year Plan: 2002-03 to 2006-07 3.12 Eleventh Five Year Plan: 2007-08 to 2011-12 4. Public Sector Enterprises 62-78 4.1 Objectives of Public Sector Enterprises 4.1.1 Development of Infrastructure 4.1.2 Balanced Regional Development 4.1.3 Employment Generation
xxii Industry and Infrastructure Development in India Since 1947 4.1.4 Promotion of Competitive Conditions 4.1.5 Check on Concentration of Economic Power 4.2 Organisation of Public Sector 4.2.1 Departmental Undertakings 4.2.2 Government Companies 4.2.3 Public Corporations 4.2.4 Holding Companies 4.3 Poor Performance and Rethinking 4.4 Industrial Policy Statement, 1991 on Public Sector 4.5 Public Sector Disinvestment Commission 4.5.1 Classification of Industry Groups 4.5.2 Objectives and Strategy 4.5.3 Loss-making PSUs 4.5.4 Profit-making PSUs 4.5.5 Criteria for Disinvestment 4.5.6 Use of Disinvestment Proceeds 4.5.7 National Investment Fund 4.6 Disinvestment/Privatisation in Action 4.7 Supreme Court Judgement, September 16,2003 4.8 Public Sector at the State Level 4.9 Future of Public Sector 5. Micro, Small, and Medium Enterprises (MSMEs) 79-100 5.1 Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 5.1.1 Background 5.1.2 Classification and Definitions of MSMEs 5.1.3 Main Provisions of the MSMED Act, 2006 5.2 Advantages of Micro, Small and Medium Enterprises (MSMEs) 5.2.1 High Employment Potential 5.2.2 Widely Dispersed Entrepreneurial Base 5.2.3 Relatively Low Capital Investment 5.2.4 Regional Balanced Development 5.2.5 Export Potential 5.3 Social Face of MSMEs in India 5.4 Problems of MSMEs 5.4.1 Inadequate Availability of Finance and Credit 5.4.2 Inadequate and Irregular Supply of Raw Material
xxiii 5.4.3 Technological Obsolescence * 5.4.4-Lack of Infrastructural Facilities 5.4.5 Deficient Managerial and Technical Skills 5.4.6 Imperfect Knowledge of Market Conditions 5.5 Policy Measures to Help Small Industries 5.5.1 Reservation of Items for Exclusive Production by Small-scale Industries (SSI) 5.5.2 Excise Duty Concessions 5.5.3 Priority in the Disbursement of Loans by the Financial Institutions 5.5.4 Other Concessions 5.6 Recent Policy Initiatives for Promoting Small Industries 5.7 Small-Scale Industries in the 2006-2007 Union Budget 5.8 MSMEs and Globalisation 5.9 Sectoral Profiling of MSMEs 5.9.1 Handlooms 5.9.2 Handicrafts 5.9.3 Powerlooms 5.9.4 Silk and Sericulture 5.9.5 Unorganised Wool Sector 5.9.6 Khadi and Village Industries (KVI) 5.9.7 Coir Industry 5.9.8 Food Processing Industries 5.10 Conclusion 6. Sources of Industrial Finance 101-110 6.1 Need for Industrial Finance 6.2 Sources of Industrial Finance 6.2.1 Internal Sources 6.2.2 External Sources 6.3 Development Financial Institutions (DFIs) 6.4 All-India Financial Institutions (AIFIs) 6.4.1 All-India Development Banks 6.4.2 Specialised Financial Institutions 6.4.3 Investment Institutions 6.4.4 Refinance Institutions 6.5 State Level Institutions 6.6 Development Finance Institutions (DFIs): The Changed Scenario
xxiv Industry and Infrastructure Development in India Since 1947 6.7 Conclusion 7. Extent of Industrial Sickness 111-114 7.1 Causes of Industrial Sickness 7.1.1 External Causes 7.1.2 Internal Causes 7.2 Measures to Help Sick Industrial Units 7.3 Government Policy Regarding Nationalisation of Sick Industrial Units 8. Tax Incentives for Industrialisation and Infrastructure Development 115-124 8.1 Meaning of Tax Incentives 8.2 Forms of Tax Incentives 8.2.1 Deductions 8.2.2 Tax Credit 8.3 Rationale for Tax Incentives 8.3.1 Individuals 8.3.2 Business Organisations 8.3.3 General Purpose Incentives 8.4 Problems Created by Tax Incentives 8.5 Alternatives to Tax Incentives 8.6 Tax Holiday Schemes in India 8.6.1 Tax Holiday for Newly Established Industrial Undertakings in Free Trade Zones, Electronic Hardware Technology Parks, or Software Technology Parks 8.6.2 Tax Holiday for Newly Established Hundred Per Cent Export-Oriented Undertakings 8.6.3 Tax Holiday for Exporters of Wood-based Handicraft Items 8.7 Justification for Tax Incentives for Infrastructure Development 8.8 Tax Incentives for Infrastructure Development in India 8.8.1 Incentives under Section 35-AC 8.8.2 Extension of Tax Concessions for Infrastructure in the 2006-07 Union Budget 9. Industrial Relations and Labour Laws 125-140 9.1 Industrial Relations: Post-Independence Trends 9.1.1 From Laissez Faire to State Intervention 9.1.2 First National Commission on Labour (NCL), 1969
xxv 9.1.3 Declaration of Emergency, 1975 * 9.1.4 Post-Emergency to 1990 9.1.5 Post-liberalisation Period (1991 onwards) 9.2 Industrial Disputes Act, 1947 9.3 Contract Labour 9.3.1 Meaning and Forms of Contract Labour 9.3.2 Contract Labour (Regulation and Abolition) Act, 1970 9.3.3 Employers Viewpoint " 9.3.4 Workers Viewpoint 9.3.5 Issues in Regulating Contract Labour 9.4 Second National Commission on Labour, 2002 9.5 Labour Reforms: A Touchy Issue 9.6 Conclusion 10. Indian Industry and WTO 141-152 10.1 WTO: An Introduction 10.2 Non-Agricultural Market Access (NAMA) 10.3 Non-tariff Barriers 10.4 Services 10.5 Singapore Issues 10.6 Anti-dumping and Subsidies Agreements 10.7 TRIPS and Public Health 10.8 Agreement on Textiles and Clothing (ATC) 10.9 Textile Sector in the Post-Quota Era 10.10 Implications for India 10.11 Measures Taken by the Government Part II: Infrastructure Development in India 11. Infrastructure Development: Issues and Policies 153-179 11.1 Meaning and Types of Infrastructure 11.1.1 Economic Infrastructure 11.1.2 Social Infrastructure 11.2 Infrastructure and Economic Development 11.2.1 Infrastructural Bottlenecks 11.3 Traditional Approach to Infrastructure 11.4 Commercialisation of Infrastructure Services: The New Approach 11.5 Allocation of Risks: The Key Problem
xxvi Industry and Infrastructure Development in India Since 1947 11.5.1 Build-Operate-Transfer (BOT) 11.5.2 Public-Private Partnership 11.5.3 Value Guarantees 11.6 Infrastructure Finance: Nature and Options 11.6.1 Role of Financial Institutions 11.6.2 Debt Market 11.6.3 External Sources 11.7 India Infrastructure Finance Company Limited (IIFCL) 11.8 Recent Policy Announcements on Infrastructure 11.8.1 Infrastructure in Recent Union Budgets 11.8.2 Eleventh Five Year Plan (2007-12) on Infrastructure 11.9 FDI in Infrastructure 11.10 Conclusion 12. Energy Needs and Sources 180-210 12.1 Energy Needs of India 12.2 Electric Power 12.2.1 Basic Facts 12.2.2 Legal and Regulatory Framework 12.2.3 Institutional Reforms 12.2.4 Private Sector Participation in Power Sector 12.2.5 FDI in the Power Sector 12.2.6 Poor Performance of State Electricity Boards (SEBs) 12.2.7 Scope for Commercialisation of Power Sector 12.2.8 Accelerated Power Development Programme (APDP) 12.2.9 Hydro Power Development 12.2.10 Nuclear Power 12.2.11 Captive Power Generation 12.2.12 Tax Incentives to Power Sector 12.2.13 Trading in Electricity 12.2.14 Rural Electrification 12.2.15 New Tariff Policy of Central Electricity Regulatory Commission (CERC) for 2004-09 12.2.16 National Electricity Policy: Main Features 12.2.17 Partnership in Excellence 12.2.18 Eleventh Five Year Plan (2007-12) on Electric Power 12.2.19 Recent Initiatives in the Power Sector 12.2.20 Conclusion
xxvii 12.3 Coal 12.3.1 Eleventh Five Year Plan (2007-12) on Coal 12.3.2 Conclusion 12.4 Oil and Gas 12.4.1 Recent Initiatives in Oil and Gas 12.4.2 Eleventh Five Year Plan (2007-12) on Oil and Gas 12.4.3 Conclusion ^ 13. Transport Infrastructure and Services 211-247 13.1 Need for Integrated Transport System 13.2 Indian Railways 13.2.1 Introduction of Railways 13.2.2 Importance of Railways 13.2.3 National Rail Vikas Yojana 13.2.4 Railway Safety Review Committee 13.2.5 Participation of State Governments 13.2.6 Public Private Partnership 13.2.7 Technological Upgradation 13.2.8 Dedicated Freight Corridors (DFCs) 13.2.9 Other Initiatives 13.2.10 Eleventh Five Year Plan (2007-12) on Railways 13.2.11 Conclusion 13.3 Roads and Road Transport 13.3.1 Introduction 13.3.2 Deficiencies of Road Network 13.3.3 National Highways Development Project 13.3.4 Pradhan Mantri Gram Sadak Yojana (PMGSY) 13.3.5 Public-Private Partnership (PPP) 13.3.6 Special Accelerated Road Development Programme in the North Eastern Region (SARDP-NE) 13.3.7 Current Issues in Road Network Development 13.3.8 Eleventh Five Year Plan (2007-12) on Roads Network 13.3.9 Conclusion 13.4 Shipping and Ports 13.4.1 Importance of Maritime Activities 13.4.2 Maritime Agencies/Legislations 13.4.3 Coastal Shipping 13.4.4 Inland Water Transport (IWT)
xxviii Industry and Infrastructure Development in India Since 1947 13.4.5 Ports 13.5 Civil Aviation 13.5.1 Civil Aviation Agencies 13.5.2 From Monopoly to Competition 13.5.3 Recommendations of Naresh Chandra Committee 13.5.4 Modernisation of Delhi and Mumbai Airports 13.5.5 Greenfield Airports 13.5.6 Non-metro Airports 13.5.7 Other Recent Initiatives 13.5.8 Eleventh Five Year Plan (2007-12) on Civil Aviation 13.5.9 Conclusion 14. Communications and Information Technology 248-271 14.1 Telecommunications 14.1.1 Importance of Telecommunications 14.1.2 Telecommunications in India 14.1.3 New Telecom Policy (NTP), 1999 14.1.4 Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) 14.1.5 Telecommunications Regulatory Authority of India (TRAI) 14.1.6 FDI in Telecommunications 14.1.7 Telecommunication Services in Rural Areas 14.1.8 Recent Policy Initiatives in Telecom Sector 14.1.9 Agenda for Reforms 14.1.10 Eleventh Five Year Plan (2007-12) on Telecom and Connectivity 14.1.11 Vision for the Future 14.1.12 Conclusion 14.2 IT and IT-enabled Services 14.2.1 Introduction 14.2.2 Strategies of Indian IT-BPO Companies 14.2.3 Information Technology in Indian Banking 14.2.4 Information Technology in Agriculture 14.2.5 Challenges Ahead 14.3 Postal Services 14.3.1 Project Arrow 14.4 Information and Broadcasting 14.4.1 Broadcasting Sector
xxix 15. Special Economic Zones (SEZs) ' 272-287 15.1 Economics of SEZs 15.1.1 Meaning of SEZs 15.1.2 Types of SEZs 15.1.3 Configuration of a SEZ 15.1.4 Advantages of SEZs 15.1.5 Pre-conditions for the Success of SEZs 15.1.6 Possible Reasons for the Failure of a SEZ 15.1.7 Role of the Government 15.1.8 Role of the Private Sector 15.1.9 SEZs and Small Enterprises 15.1.10 Global Experience 15.2 SEZs in India 15.2.1 Experience with Export Processing Zones (EPZs) 15.3 Main Features of the SEZ Policy in India 15.4 Criteria for Approval 15.5 Conversion of EPZs into SEZs 15.5.1 How are SEZs Different from EPZs? 15.5.2 Will EPZ Conversion Help? 15.6 Performance of SEZs in India 15.7 Apprehensions and Concerns 15.8 SEZs and National Security 15.9 Lessons from China 15.9.1 Size of SEZ 15.9.2 Customs Regulations 15.9.3 Incentives Package 15.9.4 Labour Laws 15.9.5 Involvement of State and Local Authorities 15.9.6 DTA Sales 15.9.7 Foreign Investment and Technology 15.10 Conclusion 16. Urban Infrastructure and Services 288-305 16.1 Degree of Urbanisation in India 16.2 Constitution (Seventy-fourth Amendment) Act, 1992 16.3 Features of Urban Infrastructure Services 16.4 Urban Housing 16.5 Urban Transport
xxx Industry and Infrastructure Development in India Since 1947 16.6 National Urban Health Mission (NUHM) 16.7 Safe Drinking Water 16.7.1 Major Issues in Urban Water Supply 16.7.2 Eleventh Plan Programmes for Urban Water Supply 16.8 Sanitation Including Solid Waste Management 16.9 Jawaharlal Nehru National Urban Renewal Mission (JNNURM) 16.10 Eleventh Five Year Plan (2007-12) on Urban Infrastructure 16.11 Financing of Urban Infrastructure 16.12 Cost Effectiveness 16.13 Institutional Structure 16.14 Conclusion 17. Rural Infrastructure and Services 306-322 17.1 Constitutional Provisions 17.2 Rural Housing 17.2.1 Indira Awaas Yojana (IAY) 17.3 Rural Electrification 17.3.1 Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY), April 2005 17.4 Rural Water Supply 17.4.1 Swajaldhara 17.4.2 Eleventh Plan Targets for Rural Water Supply 17.4.3 Major Issues in Rural Water Supply 17.5 Rural Sanitation 17.5.1 Central Rural Sanitation Programme (CRSP) 17.5.2 Total Sanitation Campaign (TSC) 17.5.3 Nirmal Gram Pursakar (NGP) 17.5.4 Eleventh Plan on Rural Sanitation 17.6 National Rural Health Mission (NRHM) 17.6.1 Strategies of NRHM 17.6.2 Five Planks of the National Rural Health Mission 17.7 Rural Transport 17.7.1 Pradhan Mantri Gram Sadak Yojana (PMGSY) 17.7.2 National Rural Roads Development Agency (NRRDA) 17.8 Rural Telephony 17.8.1 New Telecom Policy (NTP), 1999 17.8.2 Digital Divide 17.9 Rural Infrastructure Development Fund (RIDF)
XXXI 17.10 Bharat Nirman Programme for Rural Infrastructure Part III: Year-wise Review of Developments in Industry/Infrastructure in India: 1947-48 to 2008-09 323-396 Part IV: Appendices Appendix 1: Industrial Policy Resolution, 1956 397-406 Appendix 2: Statement on Industrial Policy, July 24,1991 407-419 Appendix 3: New Industrial Policy and other Concessions in the North Eastern Region 420-424 Appendix 4: Industrial Infrastructure Upgradatioii Scheme 425-429 Appendix 5: Industrial Park Scheme, 2002 430-432 Appendix 6: Scheme for Integrated Development of Leather Sector 433-439 Appendix 7: Draft National Design Policy 440-445 Appendix 8: Scheme for Central Assistance to States for Developing Export Infrastructure and other Allied Activities 446-452 Appendix 9: Report on Indian Electronics Hardware Exports 453-456 Appendix 10: Anti-Dumping Laws and Procedures in India 457-467 Appendix 11: Industrial Policy Reforms in Selected States of India 468-474