Industry Policy is adopted by all economies which acts as the determinant factor of the course of industrial development for a specified time period. This policy is subjected to change from time to time in case
- the Industry Policy is observed to be ineffective or
- there is a change in the government having different view or approach towards the growth and development of the economy
In the modern world, growth as well as the developmental process of an economy depends mainly on the industrial development. Hence, the rate of growth of the economy mainly depends on the
Industry Policy of a country.
Industry Policy is basically a set of instructions, laws and regulations which are formulated on the basis of the requirements and priorities of an economy by the ruling power in the government. This policy decides the course of action on different sectors of the industry of the economy.
Industry Policy is regarded as the guideline for either encouraging/discouraging some ongoing/new industrial/investment related decisions on a specific/different industries.
In almost all of the countries in the modern world it has been seen that the pure form of lessaize faire or socialistic pattern of
Industry Policy are non-existent. This has been over-powered by the mixed economy form where market economy go on hand-in-hand with the government intervention in certain aspects. Government action materializes in the form of tax, differential rate of tax on different heads and sections, tariffs, subsidies, quotas, etc.
Industry Policy determines the priority sector among the different set of industries in the economy and accordingly gives emphasis and subsequent help. This policy also tries to back its industries in export promotion through provision of subsidies or import substitution through implementation of quota.
For example, India had started its journey after independence through the inception of Nehru-Mahalanobish planning which emphasized on heavy industrialization and import substitution. But with the passage of time this
Industry Policy needed change and ultimately on July, 1991 the new economic policy was accepted which in fact stressed on competitive existence of the economy. Thus, the Indian Industrial Policy evidenced a paradigm shift.
Hence,
Industry Policy is the framework on the basis of which the industrial development of an economy takes place.