Important Industrial Acts and Legislation of India
Important Industrial Acts and Legislation of India
The main objective of this Act is to enable the Central Government to take necessary steps for the development of industries; to control the method and direction of industrial development; and to control the activities, performance, and results of industrial undertakings in the public interest. Here you will the Important Industrial Acts and Legislation of India.
What should be the Role
Many Acts and Legislation have been made by the Government of India in India to control the industries in the country. These Acts play a very important role in the proper progress and economic development of the country. The legislation is amended from time to time according to the changing circumstances and environment.
The most important act is the Companies Act, 1956 which deals with the establishment and operation of companies in India. It confers powers on the Central Government to control the formation, finance, functioning, and winding up of companies. This includes arrangements relating to the organizational, financial, managerial, and all other relevant aspects of the company.
Several legislations have been made to provide the central government with the means to implement its policies. The most important of these is the Industrial (Development and Regulation) Act, 1951 (IDRA).
Main Objectives of the Act-Important Industrial Acts and Legislation of India
The main objective of this Act is to enable the Central Government to take necessary steps for the development of industries; to control the method and direction of industrial development; and to control the activities, performance, and results of industrial undertakings in the public interest.
Most of the transactions in trade, commerce, and industry are based on contracts. In India, the Indian Contract Act, 1872 is the governing legislation of contracts, with general principles for the formation, performance, and enforceability of contracts and certain types of contracts such as indemnity and guarantee; bailment, and mortgage; And rules have been laid down about the agency.
Salient features of the act-Important Industrial Acts and Legislation of India
Another important aspect of the legislation is industrial relations, including between employers and employees; There are many aspects to the interaction between employees and between employers. In such a relationship, whenever there is a conflict of interest, dissatisfaction arises in any of the parties involved, and from there industrial disputes or conflicts start.
The Industrial Disputes Act, of 1947 is the main legislation to investigate and settle all disputes and disputes. In this Act such possibilities can be legally struck down or locked when they can be declared illegal or illegal, the conditions of forcible layoff, retrenchment, dismissal or dismissal of an employee, the circumstances in which the industrial unit can be closed, and many other matters related to industrial workers and employers are mentioned.
Trade unions form an important part of the industrial structure. The legislation governing these trade unions is the Indian Trade Union Act, 1926. The Act is concerned with the registration of trade unions, their rights, their obligations and responsibilities, and whoever ensures that their funds are used properly.
It gives legal and corporate status to registered trade associations. These keep them safe from civil or criminal prosecution so that they can continue their proper activities for the benefit of the working class.
Source: FEMA, Companies Act of India, Department of Labor & Welfare, Business Portal, Government of India.
Industrial development and policy before liberalization
The first industrial policy after independence was announced on 6 April 1948 by the then Union Industries Minister Shyama Prasad Mookerjee. This policy established a foundation for a mixed and controlled economy in India.
Before the introduction of the new industrial policy, the Indian economy was engulfed in a Hindu growth rate of 3.5%. The economic scenario of the country had become as follows: fiscal deficit was rising, inflation was rising rapidly and the balance of payments was unfavorable. So the overall condition of the economy had become very pathetic.
The first industrial policy was announced in April 1948 by the Industrial Minister S. P. Mukherjee. It has historical importance because from here the system of the mixed economy started in the country.
The main features of the industrial scenario of India before planning (1950) were as follows:
- There was the predominance of industries making consumer-oriented goods, due to which capital-intensive industries did not develop properly.
- In 1953, the ratio between the consumer goods industries and the architectural producing industries was 62:38.
III. The industrial sector was highly underdeveloped with a very weak infrastructure.
- The development of this area was possible due to the government’s non-intervention policy in the industrial sector.
- Export orientation was considered against the interests of the country.
- The structure of ownership was given utmost importance.
VII. Technical and managerial skills were lacking.
Salient Features of the First Industrial Policy (1948):
- Development of Mixed Economy
- Organizing government programs for the development of industries.
III. Promotion of small and cottage industries.
- Foreign investment was allowed, but effective control was with the Indians.
Salient Features of Industrial Policy (1956):
- Seventeen industries were reserved for the public sector.
- Twelve industries were reserved for the public and private sectors.
III. The policy emphasized increasing the contribution of the states to the development of new industries.
- Foreign capital was welcomed in the policy but effective control was in the hands of Indians.
- The policy emphasized the reduction of regional disparities.
Industrial Policy Reforms of the 1980s
Due to the changes in industrial policy of the 1980s, the need to remove domestic controls was beginning to be felt. Policies for key industries for price deregulation of textiles, sugar, cement, and aluminum, incentives for modernization of share capital with a dilution of the provisions of MRTP.
The abolition of the industrial licenses system provided huge opportunities for large industrial houses Change was going on. Some major steps towards the removal of domestic controls were also taken during this period.
In particular, since the introduction of industrial policy reforms, there were many constraints in the development of export sectors like textiles, leather products, sports products, etc., which were also the main cause of concern and India had a comparative advantage was also present in these areas.
Policy Changes in the 1990s-Important Industrial Acts and Legislation of India
A process of change in India and a process of debate on the need for policy changes was set in the mid-1970s, and around this time China was preparing for sweeping changes. It is worth noting that during this time China had given full force in the direction of turning towards the market.
And China’s GDP doubled between 1978 and 1991. In contrast, India was hesitant to lift domestic controls in the 1980s even as the public sector was at a loss due to its overly protectionist trade policy. Although reforms were taking place on the industrial policy front, there was a sharp decline in the financial accounts of the government.
Due to the policies of the Government of India, the expenditure of the government of that time on the rapidly increasing interest payments, defense and subsidies were increasing rapidly. The government’s gross fiscal deficit had increased from 6.2 percent of GDP in 1980-81 to 8.3 percent in 1990-91.
What should be the industrial policy of India?
It is clear that India cannot revert to the pre-1991 position, but can protect domestic firms.
The government can follow China’s industrial policies to a certain extent, which can create huge firms like Lenovo and Haier etc.
India’s industrial policy should not only prevent coordination failures but also try to prevent competitive investments in the current environment, such as woes in capital availability.
For example, the government can control such irrelevant price competitions that lead to bankruptcy of companies like Jet Airways … or prevent misuse of such capital investments, which leads to NPA control in the telecom sector. is out.
Doing so is also important from a social point of view, as the poor performance of the telecom sector has ultimately constrained investment in telecom infrastructure in rural areas, further widening the digital divide.
Industrial policy should be such that employment generation in the manufacturing sector, as its share in total employment declined from 12.8% to 11.5% between 2012 and 2016.
Increasing export potential and manufacturing capabilities should be another important component of India’s industrial policy.
Goods export analysis-Important Industrial Acts and Legislation of India
Goods exports from India have seen a significant decline in dollar terms between 2014 and 2018 and any industrial policy will have to find a solution.
If India wants, it can also follow that export-oriented manufacturing model, by adopting which the export trade of East Asian countries has seen a miraculous growth. In this process, the surplus labor engaged in agriculture got employment in the manufacturing sector and due to this the wages of workers also increased and poverty also reduced rapidly.
Economies of scale are very important to becoming an export-based economy, but the share of the unorganized sector in the total exports of the country is 45%. This situation can be a big problem for any new industrial policy.
In such a situation, there will also be a need to make India’s industrial policy regulated to suit the Indian economy, especially in the context of Micro, Small, and Medium Enterprises (MSMEs).
Any kind of industrial policy for India should be promoting the MSME sector to achieve efficient and sustainable Economies of Scale.
India has to focus on the growth and development of its MSME sector in any case to become a manufacturing powerhouse.
In conclusion, it can be said that India should learn from the development of its IT sector and try to replicate it in the manufacturing sector. Some important factors have worked behind the success of the country in the IT sector, which can be followed suitably in the manufacturing sector.
- Major Goals of India’s National Manufacturing Policy
- To increase the contribution of the manufacturing sector to 25 percent of GDP by the year 2022.
- Doubling the existing employment opportunities in the manufacturing sector
- increase home value addition
- Enhancing the global competitiveness of the manufacturing sector
- Making the country an international hub for manufacturing
To achieve these objectives, world-class industrial infrastructure, a conducive business environment, an eco-system for technological innovation, especially in the field of green manufacturing, and also to create a system of accessible finance for institutions and entrepreneurs to upgrade the skills required by the industries. It is included in the goals of the National Manufacturing Policy.
The fastest-growing economies in the world
India is undoubtedly one of the fastest-growing economies in the world at the moment. We aim to achieve a sustained GDP growth rate of 9-10 percent per annum and for this, the growth of the manufacturing sector must remain in the double digits for a long period.
But the contribution of the manufacturing sector to GDP has remained stagnant for the last two decades. The situation in India’s manufacturing sector is of particular concern given changes in the manufacturing sector of other countries in Asia.
This shows that India has not been able to fully take advantage of the opportunities created by the dynamics of the global economy.
In such a situation, it becomes necessary that India should repeat its success story in the IT sector in the manufacturing sector and prepare a roadmap for inclusive and sustainable growth in the future.
Practice Question: Important Industrial Acts and Legislation of India
Comment on the state of the manufacturing sector in India. What lessons can be learned from the IT sector to boost the manufacturing sector in the country?
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