Q. Consider the following statements regarding provisions of Industrial Policy Resolution, 1956:
1.“Schedule A” industries have complete monopoly by centre.
2.The provision of compulsory licensing for industries.
Which of the statements given above is/are correct?

[A] 1 only

[B] 2 only

[C] Both 1 and 2

[D] Neither 1 nor 2

Answer: C

Explanation: The government was encouraged by the impact of the industrial policy of 1948 and it was only after eight years that the new and more crystallized policies were announced for the Indian industries. The new industrial policy of 1956 had the following major provisions.

Reservation of Industries: A clear-cut classification of industries (also known as the Reservation of Industries) was affected with three schedules:

  1. Schedule A: This schedule had 17 industrial areas in which the Centre was given complete monopoly. The industries set up under this provision were known as the Central Public Sector Undertakings (CPSUs) later getting popularity as ‘PSUs’. Though the numbers of industries were only 17, the number of PSUs set up by the Government of India went to 254 by 1991.
  2. Schedule B: There were 12 industrial areas put under this schedule in which the state governments were supposed to take up the initiatives with a more expansive follow up by the private sector. This schedule also carried the provisions of compulsory licensing.
  3. Schedule C: All industrial areas left out of Schedules A and B were put under this in which the private enterprises had the provisions to set up industries. Many of them had the provisions of licensing and have necessarily to fit into the framework of the social and economic policy of the state and were subject to control and regulation in terms of the Industries Development and Regulation (IDR) Act and other relevant legislations.

One of the most important developments of independent India, the provision of compulsory licensing for industries, was cemented in this policy. All the schedule B industries and a number of schedule C industries came under this provision. This provision established the so-called ‘License-Quota-Permit’ regime (raj) in the economy.

Source: TMH Ramesh Singh