Department of Industrial Policy & Promotion

Department of Industrial Policy & Promotion

The Department of Industrial Policy & Promotion was established in 1995 and has been reconstituted in the year 2000 with the merger of the Department of Industrial Development. Earlier separate Ministries for Small Scale Industries & Agro and Rural Industries (SSI&A&RI) and Heavy Industries and Public Enterprises (HI&PE) were created in October, 1999.

The Department of Industrial Policy & Promotion was established in 1995 and has been reconstituted in the year 2000 with the merger of the Department of Industrial Development. Earlier separate Ministries for Small Scale Industries & Agro and Rural Industries (SSI&A&RI) and Heavy Industries and Public Enterprises (HI&PE) were created in October, 1999.

With progressive liberalisation of the Indian economy, initiated in July 1991, there has been a consistent shift in the role and functions of this department. From regulation and administration of the industrial sector, the role of the department has been transformed into facilitating investment and technology flows and monitoring industrial development in the liberalised environment.

The role and functions of the department primarily include:
S Formulation and implementation of industrial policy and strategies for industrial development in conformity with the development needs and national objectives;
S Monitoring the industrial growth, in general, and performance of industries specifically assigned to it, in particular, including advice on all industrial and technical matters;
S Formulation of Foreign Direct Investment (FDI) policy and promotion, approval and facilitation of FDI;
S Encouragement to foreign technology collaborations at enterprise level and formulating policy parameters for the same;
S Formulation of policies relating to Intellectual Property Rights in the fields of patents, trademarks, industrial designs and Geographical Indications of goods and administration of regulations, rules made there under ;
S Administration of Industries (Development & Regulation) Act, 1951
S Promoting industrial development of industrially backward areas and the North Eastern Region including International Co-operation for industrial partnerships and
S Promotion of productivity, quality and technical cooperation.

Department of Industrial Policy & Promotion is responsible for formulation and implementation of promotional and developmental measures for growth of the industrial sector, keeping in view the national priorities and socio-economic objectives. While individual Administrative Ministries look after the production, distribution, development and planning aspects of specific industries allocated to them, department of Industrial Policy & Promotion is responsible for the overall Industrial Policy.

Department of Industrial Policy and Promotion monitors the industrial growth and production, in general, and selected industrial sectors, such as cement, paper and pulp, leather, tyre and rubber, light electrical industries, consumer goods, consumer durables, light machine tools, light industrial machinery, light engineering industries etc., in particular. Appropriate interventions are made on the basis of policy inputs generated by monitoring and periodic review of the industrial sector. The Department studies, assesses and forecasts the need for technological development in specific industrial sectors. On this basis, it plans for modernization and technological upgradation of the Indian industry so that, it keeps pace with the international developments in industrial technology on a continuing basis.

The Department is also responsible for facilitating and increasing the FDI inflow in the country. Foreign Investment Promotion Board (FIPB), now located in Department of Economic Affairs, Ministry of Finance, provides a time bound, transparent and pro-active FDI regime for approval of FDI investment proposals. The Department also plays a pro-active role in resolution of the problems faced by foreign investors in implementation of their projects through Foreign Investment Implementation Authority (FIIA), which interacts directly with the Ministry/State Government concerned.

The Department is responsible for encouraging acquisition of technological capability in various sectors of the industry through liberal foreign technology collaboration regime.

Foreign technology induction is facilitated both through FDI and through Foreign Technology Collaboration (FTC) agreement. FTC agreements are approved either through the automatic route under the delegated power exercised by the RBI or by the Government

The Foreign Investment Promotion Board (FIPB)
FIPB offers a single window clearance for applications on Foreign Direct Investment (FDI) in India that are under the approval route. The sectors under automatic route do not require any prior approval from FIPB and are subject to only sectoral laws. This e-filing facility is an important initiative of the FIPB Secretariat to further enhance its efficiency and transparency of decision making. The present portal is an upgraded and more secure version. Once the e-filing of the application is completed, the application needs to file/courier only SINGLE copy of the printed version of the online application, along with the duly authenticated copy of the documents attached with the application. This portal offers the additional features such as: e-communication, quicker processing, reduced paperwork, SMS/email alert and many more. Before you log in for the online application form, please take some time off to register with us.

Shanta Kumar committee on restructuring of FCI
The High Level Committee (HLC) for Restructuring of Food Corporation of India (FCI) chaired by Shanta Kumar has submitted its report to the Prime Minister Narendra Modi.

Some Recommendations of Shanta Kumar Committee
On procurement related issues: FCI should hand over all procurement operations of wheat, paddy and rice to Andhra Pradesh, Chhattisgarh, Haryana, Madhya Pradesh, Odisha and Punjab as they have sufficient experience and reasonable infrastructure for procurement. FCI procurement should focus on eastern belt, where farmers do not get minimum support price.

On stocking and movement related issues: FCI should outsource its stocking operations to various agencies such as Central Warehousing Corporation (CWC), State Warehousing Corporation (SWC), Private Sector under Private Entrepreneur Guarantee (PEG) scheme. It should be done on competitive bidding basis, inviting various stakeholders and creating competition to bring down costs of storage. Movement of grains should be containerized in order to reduce transit losses. While, railways should have faster turn-around-time by having more mechanized facilities. NFSA and PDS related issues Restructuring the National Food Security Act (NFSA) by virtually diluting its scope and coverage from 67 per cent of population to about 40 per cent population. In order to curtail leakages in PDS, government should defer implementation of NFSA in states that have not done end to end computerization. End to end computerization: It recommends end to end computerization of the entire food management system, starting from procurement from farmers, to stocking, movement and finally distribution through PDS. It will help for real time basis monitoring in order to curb leakages.

In August 2014, Union government had set up 8 members High Level Committee (HLC) on FCI restructuring. It was restructuring chaired by Shanta Kumar. Other members are: FCI Chairman-cum-Managing Director C Viswanath, Electronic and IT Secretary Ram Sewak Sharma, Former Chairman of Commission for Agricultural Costs and Prices (CACP) Ashok Gulati, Chief Secretaries of Punjab and Chhattisgarh; and Academicians G Raghuram and Gunmadi Nancharaiah of IIM-Ahmedabad.

Commission for Agricultural Costs & Prices
The CACP is an attached office of the Ministry of Agriculture and Farmers Welfare, Government of India. It came into existence in January 1965. Currently, the Commission comprises a Chairman, Member Secretary, one Member (Official) and two Members (Non-Official). The non-official members are representatives of the farming community and usually have an active association with the farming community.

1. It is mandated to recommend minimum support prices (MSPs) to incentivize the cultivators to adopt modern technology, and raise productivity and overall grain production in line with the emerging demand patterns in the country. Assurance of a remunerative and stable price environment is considered very important for increasing agricultural production and productivity since the market place for agricultural produce tends to be inherently unstable, which often inflict undue losses on the growers, even when they adopt the best available technology package and produce efficiently.

2. Towards this end, MSP for major agricultural products are fixed by the government, each year, after taking into account the recommendations of the Commission.
As of now, CACP recommends MSPs of 23 commodities, which comprise 7 cereals (paddy, wheat, maize, sorghum, pearl millet, barley and ragi), 5 pulses (gram, tur, moong, urad, lentil), 7 oilseeds (groundnut, rapeseed-mustard, soyabean, seasmum, sunflower, safflower, nigerseed), and 4 commercial crops (copra, sugarcane, cotton and rawjute).

3. CACP submits its recommendations to the government in the form of Price Policy Reports every year, separately for five groups of commodities namely Kharif crops, Rabi crops, Sugarcane, Raw Jute and Copra.

4. Before preparing aforesaid five pricing policy reports, the Commission draws a comprehensive questionnaire, and sends it to all the state governments and concerned National organizations and Ministries to seek their views. Subsequently, separate meetings are also held with farmers from different states, state governments, National organizations like FCI, NAFED, Cotton Corporation of India (CCI), Jute Corporation of India (JCI), trader's organizations, processing organizations, and key central Ministries.

5. The Commission also makes visits to states for on-the-spot assessment of the various constraints that farmers face in marketing their produce, or even raising the productivity levels of their crops.

6. Based on all these inputs, the Commission then finalizes its recommendations/reports, which are then submitted to the government. The government, in turn, circulates the CACP reports to state governments and concerned central Ministries for their comments. After receiving the feed-back from them, the Cabinet Committee on Economic Affairs (CCEA) of the Union government takes a final decision on the level of MSPs and other recommendations made by CACP. Once this decision is taken, CACP puts all its reports on the web site for various stakeholders to see the rationale behind CACP's price and non-price recommendations.

Minimum Support Price Scheme
The Minimum Support Prices were announced by the Government of India for the first time in 1966-67 for Wheat in the wake of the Green Revolution and extended harvest, to save the farmers from depleting profits. Since then, the MSP regime has been expanded to many crops. Minimum Support Price is the price at which government purchases crops from the farmers, whatever may be the price for the crops. The MSP is announced by the Government of India for 25 crops currently at the beginning of each season viz. Rabi and Kharif. Following are the 25 crops covered by MSP:
kharif crops
1 Paddy
2 Jowar
3 Bajra
4 Maize
5 Ragi
6 Arhar(Tur)
7 Moong
8 Urad
9 Cotton
10 Groundnut
11 Sunflower Seed
12 Soyabeen Black
13 Sesamum
14 Nigerseed
15 Wheat
16 Barley
17 Gram
18 Masur (Lentil)
19 Rapeseed/Mustard
20 Safflower
21 Toria
other crops
22 Copra
23 De-Husked Coconut
24 Jute
25 Sugarcane Contents

Rationale behind MSP How MSP is decided?
Price Support Scheme (PSS) for Oil seeds and Pulses Rationale behind MSP If there is a fall in the prices of the crops, after a bumper harvest, the government purchases at the MSP and this is the reason that the priced cannot go below MSP. So this directly helps the farmers.

How MSP is decided?
The government decided the support prices for various agricultural commodities after taking into account the following: Recommendations of Commission for Agricultural Costs and Prices Views of State Governments Views of Ministries Other relevant factors.
Price Support Scheme (PSS) for
Oil seeds and Pulses

The Department of Agriculture and Cooperation implements the Price Support Scheme for Oil Seeds and Pulses through the National Agricultural Cooperative Marketing Federation of India Ltd. ( NAFED). NAFED is the nodal procurement agency for Oilseeds and pulses, apart from the Cotton Corporation of India. So, when the prices of oilseeds, pulses and cotton fall below MSP, NAFED purchases them from thefarmers.

Procurement prices
Procurement price of a commodity refers to the price at which govt. procures the commodity from producers/manufactures for maintaining the buffer stock or the public distribution system. these prices are announced by the govt. of india on the recommendations of the commission for agricultural costs and prices before the harvest season of the crop. at these announced prices, govt. procures the foodgrains (wheat, paddy and coarse grains) in the needed quantity either for maintaining the buffer stock or for the distribution through fair price shops. procurement prices are fixed generally at a level, which is somewhat higher than the level of minimum support prices but lower than the prevailing market prices.

the procurement prices are lower in relation to the actual market prices and as such farmers and traders are not willing to sell their stocks voluntarily to the govt. in such circumstances, the govt. procures food grains at the announced procurement prices either by imposing a levy on the farmers, or on the traders or through other methods. Procurement prices are announced before the sowing season. As a result, the procurement price itself become the support price at which the govt. purchased all the foodgrains offered for sale. Procurement prices also become the minimum support prices because the govt. was bound to purchase the foodgrains offered by the producers for sale.

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