Current manufacture

Industries that took birth from the liberalisation of 1991

The key objective of the Industrial Policy Statement of 1991 was to maintain the growth of productivity, provide employment and optimally utilize the human resources to achieve international competitiveness. The policy statement included the abolition of industrial controls except in some industries like the atomic energy, railways and defence (Agrawal 2009). In 1991, 41% of FDI was allowed in certain selective industries. In the same year FDI policy was revised and up to 51 per cent FDI was allowed through the automatic route in 35 high priority and technology-intensive industries. This was to immediately facilitate the inflow of capital from foreign companies.
Furthermore in 1997, 100% foreign investment  was allowed in some industries whereas investment ranging from 74% to 50% was allowed in 111 sectors of the economy. The process of reducing the protection for the small scale sector was also initiated by allowing foreign investment up to 24 percent in the small scale sector (Chaudhuri 2007). The limit on the share of foreign direct investment in individual Micro, small and medium enterprises (MSMEs) was increased recently up to 100 per cent (Rao et al. 2014).
Major manufacturing industries post 1991 can be identified as:
  • The automotive industry,
  • Computer hardware industry,
  • Textile industry,
  • Machine tools and parts industry,
  • Pharmaceuticals industry,
  • Light engineering industry,
  • Iron and steel,
  • Petroleum and refined product industry amongst the others.
Value Added by the Manufacturing Sector (% of GDP)
Value added by the manufacturing Sector (% of GDP)
In the 1990s’, due to the opening up of the Indian economy, the manufacturing sector underwent painful restructuring. Some drastic measures included plant closures, sell-offs and relocation and unmatched lay-offs and retrenchments, some of which are yet to be properly recognised. In conclusion, however, it has improved production efficiency to face global competition, especially from China. Although research and development (R&D) investments have contracted as a proportion of the domestic output, the restructuring, and competitive pressure seems to have spurred innovation and product development 

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