Government Policy and Performance: A Study of Indian Engineering Industry

The Indian industrial policy made a major transition towards liberalisation in the mid-1980s, with the proponents of liberalisation expecting not only a general increase in the efficiency of Indian industry but also improvement in terms of innovative performance. Extensive industrial studies, as well as macro-level data, suggest that liberalisation in the field of industrial licensing and foreign technological collaborations have resulted in large scale entry of new firms across different segments of the economy. In this context, this paper makes an attempt to review the promotion-oriented industrial policies of Indian Engineering industry and also trace the industrial growth from 1950-51 onwards. It has been observed that there were mainly two breaks (kinked points) during this period, one in 1965-66 and the other in 1984-85. A review of policies suggests that these breaks were associated with major shifts in policies of the government. The study indicates that the first break came through industrial policies of the government with a focus on the heavy industries during the initial phases, while the other break came during 1984-85, which could be attributed to changes in policies from a restrictive one in the mid 60’s and 70’s, to a liberalised one in this sector in the 80’s.