The Industrial Policy Resolution 1977, also known as the New Industrial Policy (NIP), was a policy document adopted by the Government of India in July 1977. It marked a significant shift in India's economic policy, as it marked the abandonment of the previous policy of import substitution and the adoption of a more open and market-oriented economic policy.
Prior to the NIP, the Indian economy was heavily controlled and regulated, with a focus on import substitution, which aimed to reduce the country's dependence on imports by promoting the production of domestic substitutes. This policy was implemented through a range of measures such as tariffs, quotas, and licensing requirements, which made it difficult for foreign firms to enter the Indian market and for domestic firms to access technology and inputs.
However, by the 1970s, it had become clear that the import substitution policy had not been successful in achieving its objectives. The economy had remained stagnant, and the country was facing a balance of payments crisis. In this context, the NIP was adopted with the aim of promoting industrial growth and modernizing the economy.
The NIP marked a significant shift in the direction of economic policy, as it marked the abandonment of the import substitution policy and the adoption of a more open and market-oriented policy. The NIP allowed for the entry of foreign firms into the Indian market, and encouraged domestic firms to access technology and inputs from abroad. It also liberalized the licensing regime, making it easier for firms to set up businesses and expand their operations.
The NIP also recognized the role of the private sector in driving economic growth, and encouraged the expansion of private enterprise through the removal of controls on private investment. It also introduced a number of measures to support small and medium enterprises, such as the establishment of the Small Industries Development Bank of India (SIDBI) to provide credit and support to these firms.
Overall, the NIP played a significant role in transforming the Indian economy and paving the way for the country's economic growth in the decades that followed. It opened up the economy to foreign investment and competition, and encouraged the expansion of the private sector. While the NIP was not without its challenges and controversies, it was a key turning point in India's economic development and helped to lay the foundations for the country's current status as a major player in the global economy.
