Q.Explain the main features of the New Industrial Policy, 1991.

The 1991 policy liberalised Indian industry through delicensing, reduced public-sector reservation, FDI liberalisation and MRTP relaxation.

Facing a severe balance-of-payments crisis in 1991, the Government of India announced a New Industrial Policy that marked a decisive break from the earlier, tightly regulated industrial framework. Its principal features were as follows. First, industrial licensing — under which private firms had needed prior government permission to set up or expand almost any industrial unit — was abolished for all industries except a short list retained on strategic, security, environmental or safety grounds, ending the long-standing 'licence-permit' regime. Second, the list of industries reserved exclusively for the public sector was drastically cut down from the earlier extensive Schedule-A style list to a small number of strategic sectors, opening most industries to private and even foreign participation. Third, Foreign Direct Investment rules were liberalised, with automatic government approval permitted for foreign equity participation up to specified limits in a wide range of industries, actively inviting foreign capital and technology rather than restricting it as earlier policy had done. Fourth, the Monopolies and Restrictive Trade Practices Act's requirement that large ('MRTP') companies obtain prior government approval before expanding or setting up new undertakings was relaxed, so that firm size alone was no longer treated as automatically requiring government scrutiny. Alongside these four core measures, the government also began disinvesting part of its equity holding in select public-sector undertakings and granting them greater operational autonomy. Taken together, these reforms …

Students often name only 'liberalisation' vaguely without listing the four specific mechanisms (delicensing, reduced reservation, FDI liberalisation, MRTP relaxa …