A policy can only be effectively implemented and the objectives met if the government has the authority to take the necessary steps. The Industries (Development and Regulation) Act was passed in 1951 with this goal in mind. Until the advent of economic liberalisation in 1991, firm entry, growth, and expansion were governed by licensing administered by the Central Government under this Act.
The Industries (Development and Regulation) Act of 1951, as amended from time to time, is one of the most powerful tools in the government’s arsenal for regulating industrial development and controlling industrial activities.
Objectives
The main goal of the Act is to give the Central Government the tools it needs to carry out its Industrial Policy. As a result, the IDRA’s primary goal is to empower the government:
- To take the necessary steps for industry development.
- To control the pattern and trajectory of industrial development.
- Controlling the activities, performance, and outcomes of public-interest industrial undertakings.
Main Provisions
The IDR Act contains provisions to realise the above objectives. Some of the salient features of the Act are the following:
Development Measures: The Act authorizes the Central Government to form a Central Advisory Council composed of representatives of industrial undertaking owners, employees, consumers, primary suppliers, and others to advise the Central Government on matters pertaining to the development of the industries.
It also provides for the establishment of a Development Council for any scheduled industry or group of scheduled industries, comprised of members representing the interests of owners, employees, consumers, and others, as well as persons with special knowledge of matters relating to the technical or other aspects of the industries, for purposes such as recommending measures to improve the industries’ performance.
Regulation of Entry and Growth: The IDR Act gives the Central Government the authority to regulate the development of industries through licensing with appropriate exemptions as determined by the Government. As a result, the establishment of a new business or the expansion of an existing one may be subject to licensing requirements.
Supervision and Control: Under this Act, the Government may conduct a full and thorough investigation if it believes that — (a) there has been or is likely to be a substantial fall in the volume of output, or a marked deterioration in the quality of output, or an unjustifiable rise in the price of the output; or (b) Any industrial project is handled in a way that is seriously harmful to the public interest or the scheduled industry in question.
Takeover of Management: The Central Government’s control authority under the IDRA includes the ability to take over management of an industrial undertaking that fails to comply with any of the above-mentioned directions. The government can also take over the management of a company that is being run in a way that is highly detrimental to the scheduled industry or the public interest.
Furthermore, with the permission of the High Court, the Central Government can take over the management of an industrial undertaking owned by a company in liquidation if the Government believes that running or restarting the operations of such an undertaking is necessary for maintaining or increasing production, supply, or distribution in the public interest. In the case of an industrial undertaking whose management has been taken over by the government, the IDRA authorizes the government to take appropriate steps to liquidate or reconstruct the company in the public interest.
Price and Distribution Controls: The Act empowers the Central Government to control the supply, distribution, and price of any article or class of articles related to any scheduled industry in order to ensure equitable distribution and availability at fair prices.
Exemptions: In certain cases, the Central Government may exempt any industrial undertaking or class of industrial undertakings, or any scheduled industry or class of scheduled industries, from all or any of the provisions of the Act in the public interest.