Pn 1991

CHAPTER - I EXHIBIT NO.6(Contd.) POLICY MEASURES FOR PROMOTING & STRENGTHENING SMALL, TINY AND VILLAGE ENTERPRISES, AUGUST 6, 1991

the financial liability of the new and non-active partners/entrepreneurs to the capital invested. 3.4 A beginning has been made towards solving the problem of delayed payments of ‘factoring’ services through Small Industries Development Bank of India (SIDBI). Network of such services would be set up throughout the country and operated through commercial banks. A suitable legislation will be introduced to ensure prompt payment of Small Industries’ bills. 4. INFRASTRUCTURAL FACILITIES 4.1 To facilitate location of industries in rural/ backward areas and to promote stronger linkages between agriculture and industry, a new Scheme of Integrated Infrastructural Development (including Technological Back-up Services) for Small Scale Industries would be implemented with the active participation of State Governments and financial institutions. A beginning in this direction will be made this year itself. 4.2 A Technology Development Cell (TDC) would be set up in the Small Industries Development Organisation (SIDO) which would provide technology inputs to improve productivity and competitiveness of the products of the small scale sector. The TDC would coordinate the activities of the Tool Rooms, Process-cum-Product Development Centres (PPDCs), existing as well as to be established under SIDO, and would also interact with the other industrial research and development organisations to achieve its objectives. 4.3 Adequacy and equitable distribution of indigenous and imported raw materials would be ensured to the small scale sector, particularly the tiny sub-sector. Policies would be so designed that they do not militate against entry of new units. Based on the capacity needs, Tiny/Small Scale units would be given priority in allocation of indigenous raw materials. 4.4 A proper and adequate arrangement for delivery of total package of incentives and services at the District level will be evolved and implemented.

5. MARKETING AND EXPORTS 5.1 In spite of the vast domestic market, marketing remains a problem area for small and tiny enterprises. Mass consumption labour intensive products are predominantly being marketed by the organised sector. The tiny/ small scale sector will be enabled to have a significant share of such markets. In addition to the existing support mechanism, market promotion would be undertaken through co-operative/public sector institutions, other specialised/professional marketing agencies and consortia approach, backed up by such incentives, as considered necessary. 5.2 National Small Industries Corporation (NSIC) would concentrate on marketing of mass consumption items under common brand name and organic links between NSIC and SSIDCs would be established. 5.3 Government recognises the need to widen and deepen complementarity in production programmes of large/medium and small industrial sectors. Parts, components, sub-assemblies, etc. required by large public/ private sector undertakings would be encouraged for production in a technoeconomically viable manner through small scale ancillary units. Industry associations would be encouraged to establish sub-contracting exchanges, in addition to strengthening the existing ones under the SIDO. Emphasis would also be laid on promotion of a viable and competitive ‘component’ market. 5.4 Though the Small Scale Sector is making significant contribution to total exports, both direct and indirect, a large potential remains untapped. The SIDO has been recognised as the nodal agency to support the small scale industries in export promotion. An Export Development Centre would be set up in SIDO to serve the small scale industries through its network of field offices to further augment export activities of this sector. 6.

MODERNISATION, TECHNOLOGI-CAL AND QUALITY UPGRADATION

6.1 A greater degree of awareness to produce goods and services conforming to national and international standards would be created among the small scale sector.

19

Industrial Policy Highlights

20

EXHIBIT NO.6(Contd.) POLICY MEASURES FOR PROMOTING & STRENGTHENING SMALL, TINY AND VILLAGE ENTERPRISES, AUGUST 6, 1991

6.2 Industry Associations would be encouraged and supported to establish quality counselling and common testing facilities. Technology Information Centres to provide updated knowledge on technology and markets would be established. 6.3 Where non-conformity with quality and standards involves risk to human life and public health, compulsory quality control would be enforced. 6.4 A reoriented programme of modernisation and technological upgradation aimed at improving productivity, efficiency and cost effectiveness in the small scale sector would be pursued. Specific industries in large concentrations/clusters would be identified for studies in conjunction with SIDBI and other banks. Such studies will establish commercial viability of modernisation prescriptions, and financial support would be provided for mo-dernisation of these industries on a priority basis.

7.4 Additional employment opportunities would be generated through training of multidisciplinary ‘barefoot’ managers to suit the special requirements of the small scale sector. 8. SIMPLIFICATION OF RULES AND PROCEDURES 8.1 The persistent complaint of small scale units of being subjected to a large number of Acts and Laws, being required to maintain a number of registers and submit returns, and face an army of inspectors, would be attended to within a specified time frame of three months. 8.2 Procedures would be simplified, bureaucratic controls effectively reduced, unnecessary interference eliminated and paper work cut down to the minimum to enable the entrepreneurs to concentrate on production and marketing functions. B.

6.5 Indian Institutes of Technology (IITs) and selected Regional/ other Engineering Colleges will serve as Technological Information, Design and Development Centres in their respective command areas. 7.

PROMOTION OF ENTREPRENEURSHIP

7.1 Government will continue to support first generation entrepreneurs through training and will support their efforts. Large number of EDP trainers and motivators will be trained to significantly expand the Entrepreneurship Development Programmes (EDP). Industry Associations would also be encouraged to participate in this venture effectively. 7.2 EDP would be build into the curricula of vocational and other degree level courses. 7.3 Women entrepreneurs will receive support through special training programmes. Definition of “Women Enterprises” would be simplified. The present stipulation regarding employment of majority of women workers would be dispensed with and the units in which women entrepreneurs have a majority shareholding and management control, would be defined as “Women Enterprises”.

VILLAGE INDUSTRIES

9. HANDLOOM SECTOR 9.1 Handloom sector contributes about 30 per cent of the total textile production in the country. It is the policy of Government to promote handlooms to sustain employment in rural areas and to improve the quality of life for handloom weavers. 9.2 Schemes for the handloom sector will be redesigned keeping in mind the local and regional needs. Constraints of coverage will be removed so as to include bulk of the weavers who are outside the corporate/ cooperative fold. 9.3 Existing schemes will be redrawn and suitably revised under three major heads : (a) Project Package Scheme : Under this scheme, area-based projects for product development, upgradation of technology, improvement of marketing facilities will be drawn up. (b) Welfare Package Scheme : Number of welfare schemes and quantum of funds earmarked for them will be substantially augmented.

21

CHAPTER - I EXHIBIT NO.6(Contd.) POLICY MEASURES FOR PROMOTING & STRENGTHENING SMALL, TINY AND VILLAGE ENTERPRISES, AUGUST 6, 1991

(c) Organisation Development Package : Schemes for participation in the share capital will be redrawn under organisational development scheme for imparting a better management system in the existing state agencies. 9.4 Janta cloth scheme which sustains weavers often on a minimum level of livelihood will be phased out by the terminal year of the VIII Plan and replaced by the omnibus project package scheme under which substantial funds will be provided for modernisation of looms, training, provision of better designs, provision of better dyes and chemicals and marketing assistance. 9.5 A vastly expanded role for the National Handloom Development Corporation (NHDC) is envisaged. NHDC would be the nodal agency for increasing the supply of hank yarn and of dyes and chemicals. Spinning capacity in the cooperative sector will be increased. National Co-operative Development Corporation will provide more assistance for this in the form of Seed Money, both for cotton growers, spinning mills and weavers, spinning mills. 9.6 For improving marketing of handloom products, a more intensive implementation of schemes for design and product improvement by national level publicity, exhibitions, and design exercise will be undertaken. A special scheme will be drawn up to graduate the handloom production, which is often of low value items, to high value products suitable for export markets. This will be done by better design inputs, upgradation of technology, diversion of weavers from cotton to silk and tassar weaving. Special projects for modernisation of looms for products suitable for export markets will be drawn up. 10. HANDICRAFTS SECTOR 10.1 The key areas in handicrafts that could contribute towards a faster pace of rural industrialisation are production and marketing. Schemes for training and design development and for production and marketing assistance will be given encouragement.

10.2 Considering the importance of this sector from the point of view of employment and exports, it is proposed to provide an integrated development thrust to this sector with a view to enlarging the production base, thus enhancing the opportunities for employment and income through crafts as an economic activity and to giving it necessary inputs for quality improvement and effective marketing support both internal and overseas. Efforts will be made not only to preserve the traditional richness of the crafts but to engage the hereditary skills of the craftspersons to suit modern requirements. 10.3 Emphasis will be given to the following :-

Extension of services like supply of raw materials, design and technical guidance, market support, training and procuring of related materials/ inputs in an integrated and area-based manner through the setting up of craft development centres in identified clusters of villages.

-

Market development support in the form of a package of assistance through expansion of marketing infrastructure, exhibitions, publicity, etc., through Central and State Handicrafts Corporations, voluntary organisations and support to direct marketing activity by craftspersons.

-

Expansion of training activities by greater involvement of State Handicrafts Development Corporations, Co-operatives and voluntary organisations.

-

Measures to sustain an increased exports of handicrafts through new marketing channels like trading companies, departmental stores, etc.

11. OTHER VILLAGE INDUSTRIES 11.1 Government recognise the need to enhance the spread of rural and cottage industries towards stepping up non-farm employment opportunities. 11.2 The activities of the Khadi and Village Industries Commission and the State Khadi and Village Industries Boards will be expanded and organisations strengthened to discharge their responsibilities more effectively.

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EXHIBIT NO.6(Contd.) POLICY MEASURES FOR PROMOTING & STRENGTHENING SMALL, TINY AND VILLAGE ENTERPRISES, AUGUST 6, 1991

11.3 There will be greater emphasis on improving the quality and marketability of the products pari passu with consumer preferences instead of merely depending on rebates and subsidies. 11.4 While the plan allocation for rural industries will be augmented, effective steps will also be taken to ensure better flow of credit from the financial institutions and a more coordinated and optimal utilisation of different development schemes and agencies operating in the rural sector. Bankability of projects undertaken in this sector would be stressed. 11.5 The programmes of intensive development of KVI through area approach with tie-up with DRDA, TRYSEM and ongoing developmental programmes relating to weaker sections like Scheduled Castes, Scheduled Tribes and Women would be extended throughout the country. 11.6 The traditional village industries would be given greater thrust. Involvement of traditional

and reputed voluntary organisations will be encouraged. 11.7 Agro processing and food processing industries in KVI sector using appropriate technologies would be promoted with a view to utilise locally available agricultural produce and promote employment/ resource generation in the countryside. 11.8 Functional industrial estates would be established in areas with concentration of agricultural/ horticultural produce. 11.9 R & D in KVI sector would be strengthened through greater linkages with CSIR and other research institutions in the areas of production, finishing/packaging, processes and devel-opment of new tools and implements. 11.10 The training programmes would be upgraded and augmented to cover the expanded list of industries under the purview of the KVIC.

Source : Government of India, Ministry of Industry, Department of Small Scale Industry, Agro and Rural Industry.

23

CHAPTER - I EXHIBIT NO.7 PRESS NOTE NO. 9(1991 Series) CHANGESINPROCEDURESFORINDUSTRIALLICENSING

1. Government tabled a Statement on Industrial Policy in both Houses of Parliament on July 24, 1991. The Statement has substantially reduced the requirement for various types of industrial approvals. To implement this Policy Statement in respect of industrial licensing, Notification No. 477(E) dated 25.7.1991 has been issued under the Industries (Development and Regulation) Act, 1951.

A.

(i) The proposed article(s) of manufacture is not included in Annex I, II or is not reserved for small scale/ancillary sector.

2. Under this notification, industrial undertakings have been exempted from the operation of Sections 10, 11, 11(a) and 13 of the I(D&R) Act, 1951 subject to fulfilment of certain conditions. Section 10 refers to the requirement of registration of existing industrial units. Section 11 refers to the requirement of licensing of new industrial undertakings. Section 11(a) deals with licences for the production of new articles. Section 13 refers, inter alia to the requirement of licensing for effecting substantial expansion. 3.

(ii) The proposed project is not located within 25 kms. from the periphery of the standard urban area limits of a city having a population of more than 10 lakhs according to the 1991 Census. (List enclosed). This condition, however, will not apply to electronics, computer software, printing industry and other non-polluting industries that may be notified from time to time. This condition will also not apply to other industries provided these are located within the areas designated as ‘industrial areas’ by the State Government(s) before July 25, 1991. All other units wishing to locate within restricted locations will require an industrial licence.

The notification has three Schedules:

Schedule I

lists the industries reserved for public sector. (Annex I to this Press Note).

Schedule II

is the list of industries which are subject to compulsory licensing. This list is in the Indian Trade Classification (Harmonised System). (Annex II to this Press Note).

Schedule III

Notwithstanding the above, the location of industrial projects will be subject to Central or State environmental laws or regulations including local zoning and land use laws and regulations.

is the list of articles reserved for the small scale/ancillary sector and remains the same as before. (Not annexed).

This Press Note sets out the changes in the existing system and procedures for industrial approvals arising out of the aforesaid Notification. EXEMPTION FROM INDUSTRIAL LICENSING 4. Licensing is abolished for all industrial undertakings including MRTP/FERA com-panies, and small scale and ancillary industries (i.e. undertakings with investment less than Rs. 60 lakh and Rs. 75 lakh respectively as defined in this Ministry’s Notification No. SO 232 (E) dated 2.4.1991). The following conditions will govern this exemption from licensing.

Licensing is exempted for industrial undertakings (including MRTP/FERA companies) other than those in the small scale/ ancillary sector, if

B.

Small scale and ancillary undertakings are exempted from licensing for all articles of manufacture which are not covered by Annex I and Annex II. In addition they are also exempted from industrial licensing for the articles of manufacture exclusively reserved for small scale/ancillary sector even if they happen to be included in Annex II. Small scale/ancillary units are, as before, exempt from locational conditions subject to the provisions of any Central or State environmental law or regulations including zoning and land use laws and regulations.

Industrial Policy Highlights

24 EXHIBIT NO.7(Contd.) PRESS NOTE NO. 9(1991 Series) CHANGES IN PROCEDURES FOR INDUSTRIAL LICENSING

C. Substantial Expansion Substantial expansion of existing units will also be exempt from licensing provided the item of manufacture is not covered by Annex I, Annex II or is reserved for the small scale/ ancillary sector. However substantial expansions will be subject to the locational conditions set out in para 4(A) above. D. Broad Banding/Manufacture of New Article Existing units will be permitted to manufacture any new article without additional investment if the article is not otherwise subjected to compulsory licensing. This facility would be available notwithstanding any locational conditions. It is clarified that this is an additional facility to existing units. Under the provisions of exemption from licensing for substantial expansion described above in para 4(C), existing units can in any case manufacture any new article not covered by compulsory licensing or locational conditions. 5.

ABOLITION OF REGISTRATION SCHEMES

EXISTING

In consequence of the new Industrial Policy, existing schemes of registration namely, the Delicenced Industries Registration Scheme (DLR), Exempted Industries Registration Scheme (EIR), and registration with DGTD and other technical authorities, namely, the Textile Commissioner and the Development Commissioner for Iron and Steel, have been abolished. 6.

FILING OF MEMORANDA

In respect of new projects for manufacture of articles not covered by compulsory licensing or their substantial expansions the only requirement would be that the industrial undertaking shall file a memorandum in prescribed form to the Secretariat for Industrial Approvals (SIA) in the Ministry of Industry. Such a memorandum will also have to be filed by those industrial undertakings to be engaged in non-scheduled industries i.e. those not covered under the I(D&R) Act. The memorandum will be accompanied by a crossed demand draft for Rs. 1000/- in favour of the Pay and Accounts Officer, Department of Industrial Development, Ministry of

Industry, payable at State Bank of India, Nirman Bhawan, New Delhi - 110 011. The receipt of the memorandum will be acknowledged by the SIA and a reference number will be given. Industrial undertakings should quote this reference number in all future correspondence, if any, with the SIA. The industrial undertakings shall also file another memorandum in prescribed form with the SIA at the time of commencement of commercial production. No payment will accompany this memorandum. Small scale and ancillary units are not required to file the above memoranda with the SIA. Such units may continue to get themselves registered with the Director of Industries of the concerned State Government. 7.

NEW CLASSIFICATION SYSTEM

Industries under compulsory licensing have been notified in the Indian Trade Classification System. Entrepreneurs may note that the description of article(s) to be manufactured should be stated according to this classification in the application for industrial licences. Similarly, in the memoranda to be filed with the SIA in respect of articles not covered by industrial licensing, the description of the articles should be given according to the Indian Trade Classification (Based on Harmonised Commodity Description and Coding System), published by the Ministry of Commerce, Directorate General of Commercial Intelligence and Statistics, Calcutta. Copies of the Indian Trade Classification can be obtained on payment from the Controller of Publications, 1, Civil Lines, Delhi 110 054 or from any of the agents authorised to sell Government of India publications. 8. PHASED MANUFACTURING GRAMME (PMP)L

PRO-

The system of Phased Manufacturing Programme (PMP) will not be applicable to new projects. However, existing projects with such programmes will continue to be governed by them. 9.

CARRY ON BUSINESS (COB) LICENCES

Certain industries which were previously exempted from the licensing provisions of I(D&R) Act, 1951 have now been brought under compulsory

25

CHAPTER - I EXHIBIT NO.7(Contd.) PRESS NOTE NO. 9(1991 Series) CHANGES IN PROCEDURES FOR INDUSTRIAL LICENSING

licensing.It is clarified that such industrial undertakings which are already holding a valid registration granted to them prior to 25th July, 1991, by SIA or DGTD or any other technical authority need not apply for a COB licence. The registration will be regarded as valid authority for carrying on the business in respect of the article, quantity and location mentioned in the registration. However, for effecting substantial expansion of capacity or for manufacturing a new article covered by Annex II, at the same location, the industrial undertaking should apply for a licence under the I(D&R) Act. Small scale/ancillary industrial under-takings engaged in the manufacture of any item(s) covered under Annex II or item(s) reserved for small scale/ ancillary sector, on crossing the investment limits prescribed for them will be required to obtain a COB licence from the Government.LL

No.10/43/91-LP

10. PENDING APPLICATIONS Consequent on issue of Notification No. 477 (E) dated 25.7.1991, all pending applications for issue of Letters of Intent will be scrutinised by the SIA in the light of the notification. Those qualifying for exemption from licensing will not be processed further and the applicants would be advised to file memoranda as in para 6 above. A similar procedure would be followed in respect of applications for DLR, EIR and registrations with DGTD or other authority. 11. PENDING APPLICATIONS FOR CONVERSION OF LETTERS OF INTENT INTO INDUSTRIAL LICENCE In cases where the article of manufacture is not covered by compulsory licensing, pending applications for conversion of LOIs into ILs will not be processed further and SIA will advise the applicants to file a memorandum as in para 6 above before commencement of commercial production.

New Delhi, the 2nd August, 1991.

Sd/(L. Mansingh) Joint Secretary to the Government of India Forwarded to Press Information Bureau for wide publicity to the contents of the above Press Note. Principal Information Officer Press Information Bureau Shastri Bhawan, New Delhi.

Note: L

This has since been amended vide Press Note No.1(1994 Series)

LL This requirement has subsequently been withdrawn vide Press Note No.15 (1992

Series)

Industrial Policy Highlights

26 EXHIBIT NO.7(Contd.) PRESS NOTE NO. 9(1991 Series) CHANGES IN PROCEDURES FOR INDUSTRIAL LICENSING

ANNEX I PROPOSED LIST OF INDUSTRIES TO BE RESERVED FOR THE PUBLIC SECTORv 1.

Arms and ammunition and allied items of defence equipment, defence aircraft and warships.

2.

Atomic energy.

3.

Coal and lignite.

4.

Mineral oils.

5.

Mining of iron ore, manganese ore, chrome ore, gypsum, sulphur, gold and diamond.

6.

Mining of copper, lead, zinc, tin, molybdenum and wolfram.

7.

Minerals specified in the Schedule to the Atomic Energy (Control of Production and Use) Order, 1953.

8.

Railway transport.

Note:

L Items No. 5 and 6 have subsequently been deleted from this list, vide Press Note No.3 (1993 Series)

27

CHAPTER - I EXHIBIT NO.7(Contd.) PRESS NOTE NO. 9(1991 Series) CHANGES IN PROCEDURES FOR INDUSTRIAL LICENSING

ANNEX II LIST OF INDUSTRIES IN RESPECT OF WHICH INDUSTRIAL LICENSING IS COMPULSORY ( In ITC (HS) Classification ) Note 1. This list is based on the Indian Trade Classification, which follows the Harmonized Commodity Description and Coding System, Government of India, Ministry of Commerce, Directorate General of Commercial Intelligence and Statistics, Calcutta. The code specified for the item description relates to this classification. Note 2. Other items in respect of which industrial licensing is not exempted are : A.

For large and medium industries, The items reserved for the Small Scale Sector listed in Schedule III.

B.

For all industries, i)

All items of electronic aerospace and defence equipment, whether specifically mentioned or not, in this list.

ii)

All items related to the production or use of atomic energy including the carrying out of any process, preparatory or ancillary to such production or use, under the Atomic Energy Act, 1962.

Note 3. The authentic description will be treated as specified in the item description given below. 1.

2.

3.

Coal and Lignite. 27.01

Coal.

27.02

Lignite.

Petroleum (other than crude) and its distillation products. 27.10

Petroleum oils, other than crude.

27.11

Petroleum gases and other gaseous hydrocarbons.

27.12

Petroleum waxes and other similar products obtained through distillation of petroleum.

27.13

Petroleum coke and other residues of petroleum oils.

Distillation and brewing of alcoholic drinks. 22.03

Beer made from malt.

22.04

Wine of fresh grapes, including fortified wines.

22.05

Vermouth and other wine of fresh grapes flavoured with plants or aromatic substances.

22.06

Other fermented beverages (for example, cider, perry, mead).

22.08

Undenatured ethyl alcohol of an alcoholic strength by volume of less than 80% vol; spirits, liqueurs and other spirituous beverages; compound alcoholic preparations of a kind used for the manufacture of beverages.

Industrial Policy Highlights

28 EXHIBIT NO.7(Contd.) PRESS NOTE NO. 9(1991 Series) CHANGES IN PROCEDURES FOR INDUSTRIAL LICENSING

4.

Sugar. 170199.02 Cane sugar, refined. 170199.09 Other sugar, including centrifugal sugar.

5.

Animal fats and oils. 151610.00 Animal fats and oils, partly or wholly hydrogenated. 15.17 Edible mixtures or preparations of animal fats and oils. 151800.11 Inedible mixtures or preparations of animal fats and oils.

6.

Cigars and cigarettes of tobacco and manufactured tobacco substitutes. 24.02

7.

Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes.

Asbestos and asbestos-based products. 68.11

Articles of asbestos-cement, of cellulose fibre-cement or the like.

68.12

Fabricated asbestos fibres; mixtures with a basis of asbestos or with a basis of asbestos and magnesium carbonate; articles thereof.

681390.01

Asbestos friction materials.

8L. Plywood, decorative veneers, and other wood-based products such as particle board, medium density fibre board, and block board. 44.08

Veneer sheets, plywood and other wood sawn lengthwise of a thickness not exceeding 6 mm.

44.10

Particle board and other similar board of wood or other ligneous materials.

44.11

Fibre board of wood or other ligneous materials.

44.12

Plywood, veneered panels and similar laminated wood.

44.13

Densified wood, in blocks, plates, strips and other profile shapes.

9L. Raw hides and skins, leather, chamois leather and patent leather. 41.04

Leather of bovine or equine animals, without hair on, other than leather of heading No. 41.08 or 41.09.

41.05

Sheep or lamb skin leather, without wool on, other than leather of heading No. 41.08 or 41.09.

41.06

Goat or kid skin leather, without hair on, other than leather of heading No. 41.08 or 41.09.

41.07

Leather of other animals, without hair on, other than leather of heading No. 41.08 or 41.09.

41.08

Chamois (including combination chamois) leather.

41.09

Patent leather and patent laminated leather; and metallised leather.

10. Tanned or dressed furskins. 43.02

Tanned or dressed furskins.

11L Motor cars. 87.03

Motor cars.

Note: L This has subsequently been modified vide Press Note No.3 (1992 Series)

CHAPTER - I EXHIBIT NO.7(Contd.) PRESS NOTE NO. 9(1991 Series) CHANGES IN PROCEDURES FOR INDUSTRIAL LICENSING

12. Paper and Newsprint except bagasse-based units(i.e. except units based on minimum 75% pulp from agricultural residues, bagasse and other non-conventional raw materials). 47.01

Mechanical wood pulp.

47.02

Chemical wood pulp, dissolving grades.

47.03

Chemical wood pulp, soda or sulphate, other than dissolving grades.

47.04

Chemical wood pulp, sulphite, other than dissolving grades.

47.05

Semi-chemical wood pulp.

48.01

Newsprint, in rolls or sheets.

48.02

Uncoated paper of a kind used for writing, printing or other graphic purposes, in rolls or sheets.

48.03

Paper of a kind used for household or sanitary purposes, in rolls or sheets.

48.04

Uncoated kraft paper, in rolls or sheets.

48.05

Other uncoated paper, in rolls or sheets.

48.06

Vegetable parchment, greaseproof papers, tracing papers and the like, in rolls or sheets.

48.07

Composite paper, in rolls or sheets.

48.08

Paper, corrugated, creped, crinkled, embossed or perforated, in rolls or sheets.

48.09

Carbon paper, self-copy paper and other copying or transfer papers, in rolls or sheets.

48.10

Paper, coated with Kaolin or other inorganic substances, in rolls or sheets.

48.11

Other coated or impregnated paper, in rolls or sheets.

48.12

Filter blocks, slabs and plates, of paper pulp.

48.13

Cigarette paper.

13. Electronic aerospace and defence equipment: all types. 87.10

Tanks and other armoured fighting vehicles.

88.01 to 88.05

Defence aircraft, spacecraft, and parts thereof.

8906.01 Warships - all kinds. 93.01 to 93.07

Arms and ammunition; parts and accessories thereof.

14. Industrial explosives, including detonating fuses, safety fuses, gun powder, nitrocellulose and matches. 36.01 to 36.06

Explosives; pyrotechnic products; matches; pyrophoric alloys; certain combustible preparations.

29

Industrial Policy Highlights

30 EXHIBIT NO.7(Contd.) PRESS NOTE NO. 9(1991 Series) CHANGES IN PROCEDURES FOR INDUSTRIAL LICENSING

15. Hazardous chemicals. 22.07L Undenatured ethyl alcohol of an alcoholic strength by volume of 80% vol or higher, ethyl alcohol and other spirits, denatured, of any strength (Industrial alcohol). 280110.00 Chlorine. 281119.01 Hydrocyanic acid and its derivatives. 281210.01 Phosgene and its derivatives. 2815.11

Sodium Hydroxide (Caustic soda): Solid.

2815.12

Sodium Hydroxide (Caustic soda): In aqueous solution.

290121.00 Ethylene. 290122.00 Propene (propylene). 290124.01 Butadienes. 290220.00 Benzene. 290230.00 Toluene. 290241.00 O-xylene. 290242.00 M-xylene. 290243.00 P-xylene. 290244.00 Mixed xylene isomers. 290531.00 Ethylene glycol (ethanediol)/ethylene oxide. 29.05v Industrial alcohol. 292229.02 Meta amino phenol. 292910.09 Isocyanates and diisocyanates of hydrocarbon, not elsewhere specified (example, Methyl isocyanate). 380810.02 Aluminium Phosphide. 380810.16 Dimethoate. 380810.21 Quinalphos. 380810.29 Carbaryl, Phorate and Fenitrophion. 390110.00 Polyethylene having a specific gravity of less than 0.94. 16. Drugs and Pharmaceuticals. (According to Drug Policy).

Note:

29.36

Provitamins and vitamins, natural or reproduced by synthesis (including natural concentrates), derivatives thereof used primarily as vitamins, and inter-mixtures of the foregoing. (Subject to the Drug Policy).

29.37

Hormones, natural or reproduced by synthesis; derivatives thereof, used primarily as hormones; other steroids used primarily as hormones. (Subject to the Drug Policy).

29.38

Glycosides, natural or reproduced by synthesis, and their salts, ethers, esters and other derivatives. (Subject to the Drug Policy).

29.39

Vegetable alkaloids, natural or reproduced by synthesis, and their salts, ethers, esters and other derivatives. (Subject to the Drug Policy).

L These items have been subsequently deleted vide Press Note No.2 (1992 Series).

CHAPTER - I EXHIBIT NO.7(Contd.) PRESS NOTE NO. 9(1991 Series) CHANGES IN PROCEDURES FOR INDUSTRIAL LICENSING

29.41

Antibiotics. (Subject to the Drug Policy).

29.42

Other synthetic drugs, not elsewhere specified or included. (Subject to the Drug Policy).

30.01 to 30.06

Pharmaceutical products. (Subject to the Drug Policy).

17. Entertainment electronics (VCRs, colour TVs, CD players, tape recorders). 85.19 852031.00 8520.39 85.21

Compact disc players. Tape recorders, cassette-type. Tape recorders, other than cassette-type. Video recording or reproducing apparatus.

8528.10L Colour television receivers. 18LL White goods (domestic refrigerators, domestic dishwashing machines, programmable domestic washing machines, microwave ovens, airconditioners). 84.15

Air conditioning machines.

84.18

Refrigerators and other freezing equipment, of the household type.

842211.00 84.50 851650.00

Dishwashing machines, of the household type. Household washing machines, of the programmable type. Microwave ovens.

Note: LL Subsequent changes in these items are notified vide press Note No.4 (1993 Series) L Subsequently denoted by 8 digit ITC Code, namely 852810.10 vide Press Note No.11

(1992 Series)

31

Industrial Policy Highlights

32 EXHIBIT NO.7(Contd.) PRESS NOTE NO. 9(1991 Series) CHANGES IN PROCEDURES FOR INDUSTRIAL LICENSING

List of cities with the population of 10 lakhs and above according to the provisional results of the 1991 Census Sl. No.

Name of the cities

Provisional population according to the 1991 Census

1.

Greater Bombay U.A.

12,571,720

2.

Calcutta U.A.

10,916,272

3.

Delhi U.A.

8,375,188

4.

Madras U.A.

5,361,468

5.

Hyderabad U.A.

4,280,261

6.

Bangalore U.A.

4,086,548

7.

Ahmedabad U.A.

3,297,655

8.

Pune U.A.

2,485,014

9.

Kanpur U.A.

2,111,284

10. Nagpur U.A.

1,661,409

11. Lucknow U.A.

1,642,134

12. Surat U.A.

1,517,076

13. Jaipur U.A.

1,514,425

14. Kochi U.A.

1,139,543

15. Coimbatore U.A.

1,135,549

16. Vadodara U.A.

1,115,265

17. Indore U.A.

1,104,065

18. Patna U.A.

1,098,572

19. Madurai U.A.

1,093,702

20. Bhopal M.C.

1,063,662

21. Vishakapatnam U.A.

1,051,918

22. Varanasi U.A.

1,026,467

23. Ludhiana M. Corpn.

1,012,062

CHAPTER - I EXHIBIT NO.8 PRESS NOTE NO. 10(1991 Series) PROCEDURES IN RESPECT OF FOREIGN TECHNOLOGY AGREEMENTSL

1. Government tabled a Statement on Industrial Policy in both the Houses of Parliament on July 24, 1991. The Statement has substantially liberalised the provisions and simplified the procedures governing Foreign Technology Agreements. 2. The relevant portion of the Statement dealing with Foreign Technology Agreements is as follows “39 C. FOREIGN TECHNOLOGY v AGREEMENTS i)

Automatic permission will be given for foreign technology agreements in high priority industries (Annex III)* upto a lumpsum payment of Rs. 1 crore, 5% royalty for domestic sales and 8% for exports, subject to total payments of 8% of sales over a 10 year period from date of agreement or 7 years from commencement of production. The prescribed royalty rates are net of taxes and will be calculated according to standard procedures.

ii)

In respect of industries other than those in Annex.IIIvv, automatic permi-ssion will be given subject to the same guidelines as above if no free foreign exchange is required for any payments.

iii)

All other proposals will need specific approval under the general procedures in force.

iv)

No permission will be necessary for hiring of foreign technicians, foreign testing of indigenously developed technologies. Payment may be made from blanket permits or free foreign exchange according to RBI guidelines.”

This Press Note sets out the procedures for approval of foreign technology agreements, hiring of foreign technicians and foreign testing of indigenously developed technologies.

3. FOREIGN TECHNOLOGY AGREEMENTS (a) Automatic Approvals: Applications for automatic approvals under para 39-C(i) will be filed in the prescribed form (10 copies) with the Entrepreneurial Assistance Unit of the Secretariat for Industrial Approvals (SIA) in the Department of Industrial Development, Ministry of Industry, Udyog Bhawan, New Delhi-110 011. The application shall state clearly the description of the article to be manufactured in the Indian Trade Classification System. The payment terms must comply with the conditions laid down in the said para. On receipt of the application, SIA will communicate approval after confirming that the item is covered by Annex III. No other scrutiny of the application will be done. A copy of the approval will be sent to the Reserve Bank of India (RBI). After the SIA approval, the entrepreneurs may approach the authorised dealers for foreign exchange release along with a copy of the agreement with the foreign collaborator. Intimation will be given by the entrepreneurs to RBI in a proforma to be prescribed by RBI. The entrepreneur shall furnish such other information as may be prescribed by RBI from time to time. RBI will issue necessary instructions to all concerned and delegate powers to authorised dealers to release the foreign exchange required. With regard to the provision contained in para 39-C(ii), for foreign technology agreements in industries other than those in Annex III the same procedure as indicated above would apply. However, in respect of these proposals (covered by para 39C(ii)), no free foreign exchange will be released towards lumpsum payment or royalty. The payments involved may be met through EXIM SCRIPSvvv. The Ministry of Commerce is issuing a Public Notice authorising the use of EXIM SCRIPS for this purpose. For purposes of calculating the payments prescribed under paras 39-C(i) and (ii), the lumpsum and royalty payments will be net of taxes.

Note: L Subsequently amended vide Press Notes No. 10(1991 Series), 4 (1992 Series) & 12(1992 Series) LL Attached to Press Note No.10(1992 Series) LLL Since amended vide Press Note No.12 (1992 Series)

33

Industrial Policy Highlights

34

EXHIBIT NO.8(Contd.) PRESS NOTE NO. 10(1991 Series) PROCEDURES IN RESPECT OF FOREIGN TECHNOLOGY AGREEMENTS❖

(b) Other Approvals: Proposals which are not covered by paras 39-C(i) and (ii) of the Statement on Industrial Policy will be dealt with according to the general procedure in force. Applications may be filed in the prescribed form (10 copies) with the Entrepreneurial Assistance Unit of the Secretariat for Industrial Approvals (SIA) in the Department of Industrial Development, Ministry of Industry, Udyog Bhawan, New Delhi - 110011.

(b) Where the payment to the foreign technician does not exceed US $ 500 per day, regardless or whether the local costs on board and lodging and other items are met by the Indian Company or not.

(c) Pending Applications: Pending applications for foreign technology agreements will be dealt with by the SIA in accordance with the new guidelines/ procedures contained in this Press Note.

5. FOREIGN TESTING OF INDIGENOUS RAW MATERIALS AND PRODUCTS AND INDIGEN-OUSLY DEVELOPED TECHNOLOGY

4. HIRING OF FOREIGN TECHNICIANS

Full powers are being delegated by Government to RBI to authorise payments in such cases either against blanket permits or in free foreign exchange. RBI will issue necessary instructions in this regard, including delegation to the authorised dealers.

Henceforth no permission is necessary for hiring of foreign technicians and no applications need be made to Government for this purpose irrespective of whether the hiring of foreign technicians is under an approved collaboration agreement or not. As regards release of foreign exchange, full powers are being delegated by the Government to RBI to authorise payments either against blanket permits or in free foreign exchange. RBI will in turn delegate its existing powers to the authorised dealers to release payments in free foreign exchange and against blanket permits. Release of foreign exchange by authorised dealers under the blanket permit would not be subject to any restrictions on per diem rates and duration of engagement, etc. For release of foreign exchange other than under blanket permits, the existing guidelines followed by the RBI, as shown below, would continue and would be delegated to authorised dealers: (a) Where the duration of the engagement of foreign technicians does not exceed 12 months by a company in a year, with no single technician exceeding 3 months.

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(c) Where in the case of company to company payment, the payment by the Indian company to the foreign company does not exceed US $ 50,000 in a year.

6. NEW CLASSIFICATION SYSTEM Entrepreneurs may note that the description of article(s) to be manufactured should be stated according to the Indian Trade Classification system. This applies both to the applications to be filed under the provision of para 3 and para 6. The description of industries covered by Annex III of the Statement on Industrial Policy in the Indian Trade Classification (Harmonised System) is attached to this Press Note. Copies of the Indian Trade Classification (Based on Harmonised Commodity Description and Coding System), published by the Ministry of Commerce, Directorate General of Commercial Intelligence and Statistics, Calcutta, can be obtained on payment from the Controller of Publications, 1, Civil Lines, Delhi - 110 054 or from any of the agents authorised to sell Government of India publications.

New Delhi, the 14th August, 1991.

The Press Information Bureau is requested to give wide publicity to this Press Note. Sd/(L. Mansingh) Joint Secretary to the Government of India Principal Information Officer, Press Information Bureau, Shastri Bhawan, New Delhi.

35

CHAPTER - I EXHIBIT NO. 9 PRESS NOTE NO. 11 (1991 Series) CHANGES IN PROCEDURES FOR FOREIGN INVESTMENT APPROVALS

1. Government tabled a Statement on Industrial Policy in both the Houses of Parliament on July 24, 1991. The Statement has substantially liberalised the provisions and simplified the procedures governing foreign investment proposals. 2. The relevant portion of the Statement dealing with foreign investment is contained in para 39 B. According to the Statement approvals will be given for investment upto 51% foreign equity in high priority industries [Annex III of the Policy Statement]L. These approvals will be available if the foreign equity covers the foreign exchange requirement for import of capital goods. The import of components, raw materials and intermediate goods and payment of know-how fees and royalties will be governed by the general policy applicable to other domestic units. Payment of dividends will be monitored through the Reserve Bank of India so as to ensure that outflows on account of dividend payments are balanced by export earnings over a period of time. Other foreign equity proposals including proposals involving 51% equity but which do not meet any or all of the criteria mentioned above, will continue to require clearance.

proposed foreign equity must cover the import of capital goods required for the project. The Reserve Bank of India will issue the necessary permission for the foreign equity investment under the Foreign Exchange Regulation Act, 1973 (FERA). This permission will include exemption from the operation of sections 26(7), 28, 29, and 31 of FERA. Simultaneously the Reserve Bank of India will confirm that the import of capital goods is covered by the foreign equity. Based on this confirmation the Chief Controller of Imports & Exports shall issue the relevant import licence for capital goods imports. Under the procedure outlined above the plant and machinery proposed to be imported must be new and not second hand. There will be no indigenous clearance of these capital goods. B.

Dividend BalancingLL

Para 39 B(ii) of the Policy Statement provides for the monitoring of outflow of foreign exchange on account of dividend payments which are to be balanced by export earnings over a period of time. This monitoring will be done by the Reserve Bank of India. The balancing will be done on the following basis: (i)

The condition of dividend balancing is required for all companies receiving approval for foreign equity upto 51% under the provisions of para 39 B(i) of the Policy Statement.

(ii)

The balancing of dividends would be over a period of 7 years from commencement of production. Balancing will not be required beyond this period.

Majority foreign equity holding upto 51% will also be allowed for trading companies primarily engaged in export activities. 3. APPROVALS FOR FOREIGN INVESTMENT UPTO 51% FOREIGN EQUITY IN HIGH PRIO-RITY INDUSTRIES(ANNEX III). A. Procedures for Approvals Applications for approval under the provisions in paras 39 B(i) and 39 B(ii) of the Statement on Industrial Policy will be filed with the Reserve Bank of India. The application shall state clearly the description of the article to be manufactured in ITC (HS classification). The proposal shall be a composite one including detailed information on the capital goods to be imported for the project. Under the provisions of the policy the

(iii) Remittance of dividends should be covered by earnings of the company from export of items in Annex III. The amount of dividend payment may be covered by export earnings of such items recorded in years prior to the payment of dividend or in the year of payment of dividend. The Reserve Bank of India will issue appropriate instructions to give effect to these provisions.

Note: L Annex.III list is attached to Press Note No.10 (1992 Series). LL Subsequently amended vide Press Note No. 12 (1992 Series).

Industrial Policy Highlights

36

EXHIBIT NO. 9 (Contd.) PRESS NOTE NO. 11 (1991 Series) CHANGES IN PROCEDURES FOR FOREIGN INVESTMENT APPROVALS

4. FOREIGN INVESTMENT IN TRADING COMPANIES Under the provisions of para 39 B(iv) foreign equity holdings upto 51% equity will be allowed in trading companies primarily engaged in export activities. Applications for foreign investment under this clause will be filed with the Reserve Bank of India in the form to be prescribed by the RBI. Such trading houses shall be at par with the domestic trading and export houses and shall operate in accordance with the Import Export Policy. 5. FOREIGN INVESTMENT IN HOTELS AND TOURISM RELATED INDUSTRY Foreign equity holdings upto 51% will also be permitted in hotels and tourism related industry. Applications will be filed with the Reserve Bank of India in the form to be prescribed by the RBI. 6. OTHER FOREIGN PROPOSALS

INVESTMENT

All other foreign investment proposals will be subject to the existing procedures. Applications will be made to the Secretariat of Industrial Approvals in the Department of Industrial Development in the prescribed form. These proposals will be considered according to usual procedures. This will include proposals involving 51% foreign equity which do not meet any or all of the criteria under paras 39 B(i) and (ii) of the Policy. Proposals of foreign investment, foreign technology agreements not

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covered by the automatic facility, and import of capital goods may, if desired, continue to be made on a composite basis. 7. FOREIGN TECHNOLOGY AGREEMENTS Under the provisions of the new policy foreign equity proposals need not necessarily be accompanied by foreign technology agreements. The procedure for foreign technology approvals have been outlined in Press Note No.10 (1991 Series). 8. NEW CLASSIFICATION SYSTEM Entrepreneurs may note that the description of article(s) to be manufactured should be stated according to the Indian Trade Classification (Harmonised System). This applies both to the applications to be filed under the provisions of para 3 and para 6 of this Press Note.L The description of industries covered by Annex III of the Statement on Industrial Policy in the Indian Trade Classification (Harmonised System) is attached to this Press Note.L Copies of the Indian Trade Classification (Based on Harmonised Commodity Description and Coding System), published by the Ministry of Commerce, Directorate General of Commercial Intelligence and Statistics, Calcutta, can be obtained on payment from the Controller of Publications, 1, Civil Lines, Delhi 110 054 or from any of the agents authorised to sell Government of India publications.

New Delhi, the 20th August, 1991.

The Press Information Bureau is requested to give wide publicity to this Press Note.

Sd/(L. Mansingh) Joint Secretary to the Government of India Principal Information Officer, Press Information Bureau, Shastri Bhawan, New Delhi. Note: L A list of Annex.III industries is appended to Press Note No.10 (1992 Series).

CHAPTER - I EXHIBIT NO.10 PRESS NOTE NO. 12 (1991 Series) PROCEDURES IN RESPECT OF FOREIGN TECHNOLOGY AGREEMENT

Amendment to Press Note No.10 (1991 Series) dated 14th August, 1991. 1. Government tabled a Statement on Industrial Policy in both the Houses of Parliament on July 24, 1991. The Statement has substantially liberalised the provisions and simplified the procedures governing Foreign Technology Agreements. 2. The relevant portion of the Statement dealing with Foreign Technology Agreements is as follows: “39C. FOREIGN TECHNOLOGY AGREEMENTS i)

Automatic permission will be given for foreign technology agreements in high priority industries (Annex III) upto a lumpsum payment of Rs. 1 crore, 5% royalty for domestic sales and 8% for exports, subject to total payments of 8% of sales over a 10 year period from date of agreement or 7 years from commencement of production. The prescribed royalty rates are net of taxes and will be calculated according to standard procedures. ii)

In respect of industries other than those in Annex III, automatic permission will be given subject to the same guidelines as above if no free foreign exchange is required for any payments.

iii)

All other proposals will need specific approval under the general procedures in force.

(iv) No permission will be necessary for hiring of foreign technicians, foreign testing of indigenously developed technologies. Payment may be made from blanket permits or free foreign exchange according to RBI guidelines." 3. Press Note No.10 (1991 Series) issued on 14th August, 1991 set out the procedures for approval of foreign technology agreements, hiring of foreign technicians and foreign testing of indigenous raw materials and products and indigenously developed technologies. In that Press Note, it has been stated

that applications for automatic approvals under paras 39 C(i) and C (ii) referred to above would be made to the Secretariat for Industrial Approvals in the Department of Industrial Development. In the interests of entrepreneurs, this procedure has now been modified as below. Procedures relating to other matters, however, remain the same as in Press Note No.10. 4. FOREIGN TECHNOLOGY AGREE-MENTS (a) Automatic Approvals under Para 39C (i) Applications for automatic approvals under para 39C(i) will be filed in the prescribed form (10 copies) with the Reserve Bank of India (RBI). The application shall state clearly the description of the article to be manufactured in the Indian Trade Classification System. The payment terms must comply with the conditions laid down in para 39 C(i). After RBI’s approval, the entrepreneur may approach the authorised dealer for foreign exchange release along with a copy of the agreement entered into with the foreign collaborator. The entrepreneur shall furnish such other information as may be prescribed by the RBI from time to time. RBI will issue necessary instructions to all concerned and delegate powers to authorised dealers to release the required foreign exchange. (b) Automatic Approvals under Para 39 C(ii) With regard to the provision contained in para 39C(ii) regarding foreign technology agreements in industries other than those in Annex III the same procedure as laid down above for approval under para 39C(i) would apply. However, in respect of these proposals, no free foreign exchange will be released towards lumpsum payment or royalty. The payments involved may be met through EXIM scrips. Ministry of Commerce is issuing a Public Notice authorising the use of EXIM scrips for this purpose. For purposes of calculating the payments prescribed under paras 39C(i) and (ii), the lumpsum and royalty payments will be net of taxes.

37

38

Industrial Policy Highlights EXHIBIT NO.10 (Contd.) PRESS NOTE NO. 12 (1991 Series) PROCEDURES IN RESPECT OF FOREIGN TECHNOLOGY AGREEMENT

5. OTHER CLARIFICATIONS (a) Extension of foreign technical colla-boration agreements. Extensions of foreign technical collaboration agreements will need the approval of the Government. For this purpose, the entrepreneurs will have to file an application in the prescribed form (10 copies) with the Entrepreneurial Assistance Unit of the SIA in the Department of Industrial Development.

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(b) Deputation of Indian technicians for training abroad. For deputing Indian personnel for training and other purposes abroad, the entrepreneurs may approach only the RBI. (c) Hiring of foreign technicians for more than three months. For hiring foreign technicians beyond a period of three months, clearance of the Ministry of Home Affairs will be required as before.

New Delhi, the 31st August, 1991.

The Press Information Bureau is requested to give wide publicity to this Press Note. Sd/(L. Mansingh) Joint Secretary to the Government of India Principal Information Officer, Press Information Bureau, Shastri Bhawan, New Delhi.

39

CHAPTER - I EXHIBIT NO.11 PRESS NOTE NO. 15L(1991 Series) THE JURISDICTION OF THE DEVELOPMENT COMMISSIONER, MADRAS EXPORT PROCESSING ZONE

100% Export Oriented Units set up in the Union Territory of Pondicherry will also fall within the jurisdiction of Development Commissioner, Madras Export Processing Zone in addition to the units set up in Tamilnadu, Andhra Pradesh, Andaman &

No.10(53)/91-LP

Nicobar Islands, as already mentioned in the Annex attached to the Press Note No. 14 (1991 series) dated 26th September, 1991 for the purpose of exercising delegated powers by DCs concerned, as specified in the above mentioned Press Note.

New Delhi, the 25th October, 1991

Forwarded to Press Information Bureau for wide publicity to the contents of the above Press Note.

Sd/(S.Bhavani) Deputy Secretary to the Government of India

Principal Information Officer, Press Information Bureau, Shastri Bhawan New Delhi Note: L Press Note No.13(1991 Series) has been superseded by Press Note No.3(1995 Series) Press Note No.14(1991 Series) has been superseded by Press Note No.4(1995 Series)

40

Industrial Policy Highlights EXHIBIT NO. 12 PRESS NOTE NO.16 (1991 Series) GUIDELINES FOR LICENSING OF SUGAR FACTORIES

A. The Government of India have reviewed the guidelines for licensing of new and expansion of existing sugar factories issued vide this Ministry’s Press Note No. 4 (1990 Series) dated 23.7.1990. In supersession of the aforesaid Press Note, Government have formulated the following revised guidelines: 1. New sugar factories will continue to be licensed for a minimum economic capacity of 2500 tonnes cane crush per day (TCD). There will not be any maximum limit on such capacity. However, in areas specified as industrially backward areas by the Government of India and certified by the Indian Council of Agricultural Research to be agro-climatically suited for development of sugarcane, licensing of new sugar factories in the co-operative and public sectors would be allowed for an initial capacity of 1750 TCD subject to the condition that the units would expand their capacity to 2500 TCD within a period of 5 years of going into production. 2. Licences for new sugar factories will be issued subject to the condition that the distance between the proposed new sugar factory and an existing/already licensed sugar factory should be 25 Kms. This distance criterion of 25 Kms. could, however, be relaxed to 15 Kms in special cases, where cane availability so justifies. 3.

The basic criterion for grant of licences for new sugar units would be their viability, mainly from the point of view of cane availability and potential for development of sugarcane.

4.

All new licences will be issued with the stipulation that cane price will be payable on the basis of sucrose content of sugarcane.

5.

Other things being equal, preference in licensing will be given to proposals from the co-operative sector and the public sector, in that order, as compared to the private sector. In case more

than one application is received from any zone of operation, priority will be given to the application received earlier. However, in such cases also, preference will be given to the co-operative sector, followed by the public sector and the private sector, in that order, even though the applications of the first two sectors may be of a later date. 6. Priority will continue to be given to sugar factories with capacity less than 2500 TCD to expand to the aforesaid minimum economic capacity. 7. While granting licences for new units and expansion projects, the additional capacity to be created upto the end of the Eighth Plan, i.e. 1996-97, will be kept in view. 8. While granting licences for new sugar factories, industrial licences in respect of down-stream units for the use of molasses i.e. industrial alcohol, etc. will be given readily. B. Applications for licences will be initially screened by the Screening Committee of the Ministry of Food. While considering such applications, the comments of the State Government/Union Territory Administration concerned would also be obtained. The State Government/Union Territory Administration would be required to furnish their comments within 3 months of the receipt of communication from the Ministry of Food. C. Applications for grant of industrial licences for the establishment of new sugar factories as well as expansion of existing units should be submitted directly to the Secretariat for Industrial Approvals in the Department of Industrial Development in Form IL alongwith the prescribed fee of Rs.2500. A copy of the application may also be sent to the Ministry of Food. D. The procedure and guidelines, as given above, are brought to the notice of the entrepre-neurs for their information and guidance.

No.10(74)/91-LP New Delhi, the 8th November 1991. Forwarded to Press Information Bureau for wide publicity to the contents of the above Press Note. Sd/(S.Bhavani) Deputy Secretary to the Government of India Principal Information Officer, Press Information Bureau, Shastri Bhawan, New Delhi.

41

CHAPTER - I EXHIBIT NO.13 PRESS NOTE NO.17 (1991 Series) PROCEDURES FOR INCREASE IN FOREIGN EQUITY TO 51% IN EXISTING COMPANIESL

1. Government tabled a Statement on Industrial Policy in both the Houses of Parliament on July 24, 1991. The statement has substantially liberalised the provisions and simplified the procedures governing foreign investment proposals. 2. The relevant portion of the Statement dealing with foreign investment is contained in para 39 B. According to the Statement approvals will be given for investment upto 51 per cent foreign equity in high priority industries [Annex III of the Policy Statement]. These approvals will be available if the foreign equity covers the foreign exchange requirement for import of capital goods. The import of components, raw materials and intermediate goods and payment of know-how fees and royalties will be governed by the general policy applicable to other domestic units. Payment of dividends will be monitored through the Reserve Bank of India so as to ensure that outflows on account of dividend payments are balanced by export earnings over a period of time. 3. Other foreign equity proposals including proposals involving 51 per cent equity but which do not meet any or all of the criteria mentioned above, will continue to require clearance. 4. The procedures for foreign equity investment in new companies have been announced in Press Note No.11 (1991 Series). 5. This Press Note states out the procedures to be followed for increase in foreign equity in existing companies which already have some foreign equity holdings. A. ELIGIBILITY CRITERIA FOR INCREASE IN FOREIGN EQUITY 6. The following categories of companies will receive automatic approval from the Reserve Bank of India for raising their foreign equity levels from existing levels upto 51 percent : (i)

Companies wishing to raise foreign equity as part of an expansion programme.

A company wishing to raise its foreign equity from existing levels to 51 per cent may do so as part Note:

of an expansion programme. The expansion programme must be in high priority industries shown in Annex III to the Statement on Industrial Policy. The additional equity should be part of the financing of the expansion programme and the money to be remitted should be in foreign exchange. The company itself need not be exclusively engaged in activities listed in Annex III; only the proposed expansion must be exclusively in the high priority industries shown in Annex III. (ii)

Companies wishing to raise level of foreign equity upto 51 per cent without an expansion programme.

A company exclusively engaged in high priority industries listed in Annex III can also raise its equity from existing levels to 51 per cent without an expansion programme. The increase in equity level must result from expansion of the equity base of the existing company. The additional foreign equity must be from remittance of foreign exchange. B. REQUIREMENT FOR PREFEREN-TIAL SHARE ALLOCATION 7. On receipt of RBI approval the company must pass a special resolution under Section 81 (1A) of the Companies Act proposing preferential allocation of the required volume of fresh equity to the foreign investor. In respect of the equity holdings of financial institutions in such companies, the Finance Ministry will separately advise the financial institutions that they may support such propo-sals provided, in their commercial judgement, they are in the interest of the company. C. ISSUE OF SHARES VALUATION

AND

SHARE

8. The CCI will allow preferential allocation of equity in favour of the foreign investor on the basis of the RBI approval for expansion of foreign equity and the adoption of the special resolution by the company. For such cases, the price of new equity will be fixed by the CCI on the basis of market prices, computed on the basis of the average price for the six months period preceding the date on

L These procedures have been subsequently revised vide Press Note No.13(1992 Series)

42

Industrial Policy Highlights EXHIBIT NO.13(Contd.) PRESS NOTE NO.17 (1991 Series) PROCEDURES FOR INCREASE IN FOREIGN EQUITY TO 51% IN EXISTING COMPANIES

which the application is received in the CCI, with a discount of upto 10 per cent if requested by the shareholders resolution. The market price will take into account any bonus issue which may have been declared in this period and adjust for the same. For companies undertaking such equity expansion disinvestment, if it occurs in future, will also be at market price computed on the same basis. D. PROCEDURES FOR APPROVALS 9. Applications for approval under the provisions in para 6 above will be filed with the Reserve Bank of India. In the case of expansion programme the application shall state clearly the description of the article to be manufactured in ITC (HS classification). The proposal shall be a composite one including detailed information on the capital goods to be imported for the project expansion programme. Under the provisions of the policy the proposed foreign equity must cover the import of capital goods required for the expansion programme. Similarly, in the case of companies not undertaking expansion programmes, the application shall describe the existing products of the company in ITC (HS classification). 10. The Reserve Bank of India will issue the necessary permission for the foreign equity investment under the Foreign Exchange Regulation Act, 1973 (FERA). This permission will include exemption from the operation of sections 26(7), 28, 29, and 31 of FERA. Simultaneously the Reserve Bank of India will confirm that the import of capital goods is covered by the foreign equity. Based on this confirmation the Chief Controller of Imports & Exports shall issue the relevant import licence for capital goods imports. 11. Under the procedure outlined above the plant and machinery proposed to be imported must be new and not second hand. There will be no indigenous clearance of these capital goods. E. DIVIDEND BALANCING 12. Para 39 B(ii) of the Policy Statement provides for the monitoring of outflow of foreign exchange on account of dividend payments which are to be balanced by export earnings over a period of time. This monitoring will be done by the Reserve Bank of India. The balancing will be done on the following basis:

(i)

The condition of dividend balancing is required for all companies receiving approval for foreign equity upto 51 per cent under the provisions outlined above in para 6.

(ii)

The balancing of dividend would be over a period of 7 years reckoned from the date of commencement of production for companies raising their level of foreign equity for an expansion programme. For companies which are raising their foreign equity levels without an expansion programme, this period will start from the date of allotment of the shares raising the level of foreign equity to the newly approved level.

(iii) Remittance of dividends should be covered by earnings of the company from export of items in Annex III. The amount of dividend payment may be covered by export earnings of such items recorded in years prior to the payment of dividend or in the year of payment of dividend. The Reserve Bank of India will issue appropriate instructions to give effect to these provisions. F. OTHER PROPOSALS FOR RAISING LEVEL OF FOREIGN EQUITY IN EXISTING COMPANIES 13. All other foreign proposals, for raising of foreign equity levels in existing companies will be subject to usual procedures. Applications will be made to the Secretariat of Industrial Approvals in the Department for Industrial Development in the prescribed form. This will include proposals involving increase in foreign equity upto 51 per cent which do not meet any or all of the criteria outlined above. G. CLASSIFICATION SYSTEM 14. Entrepreneurs may note that the description of article(s) to be manufactured should be stated according to the Indian Trade Classification (Harmonised System)

43

CHAPTER - I EXHIBIT NO.13(Contd.) PRESS NOTE NO.17 (1991 Series) PROCEDURES FOR INCREASE IN FOREIGN EQUITY TO 51% IN EXISTING COMPANIES

15. The description of industries covered by Annex III of the Statement on Industrial Policy in the Indian Trade Classification (Harmonised System) is available in Press Note No.11 (1991 Series)L. (Copies of the Indian Trade Classification (Based on Harmonised Commodity Description and Coding

No.11/43/91-LP

System), published by the Ministry of Commerce, Directorate General of Commercial Intelligence and Statistics, Calcutta, can be obtained on payment from the Controller of Publications, 1, Civil Lines, Delhi 110 054 or from any of the agents authorised to sell Government of India publications).

New Delhi, the 19th November, 1991.

The Press Information Bureau is requested to give wide publicity to this Press Note.

Sd/(L.Mansingh) Joint Secretary to the Government of India Principal Information Officer, Press Information Bureau, Shastri Bhawan, New Delhi.

Note:

L

List of Annex III industries is appended to Press Note No.10 (1992 Series)

44

Industrial Policy Highlights EXHIBIT NO.14 PRESS NOTE NO.18(1991 Series) CLARIFICATIONS REGARDING HOTEL AND TOURISM RELATED INDUSTRY

1. Government tabled a Statement on Industrial Policy in both Houses of Parliament on July 24, 1991. Subsequently Government have issued Press Note No.10 (1991 Series) on 14th August, 1991, Press Note No.11 (1991 Series) on 20th August, 1991, Press Note No.12 (1991 Series) on 31st August, 1991 and Press Note No.17 (1991 Series) on 19th November, 1991 laying down the procedures for approval of foreign technology agreements, foreign investments, etc. Annex III attached to the Statement on Industrial Policy and the Press Notes referred to above, list out the industries eligible for automatic approval of foreign technology agreements and for 51 per cent foreign equity approvals. Serial No.34 of this Annex contains the following entry: “34.Hotels and Tourism related Industry”. For the information of entrepreneurs, it is hereby clarified that the term ‘Hotels’ would include restaurants, beach resorts and other tourism complexes providing accommodation and/or catering and food facilities to tourists. The term ‘Tourismrelated Industry’ would include among other the following:i)

Travel agencies, tour operating agencies and tourist transport operating agencies;

ii)

Units providing facilities for cultural, adventure and wildlife experience to tourists;

iii)

Surface, air and water transport facilities for tourists;

iv)

Leisure, entertainment, amusement, sports and health units for tourists; Convention/seminar units and organisations.

v)

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2. Hotel and Tourism related Industry as clarified above will also be eligible for approval for direct foreign investment upto 51 per cent foreign equity in accordance with para 39B of the Statement on Industrial Policy dated 24.7.1991. Procedures for Approvals as given in Press Note No.17 (1991 series) dated 19.11.1991 will be applicable for this purpose. 3L. As regards foreign technology agreements in Hotel Industry only, automatic permission will be available in terms of para 39C(i) of the Statement on Industrial Policy subject to fulfilment of the following parameters: (a) Technical and Consultancy Serivces: Lumpsum fee not exceeding US $ 200,000. (b) Franchising and Marketing/Publicity support Upto 3% of the gross room sales. (c) Management Fees Upto 10% of the foreign exchange earnings provided the foreign party puts in 25 per cent of the equity. This will also cover payments for marketing and publicity support. It may be mentioned that the above parameters are different from those applicable to other industries as specified in para 39 C(i) of the Statement. The procedure for grant of approval in such cases will be the same as indicated in Press Notes No.10,11,12 and 17 (1991 Series). Proposals which are not covered by paras 2 and 3 of this Press Note will be dealt with according to the general procedure in force and the procedure laid down in Press Notes No.10,11,12 and 17 may be followed for submission of applications.

New Delhi, the 25th November,1991.

Forwarded to the Press Information Bureau for wide publicity to the contents of the above Press Note. Sd/(L. Mansingh) Joint Secretary to the Government of India Press Information Officer, Press Information Bureau, Shastri Bhawan, New Delhi. Note: L The Norms have been revised vide Press Note No.1(1995 Series)

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CHAPTER - I EXHIBIT NO. 15 PRESS NOTE NO.19 (1991 Series) IMPORT OF TECHNOLOGY AND CAPITAL GOODS UNDER TDF

1. The Technical Development Fund Scheme is one of the important schemes administered by the Department of Industrial Development to encourage modernisation and upgradation of technology, product-mix rationalisation and export promotion by industrial units. The scheme has proved very useful to the Industry due to its flexibility and fast track clearance. To encourage modernisation and technology upgradation, Government have decided to liberalise the Scheme further as follows: (i)

To counter the effect of depreciation of Indian Rupee against U.S. Dollar and other currencies and to retain the purchasing power as intended in 1989, the upper ceiling on the aggregate value of the Foreign Exchange that could be approved to an industrial unit in a financial year under the Scheme will, henceforth, be equivalent to Rs. 5 crore instead of the existing

No. 2(1)/91-TDF

ceiling of Rs. 3 crore. In deserving cases, this limit can be relaxed to some extent to enable a total technology package to be implemented without fragmentation. (II) The applications for import of Designs & Drawings as per the para 162 of Exim Policy 1990-93 which were being considered by a Committee chaired by Joint Secretary (SIA), shall, henceforth, be considered by the TDF Committee as all such proposals essentially aim at effecting modernisation and technological upgradation. 2. Provisions of this Department’s earlier Press Notes No. 2(1)/88-TDF dated 22nd April, 1988 and No. 2(1)/89-TDF dated 17th March, 1989, will continue to apply except the amendment to the extent cited above which will take effect from 25.8.1991.

New Delhi, the 9th December, 1991.

Forwarded to the Principal Information Officer, Press Information Bureau, Government of India for issuing the Press Note and giving it a wide publicity.

Sd/(L. Mansingh) Joint Secretary to the Government of India Press Information Officer Press Information Bureau Shastri Bhawan New Delhi.

46

Industrial Policy Highlights EXHIBIT NO.16 PRESS NOTE NO.20 (1991 Series) REVISION OF APPLICATION FORM FOR FOREIGN INVESTMENTS/TECHNOLOGY AGREEMENTS

1. Applications for approval of foreign investment and foreign technology agreement are being made by entrepreneurs in Form ‘FC’. Government have now substantially liberalised the provisions and simplified the procedures governing foreign investment and technology agreement approvals through:(i)

(ii)

Press Note No. 10 (1991 Series) dated 14-8-1991 relating to foreign technology agreements. Press Note No. 11 (1991 Series) dated 20-8-1991 relating to foreign investment.

(iii) Press Note No. 12 (1991 Series) dated 31-8-1991 containing amendments to Press Note No. 10 relating to foreign technology agreements. (iv) Press Note No. 17 (1991 Series) dated 19-11-1991 regarding increase in foreign equity to 51% in existing companies. 2. In the light of the above, it has become necessary to revise Form ‘FC’. A copy of the revised form, which will now be known as “Form FC (SIA)”, is attached. The Form FC (SIA) is meant for applications made to the Secretariat for Industrial Approvals (SIA), Ministry of Industry (Department of Industrial Development),

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Udyog Bhawan, New Delhi-110 011, to obtain approval for foreign investment and/or foreign technology agreement. 3. For permission under paragraphs 39 B(i), 39 B(iv), 39 C(i) and 39 C(ii) of the Statement on Industrial Policy, the application is to be made to the Controller, Foreign Investment & Technology Transfer Section, Reserve Bank of India, Exchange Control Department, Central Office, Bombay-400 023. The Form prescribed by the RBI should be used for this purpose. To distinguish this Form FC(SIA) this Form, will henceforth be known as Form FC (RBI). The RBI is bringing out a shorter and simplified version in view of the liberalised procedures for clearances under the purview. 4. The revised Form will also be applicable to Non-Resident Indian investment and/or technology agreement proposals. In such cases, the applicant should superscribe ‘NRI’ in bold letters on top right-hand side corner of the first page of the Form. 5. There shall be no fee for applications made in Form ‘FC’. 6. Applications for foreign investments and/or foreign technology agreements may henceforth be submitted in the revised form.

New Delhi, the 13th December, 1991

Forwarded to the Press Information Bureau for wide publicity to the contents of the above Press Note. Sd/(L. Mansingh) Joint Secretary to the Government of India Press Information Officer Press Information Bureau Shastri Bhawan, New Delhi.

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CHAPTER - I EXHIBIT NO.17 PRESS NOTE NO.22L(1991 Series) AMENDMENT TO THE INDUSTRIAL ENTREPRENEURS MEMORANDUMLL

1. Under the provisions of Press Note No. 9 (1991 Series) dated 2nd August, 1991, entrepreneurs are required to submit an Industrial Entrepreneurs Memorandum in the prescribed form alongwith the prescribed fee for undertaking the manufacture of any article exempted in terms of this Ministry’s notification No. 477 (E) dated 25th July, 1991. On filing the memorandum with the requisite number of copies, entrepreneurs are given an acknowledgement of receipt. 2. References are being received from entrepreneurs seeking amendments and modifications in the memorandum already filed by them and acknowledged by the SIA. In this connection, it is clarified that the requirement of the entrepreneurs having to file a memorandum is intended purely for statistical purposes and to conduct a limited postfacto check to see whether the proposed manufacturing activity requires an industrial licence

or not. The procedure is not in the nature of any registration involving scrutiny of the memorandum. Under these circumstances, it is in the interest of the entrepreneurs to fill in the memorandum correctly. 3. It is, therefore, notified for the information and guidance of the entre-preneurs that no amendments/ modifications will be made to the memorandum already filed and acknowledged by SIA, unless the error or omission is on account of wrong feeding of data in the computer by SIA. Where any correction or amendment is sought to be made, the entrepreneur will have to submit a fresh memorandum in the prescribed form alongwith the prescribed fee for issue of fresh acknowledgement. In such cases, entre-preneurs are advised to state clearly that the earlier memorandum is being withdrawn by them so that the acknowledgement issued earlier by the SIA could be cancelled.

No. 10(88)/91-LP

New Delhi, the 24th December, 1991

Forwarded to Press Information Bureau for wide publicity to the contents of the above Press Note. Sd/(G. Sundaram) Deputy Secretary to the Government of India

Press Information Officer, Press Information Bureau, Shastri Bhawan, New Delhi.

Note: L

Press Note No.21 of 1991 Series has been superseded by Press Note No.10 of 1992 Series

LL Further clarification in Press Note No.6 (1993 Series)

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Industrial Policy Highlights EXHIBIT NO.18 PRESS NOTE NO.23 (1991 Series) PROCEDURE FOR FOREIGN INVESTMENT IN TRADING COMPANIES

(a)

1. Government tabled a Statement on Industrial Policy in both the Houses of Parlia-ment on July 24, 1991. The Statement has substantially liberalised the provisions and simplified the procedures governing foreign investment and foreign technology proposals. 2. Para 39(B) (iv) of the Statement on Industrial Policy lays down that “majority foreign equity holding upto 51 per cent equity will be allowed for trading companies primarily engaged in export activities. While the thrust would be on export activities, such trading houses shall be at par with domestic trading and export houses in accordance with the Import Export Policy”. 3. This Press Note sets out the principles and procedures for approval of foreign equity holding upto 51 per cent in trading compa-nies primarily engaged in export activities. 4. The criteria for grant of Export House, Trading House or Star Trading House certificates are laid down in paragraphs 218 and 226 of the ImportExport Policy, 1990-93. As amended by the Ministry of Commerce, Import Trade Control Public Notice No. 242-ITC(PN)/90-93 dated November 8, 1991, effective from April 1, 1992, the average net foreign exchange earnings in the three preceding licensing years should not be less than Rs. 6 crore for Export House Certification; Rs. 30 crore for Trading House Certification; Rs. 125 crore for Star Trading House certification. Further, such certification will also be granted if the minimum net foreign exchange earning in the immediate preceding licensing year is not less than Rs.12 crore for Export House; Rs. 60 crore for Trading House and Rs. 150 crore for Star Trading House. 5.

Provisions for approval

(i)

New Companies

In the case of a new company,the Reserve Bank of India will give automatic approval for foreign investment upto 51 per cent foreign equity on the following basis:

Such a company will register itself with the Ministry of Commerce (Office of CCI&E) as a registered exporter/importer.

(b) The repatriation of dividend will be permissible only after the company has registered itself with the Ministry of Commerce (Office of CCI&E) as an Export House/Trading House/Star Trading House under the provisions of the prevailing Import Export Policy. (ii)

Existing Companies

In the case of existing companies already registered as Export Trading/Star Trading House, the Reserve Bank will give automatic approval on an application for foreign investment upto 51 per cent foreign equity. The approval will be subject to the following requirements: (a)

On receipt of RBI approval the company must pass a special resolution under Section 81 (1A) of the Companies Act proposing preferential allocation of the required volume of fresh equity to the foreign investor.

(b)

The CCI will allow preferential allo-cation of equity in favour of the foreign investor on the basis of the RBI approval for expansion of foreign equity and the adoption of the special resolution by the company. For such cases, the price of new equity will be fixed by the CCI on the basis of market prices, computed on the basis of the average price for the six months period preceding the date on which the application is received in the CCI, with a discount of upto 10% if requested by the shareholders resolution. The market price will take into account any bonus issue which may have been declared in this period and adjust for the same. For companies undertaking such equity expansion disinvestment, if it occurs in future, will also be at market price computed on the same basis.

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CHAPTER - I EXHIBIT NO.18(Contd.) PRESS NOTE NO.23 (1991 Series) PROCEDURES FOR FOREIGN INVESTMENT IN TRADING COMPANIES

6.

Application procedure

Applications for approval under the provisions of para 5 above will be filed with the Reserve Bank of India in the prescribed form. The Reserve Bank of India will issue the necessary permission for the foreign equity investment under the Foreign Exchange Regulation Act, 1973 (FERA). Interalia, this permission will include exemption from the operation of sections 26(7), 28, 29, and 31 of FERA. 7.

Dividend BalancingL

The outflow of foreign exchange on account of dividend payments are to be balanced by export earnings over a period of time in respect of all approvals given under the provisions outlined in para 5 above. Monitoring will be done by the

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Reserve Bank of India. The balancing will be done on the following basis: (i)

The balancing of dividend would be over a period of 7 years reckoned from the date of recognition as Export House/ Trading House/Star Trading House for new companies, and from the date of allotment of the shares raising the level of foreign equity to the approved level in the case of existing companies.

(ii)

The amount of dividend payment should be covered by export earnings recorded in years prior to the payment of dividend or in the year of payment of dividend.

The Reserve Bank of India will issue appropriate instructions to give effect to these provisions.

New Delhi, the 31st December, 1991.

The Press Information Bureau is requested to give wide publicity to this Press Note.

Sd/(L.Mansingh) Joint Secretary to the Government of India Principal Information Officer Press Information Bureau Shastri Bhawan, New Delhi.

Note: L This condition has been withdrawn (except for industries in Consumer goods Sector) vide Press Note No.12 (1992 Series)