Graduate Level intermediate Indian Economy Industrial Policy LPG Reforms
Complete notes on Indian industrial policy for Kerala PSC — 1991 LPG reforms, Make in India, Startup India, PLI schemes, SEZ policy, industrial corridors. Exam-focused tables for Graduate Level preparation.
Published: 20 Apr 2026 Relevant for: Graduate Level Prelims, Secretariat Assistant, University Assistant, LDC
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India’s industrial policy evolution — from License Raj to LPG reforms to modern initiatives like Make in India and PLI — is a core Kerala PSC topic. Expect 2-3 questions per Graduate Level paper.
1. Pre-1991 Industrial Policy (License Raj Era)
Policy Year Key Feature Industrial Policy Resolution 1948 Mixed economy; state control of key industries Industries (Development and Regulation) Act 1951 Industrial licensing introduced Industrial Policy Resolution 1956 ”Economic Constitution of India”; classified industries into 3 schedules MRTP Act 1969 Monopolies and Restrictive Trade Practices Act — controlled large firms Industrial Policy 1977 Emphasis on small-scale industries Industrial Policy 1980 Partial liberalisation; focus on productivity
1956 Industrial Policy — Three Categories
Schedule Ownership Examples Schedule A (17 industries) Exclusive state monopoly Arms, atomic energy, railways, air transport Schedule B (12 industries) State-led with private participation Chemicals, fertilisers, antibiotics Schedule C Private sector (with licensing) All other industries
Aspect Detail Crisis trigger Balance of Payments crisis; forex reserves fell to cover only 2 weeks of imports PM P.V. Narasimha Rao Finance Minister Dr. Manmohan Singh Date New Industrial Policy announced 24 July 1991
What LPG Stands For
Component Meaning Key Measures L iberalisationRemoving government controls Abolished industrial licensing (except 6 industries); MRTP Act diluted P rivatisationReducing public sector monopoly Disinvestment of PSUs; reserved sectors reduced G lobalisationOpening economy to world FDI liberalised; trade barriers reduced; rupee devalued
Reform Detail Industrial licensing abolished Retained only for 6 industries (alcohol, cigarettes, defence, hazardous chemicals, drugs, electronics/aerospace) Public sector reserved list Reduced from 17 to 8 (later to 3: atomic energy, railways, defence) FDI limits raised Automatic approval up to 51% in many sectors MRTP Act Threshold limit removed; later replaced by Competition Act 2002 Disinvestment Selling government stake in PSUs Trade reforms Import licensing largely abolished; tariffs reduced Exchange rate Dual exchange rate (1992), then unified market rate (1993)
3. Make in India
Aspect Detail Launched 25 September 2014 (by PM Modi) Logo A lion made of cog wheels Objective Transform India into a global manufacturing hub; increase manufacturing share to 25% of GDP Sectors covered 25 sectors initially (automobiles, textiles, pharma, electronics, defence, food processing, etc.) Key enablers FDI liberalisation, ease of doing business, single-window clearance Make in India 2.0 Focus on 27 sectors with advanced manufacturing
4. Startup India
Aspect Detail Launched 16 January 2016 Objective Build a strong ecosystem for nurturing startups Key benefits Tax holiday (3 years out of first 10), self-certification for labour/environment laws, Fund of Funds (Rs 10,000 crore) DPIIT recognition Department for Promotion of Industry and Internal Trade registers startups Definition of startup Entity up to 10 years from incorporation; turnover under Rs 100 crore in any financial year India’s rank in startup ecosystem 3rd largest globally (after USA and China)
5. Production Linked Incentive (PLI) Scheme
Aspect Detail Announced November 2020 (expanded) Total outlay Rs 1.97 lakh crore (across all sectors) Duration 5 years per sector Objective Boost domestic manufacturing, reduce imports, create employment Incentive type Cash incentive (4-6% of incremental sales) to manufacturers
PLI Sectors (14 Sectors)
Sector Allocated Amount (Rs Crore) Mobile phones and electronics 40,951 Automobiles and auto components 25,938 ACC Battery (Advanced Chemistry Cell) 18,100 Telecom and networking products 12,195 Textile products 10,683 Food processing 10,900 Pharma (bulk drugs) 15,000 Solar PV modules 24,000 White goods (AC, LED) 6,238 Specialty steel 6,322 IT hardware (laptops, servers) 17,000 Medical devices 3,420 Drones 120 Advanced high-efficiency solar cells (part of solar allocation)
6. Special Economic Zones (SEZ)
Aspect Detail First SEZ in India Kandla (Gujarat), 1965 — originally called Export Processing Zone (EPZ) SEZ Act 2005 (came into effect February 2006) Objective Boost exports, attract FDI, generate employment Tax benefits Income tax exemption: 100% for first 5 years, 50% for next 5 years, 50% of ploughed-back profit for next 5 years Developer benefits Customs duty exemption, GST exemption on inter-unit transactions Nodal authority Board of Approval (under Commerce Ministry) Largest SEZ Mundra SEZ (Adani), Gujarat IT/ITES SEZ Minimum area 10 hectares; Multi-product SEZ: 500+ hectares
SEZ in Kerala
SEZ Location Sector Cochin SEZ (CSEZ) Kakkanad, Kochi Multi-product (first in Kerala, est. 1984 as EPZ) Kinfra Techno Industrial Park Kochi Electronics Infopark SEZ Kochi IT/ITES
7. Industrial Corridors
Corridor Route Status Delhi-Mumbai Industrial Corridor (DMIC) Delhi to Mumbai (1,504 km along DFC) Most advanced; multiple nodes operational Chennai-Bengaluru Industrial Corridor (CBIC) Chennai to Bengaluru Under development Amritsar-Kolkata Industrial Corridor (AKIC) Amritsar to Kolkata (along Eastern DFC) Under development Bengaluru-Mumbai Economic Corridor (BMEC) Bengaluru to Mumbai Under development Vizag-Chennai Industrial Corridor (VCIC) Visakhapatnam to Chennai Part of East Coast corridor
National Industrial Corridor Development Corporation (NICDC) — nodal agency for all corridors.
8. Other Key Industrial Initiatives
Initiative Year Objective Atmanirbhar Bharat 2020 Self-reliant India — Rs 20 lakh crore package during COVID Skill India 2015 Train 40 crore people in different skills by 2022 Digital India 2015 Digital infrastructure, governance, and empowerment Ease of Doing Business reforms Ongoing India rose from 142nd (2014) to 63rd (2020) in World Bank rankings Competition Act 2002 Replaced MRTP Act; Competition Commission of India (CCI) established National Manufacturing Policy 2011 Raise manufacturing to 25% of GDP; create National Investment and Manufacturing Zones (NIMZ) One District One Product (ODOP) 2018 Promote district-specific products
9. Key Organisations
Organisation Role DPIIT (Dept for Promotion of Industry and Internal Trade) Industrial policy, startup registration, FDI policy NITI Aayog Policy think tank (replaced Planning Commission in 2015) CCI (Competition Commission of India) Anti-monopoly, fair trade SIDBI Small Industries Development Bank of India — financing MSMEs NABARD Rural and agriculture development Invest India National investment promotion agency
10. PSC Quick Recall Table
Question Answer LPG reforms year? 1991 Finance Minister during 1991 reforms? Dr. Manmohan Singh PM during 1991 reforms? P.V. Narasimha Rao Make in India launched? 25 September 2014 Make in India logo? Lion made of cog wheels First SEZ in India? Kandla, Gujarat (1965 as EPZ) SEZ Act year? 2005 PLI total outlay? Rs 1.97 lakh crore Startup India launched? 16 January 2016 MRTP Act replaced by? Competition Act 2002 Planning Commission replaced by? NITI Aayog (2015) DMIC stands for? Delhi-Mumbai Industrial Corridor India’s World Bank Ease of Business rank (2020)? 63rd Industries still requiring license (2024)? Defence, hazardous chemicals, cigarettes/alcohol, electronics aerospace, industrial explosives
India’s industrial policy evolution — from License Raj to LPG reforms to modern initiatives like Make in India and PLI — is a core Kerala PSC topic. Expect 2-3 questions per Graduate Level paper.
1. Pre-1991 Industrial Policy (License Raj Era)
Policy Year Key Feature Industrial Policy Resolution 1948 Mixed economy; state control of key industries Industries (Development and Regulation) Act 1951 Industrial licensing introduced Industrial Policy Resolution 1956 ”Economic Constitution of India”; classified industries into 3 schedules MRTP Act 1969 Monopolies and Restrictive Trade Practices Act — controlled large firms Industrial Policy 1977 Emphasis on small-scale industries Industrial Policy 1980 Partial liberalisation; focus on productivity
1956 Industrial Policy — Three Categories
Schedule Ownership Examples Schedule A (17 industries) Exclusive state monopoly Arms, atomic energy, railways, air transport Schedule B (12 industries) State-led with private participation Chemicals, fertilisers, antibiotics Schedule C Private sector (with licensing) All other industries
Aspect Detail Crisis trigger Balance of Payments crisis; forex reserves fell to cover only 2 weeks of imports PM P.V. Narasimha Rao Finance Minister Dr. Manmohan Singh Date New Industrial Policy announced 24 July 1991
What LPG Stands For
Component Meaning Key Measures L iberalisationRemoving government controls Abolished industrial licensing (except 6 industries); MRTP Act diluted P rivatisationReducing public sector monopoly Disinvestment of PSUs; reserved sectors reduced G lobalisationOpening economy to world FDI liberalised; trade barriers reduced; rupee devalued
Reform Detail Industrial licensing abolished Retained only for 6 industries (alcohol, cigarettes, defence, hazardous chemicals, drugs, electronics/aerospace) Public sector reserved list Reduced from 17 to 8 (later to 3: atomic energy, railways, defence) FDI limits raised Automatic approval up to 51% in many sectors MRTP Act Threshold limit removed; later replaced by Competition Act 2002 Disinvestment Selling government stake in PSUs Trade reforms Import licensing largely abolished; tariffs reduced Exchange rate Dual exchange rate (1992), then unified market rate (1993)
3. Make in India
Aspect Detail Launched 25 September 2014 (by PM Modi) Logo A lion made of cog wheels Objective Transform India into a global manufacturing hub; increase manufacturing share to 25% of GDP Sectors covered 25 sectors initially (automobiles, textiles, pharma, electronics, defence, food processing, etc.) Key enablers FDI liberalisation, ease of doing business, single-window clearance Make in India 2.0 Focus on 27 sectors with advanced manufacturing
4. Startup India
Aspect Detail Launched 16 January 2016 Objective Build a strong ecosystem for nurturing startups Key benefits Tax holiday (3 years out of first 10), self-certification for labour/environment laws, Fund of Funds (Rs 10,000 crore) DPIIT recognition Department for Promotion of Industry and Internal Trade registers startups Definition of startup Entity up to 10 years from incorporation; turnover under Rs 100 crore in any financial year India’s rank in startup ecosystem 3rd largest globally (after USA and China)
5. Production Linked Incentive (PLI) Scheme
Aspect Detail Announced November 2020 (expanded) Total outlay Rs 1.97 lakh crore (across all sectors) Duration 5 years per sector Objective Boost domestic manufacturing, reduce imports, create employment Incentive type Cash incentive (4-6% of incremental sales) to manufacturers
PLI Sectors (14 Sectors)
Sector Allocated Amount (Rs Crore) Mobile phones and electronics 40,951 Automobiles and auto components 25,938 ACC Battery (Advanced Chemistry Cell) 18,100 Telecom and networking products 12,195 Textile products 10,683 Food processing 10,900 Pharma (bulk drugs) 15,000 Solar PV modules 24,000 White goods (AC, LED) 6,238 Specialty steel 6,322 IT hardware (laptops, servers) 17,000 Medical devices 3,420 Drones 120 Advanced high-efficiency solar cells (part of solar allocation)
6. Special Economic Zones (SEZ)
Aspect Detail First SEZ in India Kandla (Gujarat), 1965 — originally called Export Processing Zone (EPZ) SEZ Act 2005 (came into effect February 2006) Objective Boost exports, attract FDI, generate employment Tax benefits Income tax exemption: 100% for first 5 years, 50% for next 5 years, 50% of ploughed-back profit for next 5 years Developer benefits Customs duty exemption, GST exemption on inter-unit transactions Nodal authority Board of Approval (under Commerce Ministry) Largest SEZ Mundra SEZ (Adani), Gujarat IT/ITES SEZ Minimum area 10 hectares; Multi-product SEZ: 500+ hectares
SEZ in Kerala
SEZ Location Sector Cochin SEZ (CSEZ) Kakkanad, Kochi Multi-product (first in Kerala, est. 1984 as EPZ) Kinfra Techno Industrial Park Kochi Electronics Infopark SEZ Kochi IT/ITES
7. Industrial Corridors
Corridor Route Status Delhi-Mumbai Industrial Corridor (DMIC) Delhi to Mumbai (1,504 km along DFC) Most advanced; multiple nodes operational Chennai-Bengaluru Industrial Corridor (CBIC) Chennai to Bengaluru Under development Amritsar-Kolkata Industrial Corridor (AKIC) Amritsar to Kolkata (along Eastern DFC) Under development Bengaluru-Mumbai Economic Corridor (BMEC) Bengaluru to Mumbai Under development Vizag-Chennai Industrial Corridor (VCIC) Visakhapatnam to Chennai Part of East Coast corridor
National Industrial Corridor Development Corporation (NICDC) — nodal agency for all corridors.
8. Other Key Industrial Initiatives
Initiative Year Objective Atmanirbhar Bharat 2020 Self-reliant India — Rs 20 lakh crore package during COVID Skill India 2015 Train 40 crore people in different skills by 2022 Digital India 2015 Digital infrastructure, governance, and empowerment Ease of Doing Business reforms Ongoing India rose from 142nd (2014) to 63rd (2020) in World Bank rankings Competition Act 2002 Replaced MRTP Act; Competition Commission of India (CCI) established National Manufacturing Policy 2011 Raise manufacturing to 25% of GDP; create National Investment and Manufacturing Zones (NIMZ) One District One Product (ODOP) 2018 Promote district-specific products
9. Key Organisations
Organisation Role DPIIT (Dept for Promotion of Industry and Internal Trade) Industrial policy, startup registration, FDI policy NITI Aayog Policy think tank (replaced Planning Commission in 2015) CCI (Competition Commission of India) Anti-monopoly, fair trade SIDBI Small Industries Development Bank of India — financing MSMEs NABARD Rural and agriculture development Invest India National investment promotion agency
10. PSC Quick Recall Table
Question Answer LPG reforms year? 1991 Finance Minister during 1991 reforms? Dr. Manmohan Singh PM during 1991 reforms? P.V. Narasimha Rao Make in India launched? 25 September 2014 Make in India logo? Lion made of cog wheels First SEZ in India? Kandla, Gujarat (1965 as EPZ) SEZ Act year? 2005 PLI total outlay? Rs 1.97 lakh crore Startup India launched? 16 January 2016 MRTP Act replaced by? Competition Act 2002 Planning Commission replaced by? NITI Aayog (2015) DMIC stands for? Delhi-Mumbai Industrial Corridor India’s World Bank Ease of Business rank (2020)? 63rd Industries still requiring license (2024)? Defence, hazardous chemicals, cigarettes/alcohol, electronics aerospace, industrial explosives
