Government Policy and Performance: A Study of the Indian Engineering Industry

The Indian industrial policy made a major transition towards liberalization in the mid-1980s with the proponents of liberalization expecting not only a general increase in the efficiency of Indian industry but also improvement terms of innovative performance. Extensive industrial studies, as well as macro level data, suggest that liberalization in the field of industrial licensing and foreign technological collaborations has resulted in large scale entry of new firms across different segments of the economy In this context, the authors review the promotion oriented industrial policies of Indian Engineering industry and trace the industrial growth from 1950-51 onwards. There was mainly two breaks (kinked points) during this period, one in 1965-66 and the other in 1984-85. A review of policies suggests that these breaks were associated with major shifts in policies of the government. The study indicates that the first break came through industrial policies of the government with a focus on the heavy industries during the initial phases, while the other break came during 1984-85 which could be attributed to changes in policies from a restrictive one in the mid 60s and 70s to a liberalized one in this sector in the 80s.