12. Industry and Infrastructure
Free Economy rapid revision notes for UPSC, APPSC and TGPSC. Original notes are presented below with their tables, images and visual aids preserved.
12. Industry and Infrastructure
12.1 Evolution of Industrial Policy
Policy |
Key Features |
Industrial Policy Resolution, 1948 |
Accepted a mixed economy. Arms, atomic energy and railways were reserved for the State; key industries were to be regulated |
Industries (Development and Regulation) Act, 1951 |
Brought in industrial licensing to control the start and growth of industries |
Industrial Policy Resolution, 1956 |
Called the "economic constitution" of India; it divided industries into Schedule A (State monopoly), Schedule B (State leads, private joins) and Schedule C (private sector); linked to the Mahalanobis model of the 2nd Plan |
MRTP Act, 1969 |
Controlled concentration of economic power and monopolies |
Industrial Policy, 1977 |
Gave priority to small-scale and village industries; set up District Industries Centres |
New Industrial Policy, 1991 |
Part of the LPG reforms (liberalisation, privatisation and globalisation): ended most licensing, relaxed MRTP limits, opened automatic approval for foreign investment and cut the list of industries reserved for the public sector |
After 1991
Industrial licensing is now needed for only a few industries: alcohol, tobacco products, electronic aerospace and defence equipment, industrial explosives and specified hazardous chemicals.
Industries reserved for the public sector were cut to atomic energy and railways (with limited exceptions).
The MRTP Act was replaced by the Competition Act, 2002; the Competition Commission of India (CCI) was set up in 2009.
FERA, 1973 was replaced by FEMA, 1999.
The World Bank stopped publishing its Doing Business ranking in 2021 after data concerns; it now produces the B-READY report (first edition in 2024).
12.2 Public Sector and Disinvestment
Term |
Key Point |
Navratna and Maharatna |
Special status for large, profitable public sector companies, giving them more financial freedom. Miniratna is the lower category; Maharatna is the highest |
Disinvestment |
Sale of the Government's stake in a public sector enterprise. Managed by the Department of Investment and Public Asset Management (DIPAM) |
Strategic disinvestment |
Sale that transfers management control, as with Air India, which went to the Tata Group in January 2022 |
Public Sector Enterprise Policy (2021) |
Limits the public sector in a few strategic sectors; other sectors are to be privatised or merged |
National Monetisation Pipeline (2021) |
Leasing of existing government infrastructure assets to private players for a fixed period, with the money used to build new assets |
12.3 Micro, Small and Medium Enterprises (MSMEs)
MSMEs are classified under the MSME Development Act, 2006, using both investment in plant and machinery and annual turnover. The limits were revised, effective from 1 April 2025.
Category |
Investment (up to) |
Turnover (up to) |
Micro |
Rs 2.5 crore |
Rs 10 crore |
Small |
Rs 25 crore |
Rs 100 crore |
Medium |
Rs 125 crore |
Rs 500 crore |
An enterprise must meet both limits for a category. If it exceeds either limit it moves to the next higher category.
Udyam Registration (from July 2020) is the online registration system for MSMEs.
The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) guarantees collateral-free loans.
Under the Public Procurement Policy for MSEs, central ministries buy 25% of their annual purchases from micro and small enterprises.
Government e-Marketplace (GeM), launched in 2016, is the online platform for public procurement.
12.4 Manufacturing Push
Initiative |
Key Point |
Make in India (2014) |
Launched on 25 September 2014 to turn India into a manufacturing hub; the aim was a 25% share of manufacturing in GDP, which has not been reached |
Production Linked Incentive (PLI) schemes |
Started in 2020 with mobile phones and electronics; extended to 14 sectors with an outlay of about Rs 1.97 lakh crore. Incentives are paid on extra sales over a base year |
National Manufacturing Mission |
Announced in Budget 2025-26 to support small, medium and large manufacturing, including clean technology |
India Semiconductor Mission (2021) |
Supports chip fabrication, packaging and design in India |
Start-up India (2016) |
Tax benefits, funding support and easier rules for new firms |
Special Economic Zones (SEZs) |
Kandla had Asia's first export processing zone in 1965; the SEZ Act, 2005 governs SEZs, which get tax and duty benefits to promote exports |
Industrial corridors |
Planned zones along transport routes, such as the Delhi-Mumbai Industrial Corridor; the National Industrial Corridor Development and Implementation Trust coordinates them |
12.5 Measuring Industrial Output
Index of Industrial Production (IIP)
The IIP is a monthly index of the volume of industrial production, compiled by the National Statistics Office (NSO), MoSPI.
MoSPI revised the base year from 2011-12 to 2022-23 in 2026. The new series adds a water supply and waste management sector to the earlier mining, manufacturing and electricity sectors.
Index of Core Industries (ICI)
Compiled by the Office of the Economic Adviser, DPIIT; it tracks the output of the core industries, which feed into the IIP.
The new series with base year 2022-23 was released on 20 July 2026. It replaced the 2011-12 series.
Core industries rise from eight to nine with the addition of iron ore.
The nine are: coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, electricity and iron ore.
Electricity now has the largest weight in the index, and steel is measured by gross, not net, production.
Remember
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12.6 Infrastructure
Infrastructure means the basic physical systems that support production and daily life. Economic infrastructure includes transport, energy and communication; social infrastructure includes schools, hospitals and housing.
Sector |
Key Points |
Roads |
India has one of the world's largest road networks. The Golden Quadrilateral (NHDP, 1998) links Delhi, Mumbai, Chennai and Kolkata. Bharatmala Pariyojana (2017) is the highway development programme |
Railways |
Dedicated Freight Corridors (Eastern and Western) separate freight from passenger trains and are run by DFCCIL |
Ports |
Sagarmala (2015) promotes port-led development; Maritime India Vision 2030 is the long-term plan |
Aviation |
UDAN (2016) makes regional flights affordable and connects smaller airports |
Inland waterways |
National Waterway-1 runs on the Ganga from Prayagraj to Haldia |
Energy |
Electricity Act, 2003; PM Surya Ghar Muft Bijli Yojana (2024) for rooftop solar; National Green Hydrogen Mission (2023); target of 500 GW non-fossil capacity by 2030; International Solar Alliance founded in 2015 |
Digital |
BharatNet takes broadband to villages; 5G services were launched in October 2022 |
Urban |
Smart Cities Mission (2015) and AMRUT for urban services |
12.7 Financing Infrastructure
Model / Institution |
Key Point |
BOT (Build-Operate-Transfer) |
A private firm builds and runs a project, collects fees (such as tolls) and then hands it to the Government |
Hybrid Annuity Model (HAM) |
The Government pays part of the project cost during construction and the rest as annual payments, so the private partner carries less risk |
Toll-Operate-Transfer (TOT) |
Existing public highways are leased to private operators for a fixed period |
Viability Gap Funding (VGF) |
Government grant to make a project that is socially useful but not fully profitable attractive to private investors |
IIFCL (2006) |
India Infrastructure Finance Company Ltd, a government-owned lender for infrastructure |
NIIF (2015) |
National Investment and Infrastructure Fund, set up to attract domestic and foreign long-term capital |
NaBFID (2021) |
National Bank for Financing Infrastructure and Development, a development finance institution |
InvITs |
Infrastructure Investment Trusts, regulated by SEBI since 2014; allow investors to put money in completed projects |
12.8 Planning and Logistics
Initiative |
Key Point |
National Infrastructure Pipeline (NIP) |
Launched in December 2019 with a pipeline of projects worth over Rs 100 lakh crore for 2020 to 2025 |
PM GatiShakti National Master Plan |
Launched on 13 October 2021; a digital platform that brings many ministries together to plan multimodal connectivity and avoid delays |
National Logistics Policy (2022) |
Launched in September 2022 to cut logistics costs and improve efficiency; the Unified Logistics Interface Platform (ULIP) connects data systems |
Logistics Performance Index (LPI) |
A World Bank index; India ranked 38th in 2023, improved from 44th in 2018 |
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