Licensing policy of the government was primarily aimed to promote _______ .

Key Points

• The licensing policy of the government was introduced to regulate the industrial sector and ensure fair competition among businesses. It aimed to control the establishment, expansion, and operation of industries through a licensing system.
• The primary objective of the licensing policy was to promote regional equality and balanced economic development across different states and regions of the country.
• It sought to prevent the concentration of industries in a few regions and encourage their dispersal in less-developed areas.
• Another objective of the licensing policy was to promote import substitution and self-reliance in the economy.
  • It encouraged the production of goods and services within the country and discouraged their importation from abroad.

Additional Information Licensing Policy in India:

• Industrial licensing in India is a mandatory rule put forth by the government of India for enterprises belonging to certain industries. 
• The licensing policy was introduced in the Industrial Policy Resolution(IPR) of 1956 to promote regional equality.
• The rule was passed under the Industries (Development and Regulation) Act, of 1951, also known as IDR Act.
• Under this policy, private entrepreneurs were required to obtain a government license before establishing a new industry or expanding an existing one.
• It also aimed to protect the interests of small-scale industries and prevent the domination of large corporations.
• It had some drawbacks too as
  • Bureaucratic delays, corruption, and rent-seeking behavior among officials and businessmen were caused by it.
  • It also stifled innovation and efficiency in the industrial sector by creating entry barriers and limiting competition.