Economic changes initiated by the government under the Industrial Policy, 1991
- The government reduced the number of industries under compulsory licensing to six.
- The role of public sector was reduced. It was now limited only to four industries of strategic importance.
- Disinvestment was carried out in case of many public sector industrial enterprises.
- Foreign Direct Investment was permitted.
- Automatic permission was now granted for technology agreements with foreign companies.
- Foreign Investment Promotion Board (FIPB) was set up to promote and channelise foreign investment in India.
The Indian corporate sector has come lace-to-face with several challenges due to government policy changes. Some of them are:
- Increasing Competition: The competition has Increased due to entry of new players (pnvausanon and globalisation).
- More Demanding Customers: Customers today has become more demanding because they are well-informed. Increased competition in the market gives the customers Wider choice In purchasing better quality of goods and services.
- Rapidly Changes Technological Environment: The rapidly changing technological environment creates tough challenges before smaller firms
- Necessity for Change After 1991: The market forces have become turbulent as a result of which the enterprises have to continuously modify their operations.
- Need for Developing Human Resources Earlier: Indian enterprises worked with inadequately trained personnel The new market conditions require people with higher competence and greater commitment Hence. the need for developing human resources
- Market Orientation Before 1991: All firms worked with production oriented marketing operations. In a fast changing world. there was a shift to markel orientation. The firms had to study and analyse the market first and produce goods accordingly.
- Loss of Budgetary Support to the Public Sector: The public sector undertakings have realised that in order to survive and grow, they will have to be more efficient and generate their own resources for the purpose