Late last year, the Union commerce ministry had circulated the draft of Industrial Policy 2022—Make in India for the World, aimed to replace the 1991 policy. The draft aimed to address challenges faced by the industry through policy measures to foster and create an innovative and competitive ecosystem.

“As far as the proposed new industrial policy goes, it is currently on the back-burner,” the first of the two people mentioned above said on the condition of anonymity. “It would come out eventually, but not anytime soon,” the person added.

The policy draft had proposed to create a development finance institution using India’s forex reserves to provide low-cost finance, and a technology fund to incentivize companies in advanced technology areas. It also sought ‘One Nation-One Standard’ to ensure the availability of quality products, promote start-ups across rural and urban areas, and push for innovation at urban local bodies.

Some of its objectives were to achieve greater competitiveness and capability, economic integration, moving up the global value chain, promoting India as an attractive investment destination, nurturing innovation and entrepreneurship, and achieving global scale and standards. It also included a plan to develop mega clusters to integrate with global supply chains. Another proposal was to help small businesses access corporate bond markets. However, it made no mention of topics such as climate change, green energy commitments and the West’s China-plus-one strategy, which may need to be integrated into the final policy.

The government may look into the policy after the general election in 2024, said the second person mentioned above.

“The proposed industrial policy may have to be relooked with a fresh perspective so that major challenges currently faced by the global economy are addressed,” the person added.

Queries emailed to a commerce ministry spokesperson remained unanswered.

“The industrial policy has to be futuristic, and it has to address not only major global issues, but others like land and labour issues. It has to have a long-term perspective which will allow India to reach its 2047 targets (to achieve the goal of becoming a $30-trillion developed economy),” said N.R. Bhanumurthy, vice-chancellor of Dr B.R. Ambedkar School of Economics University, Bengaluru.

“Schemes like production-linked incentives have a short-term impact, and like many other policies, use the sunset clause. Industrial policy has to be much more structural and long-term,” Bhanumurthy added.

At a time the global economy is struggling with inflation, high interest rates and slow growth, the Indian economy has been an outperformer. The Reserve Bank of India recently revised India’s growth forecast for FY24 to 7%, an increase from the previous 6.5%, encouraged by rising rural consumption and increasing capital expenditure.