Impact of change in policy of the government on business and industry:
(i) Increase in competition: As a result of changes in the rules of industrial licensing, entry of foreign firms have increased especially in service industries like telecommunications, airlines, banking, insurance, etc. which were reserved for PSU sector earlier.
(ii) More Demanding Customers: Customers today have become more demanding because they are well informed. Increasing competition in the market gives the customers wider choice in purchasing better quality of goods and services at cheaper rates.
(iii) Rapidly Changing Technological Environment: Increasing competition forced the firms to develop new ways to survive and grow in the market. The rapidly changing technological environment creates tough challenges before smaller firms.
(iv) Necessity for Change: In a regulated environment of pre-1991 era, the firms could have relatively stable policies and practice. After 1991, the market forces have become turbulent, as a result of which, the enterprise have to continuously modify their operations.
(v) Need for Development of Human Resource: Indian enterprises lacked availability of trained technical personnel always. New market conditions require people with higher competence and greater commitment.
(vi) Market Orientation: Earlier firms used to decide production not the demand of products. In a fast changing world, there is a shift of market orientation as much as the firms have to study and analyse the market first and then produce goods accordingly.
(vii) Loss of Budgetary Support to the Public Sector: The central government’s budgetary support for financing the public sector outlays has declined over the years. 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 survival.