In which industrial policy was the investment limit for tiny industry/unit increased to ₹2 lakh?

The correct answer is 1980.

The question asks about the specific Industrial Policy in which the investment limit for a tiny industry/unit was increased to ₹2 lakh. Let us understand this with proper context.

Background – What is a "Tiny Industry/Unit"?
In India, small-scale industries are further classified into sub-categories. A tiny unit is the smallest category within the small-scale sector. The government periodically revises the investment ceiling for such units to reflect economic changes and to provide appropriate policy support.

Key Indian Industrial Policies at a Glance:

• Industrial Policy of 1956: This was a landmark policy focused on the role of the public sector and the categorization of industries into three schedules. It did not specifically introduce the ₹2 lakh limit for tiny units.
• Industrial Policy of 1977: Introduced by the Janata Party government, this policy gave special emphasis to small, tiny, and cottage industries. It defined tiny units as those with investment in plant and machinery up to ₹1 lakh. This was the first formal recognition of the "tiny sector."
• Industrial Policy of 1980: This policy, introduced by the Congress government, reviewed and revised the earlier definitions. It increased the investment limit for tiny units from ₹1 lakh to ₹2 lakh in plant and machinery. This was done to widen the scope of support for the smallest entrepreneurs in the economy.
• Industrial Policy of 1991: This was a major liberalization policy focused on dismantling the License Raj, opening the economy to foreign investment, and restructuring the public sector. The revision relevant to tiny units had already occurred in 1980.

Step-by-Step Reasoning:

Step 1: The 1977 Industrial Policy first formally defined "tiny units" with an investment ceiling of ₹1 lakh.
Step 2: The subsequent Industrial Policy of 1980 built upon this by revising the investment limit upward.
Step 3: Specifically, the 1980 policy raised the investment limit for tiny industry/units to ₹2 lakh (in plant and machinery), thereby expanding the number of units that could qualify for benefits under the tiny sector category.
Step 4: No other policy listed in the options — 1956, 1977, or 1991 — is associated with this specific revision to ₹2 lakh.

Conclusion:
The Industrial Policy of 1980 was the policy in which the investment limit for tiny industry/units was increased to ₹2 lakh. This was a deliberate step to strengthen grassroots entrepreneurship by revising the definition to include a slightly larger base of small entrepreneurs under the protective umbrella of government policy for tiny units.