The history of organised industry in India began in 1854 when cotton mill industry was set up at Bombay with Indian capital and enterprise. Jute industry was founded in Calcutta in 1855. Coal-mining also progressed at this time.
During and after World War I & II, a somewhat more liberal policy was adopted by the authorities. Several industries rapidly expanded and a number of new industries came up, such as steel, sugar, cement, glass, industrial chemicals, soap, vanaspati and some branches of engineering.
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But their production was neither adequate in quantity for meeting even the low level of internal demand nor diversified in character.
During the list five-year plans, there has been rapid expansion and diversification in industry. New units in the existing fields as well as new enterprises have been set up. The number of industrial units has increased significantly.
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In 1951, there were only two major units producing iron and steel. There are now six major steel plants with a capacity of about 87 lakh tonnes. They produced over 71 lakh tonnes of saleable steel during 1981-82.
The steel produced by these plants has provided the basis for achieving self- sufficiency in making a number of engineering goods, from pin to giant machinery.
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In the field of new industries, agricultural tractors, electronics and fertilizers industries, which practically did not exist in 1951, there is progress to such an extent that the import of these products has been brought down to minimum. The drug and chemical industries have also made rapid progress.
The textile industry is no longer confined to the cotton and jute textiles. There are, today, quite a number of units producing different types of synthetic fibres. The machine building industry too, has made rapid strides.
The engineering industry can supply virtually the entire requirement of power generating equipment, equipment for railways, road transport and communications. Self-sufficiency has been reached with regard to sugar and cement machinery, power boilers, materials handling equipment and a large number of consumer durables.
An important feature of industrial growth in the country after Independence has been the rapid expansion of the public sector. In 1951, there were only five non-departmental public undertakings with an investment of Rs. 29 crores.
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On 1st April 1981, they numbered 185 with an investment of Rs. 21 126 crores. These enterprises produce diverse products such as steel, coal, aluminium, copper, heavy and light engineering products, fertilizers, basic chemicals, drugs, minerals, petroleum products, locomotives, aircraft and ships.
Progress during First and Second Plans:
The development of industries was remarkable particularly during the Second Five Year Plan. Three new steel plants, each of 10 lakh ingot tonnes capacity, were set up. Capacity of two existing steel plants in the private sector was doubled.
Foundation for heavy electrical, heavy machine tools, heavy machine building and branches of heavy engineering industries were laid. Production of machinery for cement and paper industries was started for the first time.
The output of many other industries like bicycles, sewing machines, telephone and electrical goods, increased substantially. Organised industrial production practically doubled in these ten years. New industrial townships and factories came up near main cities.
Development of Industries during
Third Plan and Annual Plans:
Industrial progress was uneven during the eight year (Third Plan 1961- 66 and Annual plans 1966-69). In the first four years, conditions were favourable and achievement significant. Thereafter, for three years, industrial production declined. But in 1968-69 there were signs of recovery.
In 1965, there came Pakistan’s aggression and then in 1965-66 and 1966-67 two successive droughts. These severely affected by the shortage of raw materials and components. Significant achievement was, however, made in the field of heavy engineering and different units, in the Heavy Engineering Corporation, Mining and Allied Machinery Corporation and heavy electrical projects.
There was also an appreciable increase in the production capacity of steel and non-ferrous metals. Progress was also made in the expansion of capacity in petroleum, fertilizer and petro-chemical industries.
Progress during Fourth Plan:
In the fourth plan, the performance of the industrial sector was less than expectations. While the pace of investment in some of the sectors like iron ore, petroleum and petro-chemicals was generally satisfactory, in sectors like iron and steel, non-ferrous metals, fertilizers and coal, it was not satisfactory.
The factors responsible for unsatisfactory growth in industrial production were : there were operational problems in steel and fertilizers industries, inadequate investment, shortage of steel and non-ferrous metals.
There was increase in production in industries like alloys, special steels, aluminium, automobile tyres, petroleum refinery products, electronics, machine tools, tractors and heavy electrical equipment.
The production in the public sector undertakings also showed an encouraging rise towards the closing years of the Plan.
Progress during Fifth Plan:
In the Fifth Plan (1974-79) there was high inflation and the plan had to be modified in 1976. As against an average rate of growth of industrial production of 7 per cent envisaged during the Fifth Plan, the actual rate of growth achieved during the first four years of the Fifth Plan was : 2.6 per cent for 1974-75 ; 6 per cent for 1975-76 ; 9.5 per cent for 1976-77 and 3.9 per cent of 1977-78.
The Fifth Five Year Plan was terminated one year ahead and it was decided to formulate a new five year plan from 1978-79 them.
Progress during Sixth Plan:
In industry, Sixth Plan performance fell short of target in basic industries like steel, fertiliser and cement and in textiles. The overall growth rate of industrial production was also below target. It was unstable from year to year.
However, target of creating capacity was achieved for industries like aluminium, zinc, lead, thermoplastics, petro-chemical intermediates electrical equipment, automobiles and consumer durables.
Production targets were achieved in industries like petroleum, machine tools, passengers cars, motor cycles and scooters, TV receivers, etc. But shortfall in production was reported for coal, steel, non-ferrous metals, cement, drugs and pharmaceuticals, textiles, jute manufacture, commercial vehicles, railway wagons, sugar etc.
At the same time, major technology achievements have also been reported in commissioning of 500 MW power generation unit commencement of manufacture of 500 MW turbo generator and boiler, manufacture of fuel efficient 800 cc passenger cars of contemporary technology of international level.
In fertilizer sector, manufacture of 1,350 tonnes per day fertilizer plant has commenced. In steel sector fully indigenous 3,200 cubic metre blast furnaces and seven metre tall coke oven battery and equipments are now manufactured in the country.
Similarly large sized heavy machinery for mining are now being manufactured e.g., long wall mining equipment, eight cubic metre hydraulic excavators, etc.
Higher production target in electronic industry has been achieved. Higher levels of technology have been achieved in fields like LSI/VLSI circuits, manufacture of eight and 16 bit micro-computer chips, computers and micro processors, communication equipments, broadcasting and TV transmission equipments, micro electronics, electronic materials and components etc.
As against the target of an annual growth rate of eight per cent of industrial production during the Sixth Plan, the average growth rate achieved during the period was 5.5 per cent per annum compound.
The growth during the years was uneven. It was 4 per cent in 1980-81, 8.6 per cent in 1981-82, 3.9 per cent in 1982-83, 5.3 per cent in 1983-84 and 5.8 per cent in 1984-85.
Development of Industry in Seventh Plan:
Out of the total outlay of Rs. 1,80,000 crore, Rs. 54,821.26 crore have been earmarked for energy, Rs. 19,708.09 crore for large and medium industries, and Rs. 2,752,74 crore for village and small scale Industries.
Main areas of Industry to be covered under the Seventh Plan are:
(1) To ensure adequate supply of wage goods and consumer goods of quality at reasonable rate.
(2) Maximising of production, improving productivity and technological up gradation.
(3) Development of ‘electronic’ industry.
(4) Creation of employment opportunities for skilled and trained manpower.
A growth rate of over eight per cent for output of the industry sector has been achieved during the Seventh Plan period. For 1985-86, the first year of the Plan, a growth rate of 7% was targeted. Actual growth rate achieved was 6.3%. It was satisfactory as compared to the performance of previous year.
New Industrial Policy:
The New Industrial Policy, directed towards liberalisation of economy and bringing about a competitive environment for the industries, was introduced in 1991 and with this a comprehensive programme for withdrawing various restrictions and control on industry was initiated.
Except for 15 industries considered to be sensitive for security, armament and environment etc., all other industrial projects were released of the licencing obligations and for this an amendment was effected in the MRTP Act and a free hand was given to big companies as well as the new emerging one for expansion.
Common Minimum Programme and Industry:
In order to fulfill a firm commitment of the Government for maintaining a 12% annual industrial growth rate, an effort was made to formulate policies and strategies to encourage establishment of industries in the underdeveloped districts in the country.
For resolving the issues relating to duties etc. it was decided to set up a separate commission. It was also decided to set up a disinvestment commission to formulate guidelines in respect of disinvestment issue relating to public sector units.
In order to combat misuse of public money in unproductive activities, it was also decided to set up an expenditure commission.
As a result of all these steps against a target of 7.5 percent growth rate in the industrial sector as envisaged in the eighth plan, a growth rate of 2.3 per cent was registered in the first year of the plan period (1992-93), which was 0.6 per cent more than the growth registered during 1991 -92.
In 1993-94 the growth rate was 6% which increased up to 9.4% in 1994-95 while in 1995-96 it went upto 11.9%. This speaks of the concerted efforts to face the challenges in the industrial sector and the growth rate registered during the first six months of 1996-97 was 9.8%.