After gaining independence on August 15, 1947 it was necessary to give new policy for industrial development, decide priority areas and clear doubts in the minds of private entrepreneurs regarding nationalisation of existing industries.
The Government of India announced its Industrial Policy Resolution (IPR) on April 6, 1948 whereby both public and private sectors were involved towards industrial development. Accordingly, the industries were divided into four broad categories:
(a) Exclusive State Monopoly-This includes the manufacture of arms and ammunition, production and control of atomic energy and the ownership and management of railway transport. These industries were the exclusive monopoly of the Central Government.
(b) State Monopoly for New Units-This category included coal, iron and steel, aircraft manufacture, ship building, manufacture of telephone, telegraphs and wireless (apparatus (excluding radio receiving sets) and mineral oils. New undertakings in this category could henceforth be undertaken only by the State.
(c) State Regulation-This category included industries of such basic importance like machine tools, chemicals, fertilizers, non-ferrous metals, rubber manufactures, cement, paper, newsprint, automobiles, electric engineering etc. which the Central Government would feel necessary to plan and regulate.
(d) Unregulated private enterprise-the industries in this category were left open to the private sector, individual as well as cooperative.