The approach to the Fifth Five Year Plan necessitated certain modifications in the industrial policy. Accordingly, the coverage of the core sector was enlarged by an addition of 19 industries (though the basis of selection defied any logical scrutiny). Further, industries of future importance to the nation were treated as 'basic' industries those having linkage with future as of 'strategic' importance.
The core sector was split in two portions, the first portion consisted of the items reserved for small entrepreneurs and public sectors. In this section production of mass consumption goods was to be encouraged through cooperatives also. The second portion was left open to large industrial houses, foreign concerns and their subsidiaries.