Modernization of Industry in India

The main component in the drive for structural diversification has been the effort to promote industrial growth and diversification. This effort commenced effectively with the Second Plan which, along with the Industrial Policy Resolution of 1956, articulated explicitly the objective of rapid industrialisation. Apart from rapid growth, this strategy involved certain other key components viz. a shift in the industrial structure towards industries producing basic materials and capital goods and the growth of the public sector in industry.

At Independence we inherited an industrial structure that was restricted to a few industries like textiles and sugar. The first steel plant had been set up and there was some limited development of engineering in railway workshops and assembly plants. The drive to diversify this structure, a drive linked to the search for self-reliance, has been the keynote of the industrial strategy of our plans.

The relative share in industrial production of the traditional manufacturing sectors like food and textiles has declined and that of new sectors like chemicals and engineering has increased very substantially. In terms of sophistication of technology and the range of goods manufactured an extensive degree of industrial diversification has been achieved.

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The organisation of industry has also undergone a major change with the development of the public sector. Between 1960-61 and 1977- 78, the share of the public sector in the value added in mining and organised manufacturing grew from 8.1 per cent to 28.9 per cent. The development of the public sector has been the principal element in our drive for industrial diversification and in industries like steel, non- ferrous metals, petroleum, fertilisers, petrochemicals and heavy

engineering, public sector units play a dominant role.

The industrial policy of the Government accepted the important role of the private sector and an elaborate network of institution has been established to support it and to regulate its activities. A major component of the support system is the network of development banking institutions which have been established to finance private investment in industry. This aspect has been well emphasised in the tenth plan.