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A PROJECT ON

INDUSTRIAL DEVELOPMENT IN INDIA

SINCE INDEPENDENCE

SUBMITTED TO- SUBMITTED BY –

Ms. Eritriya Roy RUPALI VINOD RAMTEKE

Faculty of Economics SECTION ‘C’

SEMESTER – I

ECONOMICS PROJECT

SUBMITTED ON: 10-10-2014

HIDAYATULLAH NATIONAL LAW UNIVERSITY,

UPARWARA REGION, NEW RAIPUR
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DECLARATION

I, Rupali Ramteke, hereby declare that, the project work entitled, “The Changing Structure of
Family” submitted to H.N.L.U, Raipur is record of an original work done by me under the
able guidance of Miss. Eritriya Roy, Faculty Member, H.N.L.U., Raipur.

RUPALI VINOD RAMTEKE

Roll No. 136

10/10/2014
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ACKNOWLEDGEMENT

Thanks to the Almighty who gave me the strength to accomplish the project with sheer hard
work and honesty. This research venture has been made possible due to the generous co-
operation of various persons. To list them all is not practicable, even to repay them in words
is beyond the domain of my lexicon.
May I observe the protocol to show my deep gratitude to the venerated faculty-in-charge
Miss. Eritriya Roy, for his kind gesture in allotting me such a wonderful and elucidating
research topic.

RUPALI VINOD RAMTEKE

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TABLE OF CONTENTS
Page

Declaration

Acknowledgement

1. Introduction 5
1.1 Industrial changes in India since Independence – A Contextual
Outline
1.2 Objectives
1.3 Scope of the study
1.4 Methodology

2. Industrialization in India 7
2.1 History of Industrialisation in India
2.2 Industrialisation since Independence

3. Industries – A Phase of Transition 12

4. Major Industries in India 13

5. Economic Development 16

6. Conclusion 17

7. References 18
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“Industrialization based on machinery, already referred to as a

characteristic of our age, is but one aspect of the revolution that is
being wrought by technology.”
- Emily Greene Balch

1. INTRODUCTION

1.1 Industrial changes in India since Independence – A

Contextual Outline

Over the years agriculture has been the major source of

livelihood of the Indian population. However, after
Independence the founding fathers saw the nation progressing
with a decent industrial base. This triggered the formulation of
programs and strategies to construct a proper infrastructure for
speedy industrialization.

India has been successful in achieving autonomy in producing

different basic and capital products since independence. The
productivity of the major Indian industries incorporates aircraft,
vessels, automobiles, steam engines, heavy electrical equipment,
construction machinery, chemicals, precision equipments,
communication instrument, power generation and transmission
tools and computers.

Today, India is considered as a developing country or a third

world country, achieving development is a great dream of every
nation. So, when analyzing the history of India, it claims a long
tradition from ancient time onwards. But in the modern times,
from 17th century onwards the background of India changed
profoundly. Because India becomes a colony of different
powers, so naturally India and its people suffered many burdens.
As a part of the colonization the Indian tradition and culture
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began to get changed. British were the main rulers of India for
about two centuries. At last, after the Second World War India
got freedom from colonialists. The post World War II and the
independence of India, was in a bad situation. That was when
Indian people were highly suffered the problems of famine,
unemployment, lack of necessary facilities, etc.

Now, India passed more than 60 years if independence. The

progress or the story of Indian development was a bulky one to
describe. Here the purpose is to analyze what are the
developmental achievements in independent India.

1.2 Objectives

1. To study industrialization in India.

2. Industries – a phase of transition.
3. To study major industries of India.
4. Economic Developments of Industries.

1.3 Scope of the study

The present project is an attempt to analyze the industries and

the very phase of change and development in the industries of
India since independence. It seeks to study about
industrialization and the phase of transition it went through. It
will also discuss about the development of all the major
industries of India and economic development in all the sectors.

It goes into more detail and provides information about some

specific and important areas for industrialisation. It also
describes the main problems India faces today and in the future.
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1.4 Methodology

Given a study of this kind, the method involved in this study is of

descriptive analytical method. The information and research on
the said topic has been performed and been thoroughly analyzed
through the medium of this project. And thereby, we can draw
out suitable conclusions by this analysis.

2. INDUSTRIALIZATION IN INDIA

2.1 History of Industrialisation in India

This section gives a rough overview of the history of

industrialisation in India. Several areas will be discussed in more
detail in the following section.

Colonial rule

Under colonial rule, India, as with most other developing

countries, followed a non-industrial model. But many Indians
believed that progress was retarded by this. It was believed that
true economic progress lay in industrialisation; Smith’s and
Ricardo’s ideas of international specialisation and mutually
advantageous free trade were rejected, at least until India became
an exporter of more sophisticated goods.

2.2 Industrialisation since Independence

India’s first Prime Minister, Jawaharlal Nehru, Premier from

1947 to 1964, saw industrialisation as the key to alleviating
poverty. Industrialisation not only promised self-sufficiency for
his nation that had just regained political sovereignty, but also
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offered external economies accruing from technical progress.

Believing the potential of agriculture and exports to be limited,
Indian governments taxed agriculture by skewing the terms of
trade against it and emphasising import substitution, thus giving
priority to heavy industry.

Nehru believed a powerful state with a centralised planned

economy to be essential if the country was to industrialise
rapidly. The Industries (Development and Regulation) Act
(IDRA) in 1951 laid the foundations for this administrative
control on industrial capacity. But, over time, the licensing
requirements became increasingly stringent and were
accompanied by a gamut of procedures that required clearance by
a number of disparate and uncoordinated ministries.

In order to pursue IS, the Import Trade Control Order of 1955

subjected almost all imports to quantitative restrictions in the
form of import licenses. These were supplemented by tariffs at
rates that were among the highest in the developing world.

Indian state intervention in industrial development has been

extensive. Unlike many East Asian countries, which used state
intervention to build strong private sector industries, India opted
for state control over key industries. At different times,
nationalised industries included chemicals, electric power, steel,
transportation, life insurance, portions of the coal and textile
industries, and banking. To promote these industries the
government not only levied high tariffs and imposed import
restrictions, but also subsidised the nationalised firms, directed
investment funds to them, and controlled both land use and many
prices.
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Under Prime Minister Indira Gandhi (1966-77), two major shifts

took place in the role of the state. First, the neglect of agriculture
was reversed through state activism in subsidising new seeds and
fertilisers, agricultural credit, and rural electrification. The green
revolution took off and by the mid-1970s India was self-sufficient
in grain. The second shift was the further tightening of state
control over every aspect of the economy. Banks were
nationalised, trade was increasingly restricted, price controls were
imposed on a wide range of products, and foreign investment was
squeezed.

In 1973, dealings in foreign exchanges as well as foreign

investment came to be regulated by the Foreign Exchange and
Regulation Act (FERA). The act virtually shut out the inflow of
new technology from abroad in the 1970s and 1980s, particularly
when these involved large equity participation.

The Indian system of state planning went far beyond the usual
inward-looking industrialisation policies that most developing
countries pursued after World War II. The government regulated
the most basic business decisions for all firms above a certain
size: borrowing, investment, capacity utilisation, pricing and
distribution.

The over-restrictive, and often self-defeating nature of the

regulatory framework, began to become evident by the late 1960s
and early 1970s. Comprehensive planning was increasingly
criticised as planned targets were not met and many plans were
not even implemented. The lack of success in some dimensions
led to a new and more restrictive set of regulations. One example
is the attempt to reserve sectors for small industries and to restrict
the growth of large firms.

Beginning in the early 1980s, a mild trend towards deregulation

started. Economic reforms were introduced, starting to liberalise
trade, industrial and financial policies, while subsidies, tax
concessions, and the depreciation of the currency improved
export incentives. These measures helped GDP growth to
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accelerate to over 5% per year during the 1980s, compared to

3.5% during the 1970s, and reduced poverty more rapidly.
However India’s most fundamental structural problems were only
partially addressed. Tariffs continued to be among the highest in
the world, and quantitative restrictions remained pervasive.

Moreover, a significant government influence continued in the

allocation of credit to firms and a discouragement of foreign
investment. Relatively inefficient public enterprises, controlling
nearly 20% of GDP, remained a drag on economic growth.

The government expanded antipoverty schemes, especially rural

employment schemes, but only a small fraction of the rising
subsidies actually reached the poor. Competition between
political parties drove subsidies up at every election. The
resulting fiscal deficits (8.4% of GDP in 1985) contributed to a
rising current account deficit. India’s foreign exchange reserves
were virtually exhausted by mid-1991 when a new government
headed by Narasimha Rao came to power.

In July 1991, India launched a second major economic reform

program. The government committed itself to promoting a
competitive economy that would be open to trade and foreign
investment. Measures were introduced to reduce the
government’s influence in corporate investment decisions. Much
of the industrial-licensing system was dismantled, and areas once
closed to the private sector were opened up. These included
electricity generation, areas of the oil industry, heavy industry, air
transport, roads and some telecommunications. Foreign
investment was suddenly welcomed.

Greater global integration was encouraged with a significant

reduction in the use of import licenses and tariffs (down to 150%
from 400%), an elimination of subsidies for exports, and the
introduction of a foreign-exchange market. Since April 1992,
there has been no need to obtain any license or permit to carry out
import-export trade. As of April 1, 1993, trade is completely free,
barring only a small list of imports and exports that are either
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regulated or banned. The WTO estimated an average import tariff

of 71% in 1993 which has been reduced to 40% in 1995. With
successive additional monetary reforms, the rupee, since 1995,
can nearly be considered a fully convertible currency at market
rates. India now has a much more open economy.

To sum it all up:

Since independence to 1980: During this period there was

restrictive growth of private sector and government’s permission
was required to set up any private enterprise in India. Despite this
the GDP grew at a rate of 1.4% per annum from 1940-1970.
Other factors such as poverty and famine lowered India’s
economic growth rate during this period and with the presence of
very few top producers of major industrial goods the absorption
of domestic productivity was greater, which lead to monopolistic
pricing. India during this phase lagged behind in terms of
economic growth as the rest of world grew and flourished
through overseas trade.

1980 to mid-1990s: Post 1980s India saw liberalization and

achieved further impetus in mid-1991. The nation witnessed
historical upsurge in per capita GNP. In 1994-95 the industrial
output-growth registered 8.4% growth and the exports rose by
27%. This resulted in a 10% drop in inflation in the mid-1990s.

1990s to 2000s: Since its liberalization policy, India has opened

several public sector enterprises. The exports saw a 17% rise in
1994 and 28% in 1995-96. Over 90% of India’s imports are
backed by export revenues. At present the current account arrears
is less than 1% of GDP and foreign-exchange profits are soaring
at $20 billion. The food stocks have witnessed an all-time
increase of 37m tonnes.

The private sector, which was neglected by previous governments

contributes to two-thirds of India’s GDP. The shift of the state’s
responsibility from a chief investor to a catalyst of private
enterprise has paved way to a new accord on liberalization.
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3. INDUSTRIES – A PHASE OF TRANSITION

In 50 years of Independence, India has sent satellites in space,

constructed nuclear power plants and boasts of having one of the
largest pools of technical manpower in the developing world.

Over the four decades after Independence, India followed a

planned development strategy based on extensive public
ownership of commercial assets; a complex industrial licensing
system; substantial protection against imports (including some of
the world’s highest tariffs on imports of capital goods, and a ban
on imports of consumer goods); restrictions on exports; virtual
prohibition of foreign investment; and extensive regulation of
financial intermediation. At some point in the 1970s and early
1980s, these policies enabled the government to control the most
basic business decisions down to the firm level.

While the development strategy it adopted helped the country

escape from the massive illiteracy, recurrent famines, fertility
rates of about seven children per woman, and secular stagnation
prevailing before Independence, it also isolated India from the
rest of the world, with the result that from 2 per cent in the 1950s,
India’s share of world trade declined to less than half of one per
cent in the late 1980s. It forced Indian consumers to pay higher
prices for goods of lower quality and deprived the country of the
benefits of foreign direct investment and modern technology. It
discouraged production for exports, created recurrent shortages of
foreign exchange, and made the balance of payments extremely
vulnerable to internal circumstances. Most important of all, it
held back the country’s growth and thus the pace at which
poverty could have been reduced.
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4. MAJOR INDUSTRIES IN INDIA

Experts believe that the contribution of India in the world GDP is

estimated to increase from 6% to 11% by the year 2025, while on
the flip side the contribution of US in world GDP is presumed to
decline from 21% to 18%. This indicates towards the emergence of
India as the third biggest global economy after US and China. The
evaluation is supported by the overall development in all the
sectors in India, in which the key sector is the industry sector.

Going by the past records the Industry sector in India registered a

growth of 6.2% in October 2003 which further increased by 4% in
the corresponding month of the next fiscal year.

1. Textile Industry:
This industry covers a wide range of activities ranging from
generation of raw materials such as jute, wool, silk and cotton to
greater value added goods such as readymade garments prepared
from different types of man-made or natural fibres. Textile
industry provides job opportunity to over 35 million individuals
thus playing a major role in the nation’s economy. It has 4% per
cent share in GDP and shares 35% of the gross export income
besides adding 14% of value addition in merchandizing sector.

2. Food Processing Industry:

In terms of global food business, India accounts less than 1.5%
inspite of being one of the keyfood producing nations
worldwide. But this on the otherhand also indicates the
enormous possibilities for the growth of this industry. Supported
by the GDP estimates, the approximate expansion of this sector
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is between 9-12% and during the tenth plan period the growth
rate was around 6-8%. Food processing industry provides job
opportunities to 1.6mn people and it is estimated to expand by
37mn by 2025.

3. Chemical Industry:
Indian chemical industry generates around 70,000 commercial
goods ranging from plastics to toiletries and pesticides to beauty
products. It is regarded as the oldest domestic sector in India and
in terms of volume it gives a sense of pride to India by featuring
as the 12 largest producer of chemicals. With an approximate
cost of $28 billion, it amounts to 12.5% of the entire industrial
output of India and 16.2% of its entire exports. Under chemical
industries some of the other rapidly emerging sectors are
petrochemical, agrochemical, and pharmaceutical industries.

4. Cement Industry:
India has 10 large cement plants governed by the different State
governments. Besides this India have 115 cement plants and
around 300 small cement plants. The big cement plans have
installed competence of 148.28 million tonnes per annum
whereas the mini cement plants have the total capacity of 11.10
million tonnes per annum. This totals the capacity of Indian
cement industry at 159.38 million tonnes. Ambuja cement, JK
cement, Aditya cement and L&T cement are some of the major
steel companies in India.

5. Steel Industry:

Indian steel industry is a 400 years old sector which has a past
record of registering 4% growth in 2005-06. The production
during this period reached at 28.3 million tonned. India steel
industry is the 10th largest in the world which is evident from its
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Rs. 9000 crore of capital contribution and employment

opportunities to more than 0.5 million people. The key players
in Steel Industry and Steel Authority of India (SAIL), Bokaro
Steel Plant, Rourkela Steel Plant, Durgapur Steel Plant and
Bhilai Steel Plant.

6. Software Industry:
Software Industry registered a massive expansion in the last 10
years. This industry signifies India’s position as the knowledge
based economy with a Compounded Annual Growth Rate
(CAGR) of 42.3%. In the year 2008, the industry grew by 7% as
compared to 0.59% in 1994-95.

7. Mining Industry:
The GDP contribution of the mining industry varies from 2.2%
to 2.5% only but going by the GDP of the total industrial sector
it contributes around 10% to 11%. Even mining done on small
scale contributes 6% to the entire cost of mineral production.
Indian Mining Industry provides job opportunities to around 0.7
million individuals.

8. Petroleum Industry:
Petroleum industry started its operations in the year 1867 and is
considered as the oldest Indian industry. India is one of the most
flourishing oil markets in the world and in the last few decades
has witnessed the expansion of top national companies like
ONGC, HPCL, BPCL and IOC.
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5. ECONOMIC DEVELOPMENT

Economic development is also very significant one in the

development of any country. We can consider it as a backbone of
the country. In this 21st century Indian economy is one of the most
discussing matters among other country even India considering as a
developing country. In short, Indian economy has a bright future.
But a better proper plan is very vital to develop such a brilliant
economy. Mainly Indian economy consists of agriculture,
industries, etc. Let us analyze each of them separately.

a) Agriculture
Indian agriculture is very necessary one for the Indian economy,
because there are many rural area and rural people depending on
agriculture for their livelihood. During the initial stage of
colonial rule, Indian villages were attained self sufficiency. But
as the impact of commercialization of agriculture more farmers
turn to cultivating cash crops instead of food crops. When India
become an independent country there existed the problem till
1990s because Indian economy was in the trap of inflation,
famine, etc. After the green revolution Indian agricultural
productivity increased steadily. Today India export many food
items but the challenge of high poverty rate is surviving. Now,
many experts are arguing for a second green revolution in Indian
agriculture.

b) Industry
From olden time onwards Indian industry was a renounced one,
during that time, the industrial set up was entirely traditional.
There were many artisans and handicraft products, which
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attracted the world market. After the colonization, it began to

spread the modern industries and the economic set up of India
also began to change. Colonialists setup factories across the
country.
The industrial sector can be further divided as large scale
industries and medium and small scale industries. The large or
mega scale industries are functioning mainly on the urban area
and the medium and small scale industries are highly
concentrate on the rural area of the country, now industrial
sector become as a vital one and there introduced specialist
banks functioning for the development of Indian industry.
Today industrial sector is one of the major contributors to the
national income and it is also a developing trend in India.

6. CONCLUSION

India has developed from an agricultural country into an urbanized,

industrialized country. However this has led to many problems for
the country including poverty and environmental damage.
However it is not too late for India to fix its problems and
hopefully in the future we will see this happening.
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7. REFERENCES

www.isidev.nic.in/pdf/ICSSR_SM.pdf

www.researchandmarkets.com › ... › Business › Economics

www.gradestack.com/CA.../Industrial...Since.../14466-2913-
1309-study-wtw

www.mapsofindia.com/...india/india/development-in-india-
after-indepen...

www.isbs.com › ... › BUSINESS & ECONOMICS / Industries /

General

http://tadhg1991.files.wordpress.com/2010/04/india-
deveolopment-since-independence-and-future-sustainability.pdf

http://www.ijsrp.org/research-paper-1212/ijsrp-p12104.pdf

www.en.wikipedia.org/wiki/Economic_development_in_India
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