At the time of independence, Punjab had only a few hundred industrial units, mainly processing food grains, cotton ginning and brick kilns. Most of the manufactured items of even common use came from outside. During the post-independence period, industrial development in Punjab took place in phases. Thus, in the fifties the cycle-parts and hosiery industries took their roots, while in the sixties, with the advent of the Green Revolution, agriculture-related industries like farm machinery manufacturing came up.

The main focus in the seventies was on such industries as auto-parts and electronic items and during the eighties on such resource-based industries as food processing. The industrial sector in the state is in the throes of a very significant phase of transition with severe challenges and many new opportunities.

Main Industrial Centres :

• The distribution of industry indicates that the main industrial centres in Punjab are Ludhiana, Jalandhar, Amritsar, Mandi Gobindgarh, Batala and Mohali. Ludhiana is, known for the production of hosiery and read made garments, bicycles and components, sewing machines and parts, machine tools, auto-parts, industrial fasteners, electrical and electronic goods, etc. About 21% of the total industrial units In Punjab are located in Ludhiana district. Famous for hand tools, pipe fittings, valves and leather products, Jalandhar is well-known for its sport goods too. Mandi Gobindgarh popularly known as the Steel-Town of Punjab, hosts more than 300 steel re-rolling mills despite being situated far from the sources of raw materials.
• Batala is famous in the country for its castings and machine tools, while Amritsar is known for food products, paper machinery and textiles. Mohali near Chandigarh, which attracted a number of 'Sunrise Industries', thanks to its locational advantages and infrastructure, seems to have lost its momentum for growth in recent years. District Ludhiana leads Punjab in industrialisation. More than 28% of the industrial output of Punjab comes from Ludhiana, which has the highest number (166) of large and medium units. While Amritsar and Jalandhar were traditionally more advanced, Sangrur, which was one of the centrally declared backward districts and Patiala, have become fast growth areas.
• Districts Bathinda, Firozpur, Gurdaspur, Hoshiarpur, Kapurthala and Moga, each contributes 2 to 5% share to the state's industrial production; while Faridkot, Mansa and Muktsar Sahib each contributes less than 1% share. These districts are industrially backward and 'A' category incentives are provided to industry coming up in them under the Industrial Policy, 1996.

Exports from the State :

• The major sectors, which have made significant contribution towards exports from the state are woollen textiles, bicycles and parts, hosiery goods, hand tools, leather products, agro/food processing (food products and beverages), textiles, basic metal and metal products, machinery other than electrical and electronics industry. These sectors have contributed about 70% of the total industrial output.

Major Industries of the State :

Bicycle and Bicycle Parts Industry :

• The state is the second largest manufacturer of bicycles and bicycle parts in the world. The Ludhiana cluster produces about 60% of the total bicycles manufactured in the country in the large and small-scale sector and more than 80% of the parts and components in the small and tiny sector.
• The first indigenously owned bicycle-manufacturing unit, Atlas Cycles, was established at Sonepat in 1951 in the SSI sector in undivided Punjab. Hero Cycle Limited commenced production of complete bicycles in 1956 as an SSI unit in Ludhiana and became the world's largest producer of bicycles in 1989, with a record production of 2936076 units and entered the Guinness Book of World Records.

Automobile and Components Industry :

• With the increase in the motor vehicle population in the country during the 1980s, a large number of SSI units were established in Punjab to produce automobile components. These units have been catering to the needs of Original Equipment Manufacturers (OEMs) and replacement markets. Of late, some units have also come up to serve the export market with improved technology and product quality and they have been able to export even to developed countries. The industry, which started as motor vehicle repair workshops, has come of age and is now a major foreign exchange earner.
• The automobile industry in Punjab is mainly an auto-component industry. The total number of units has grown to 2598 (with 2569 in SSI and 29 in L and M) employing about 45745 persons in 1999-2000. The total production in this sector has been valued at 2154.90 crore with an investment of 1128.03 crore growing at an annual average rate of 14.7% and 8.4% for production and investment respectively. Thus, the performance of this sector has been quite good. Auto-parts manufacturing units are spread over the whole state and most of them manufacture components required in the replacement market.
• The products presently manufactured in the industrial belts of Ludhiana, Jalandhar, Kapurthala and Ropar are metal-based. They range from such simple items as nuts and bolts to such complex items as axle, shafts and radiators, standards, engineering capability, machinery and quality control vary from Poor to excellent, with most of the small-scale units showing engineering ingenuity and getting the best out of what they have and what they know.

Agro/Food Processing Industry :

• Punjab is endowed with fertile land and a favourable climate to grow a large number of cereals, fruits and vegetables, oilseeds, pulses and maize and provides about 25% of India's wheat production and approximately 10% of rice production. The state has basic raw materials, manpower and a vast consumer market, which are the necessary pre-requisites for industrial production. Value addition in agriculture is the answer to the wheat-paddy rotation, which has become one of the weak spots in the state's economy.
• There is a huge domestic and export market for food products, but the consumer demands high quality food, both raw and processed, at affordable prices. Development of the agro/food processing sector can bring more employment opportunities, especially in the small towns and rural areas and cheaper and better products to the consumers. Therefore, Punjab will have to look for alternative crops, which can increase revenues/returns to the farmers and have better scope for marketing/processing. This would be possible with research and development in specific crops to achieve desired quality/yield and supporting infrastructure.

Textile and Hosiery Industry :

• Ludhiana is famous worldwide for its hosiery and knitting industry. The history of hosiery in Ludhiana can be traced back to 1902-1903, when the first manufacturing unit woollen socks was set-up. During the years that followed this industry in Ludhiana progressed steadily. Till recent years, our main trading partner for the export of hosier knit wear was the erstwhile USSR. However, after its disintegration, exports have diversified to other markets, viz, Europe, USA and other advanced countries. Production in the textile and hosiery industry in the Eighth FYP achieved an impressive average annual growth rate of 26%. It however, declined sharply during 1995-1996 to 1999-2000 to 14% in textile and 11.22% in hosiery.

Basic Metal Industry :

• The basic metal industry is acclaimed as the mother of all industries. Before independence, there were some restrictions on setting up the iron and steel industry and therefore, very few units were engaged in the manufacture of basic metals. These units were mainly concentrated in the erstwhile princely states of Nabha, Patiala and Faridkot. These states offered many incentives, such as tax holiday and free land to promote industry within their respective territories.
• After independence, overall industrial growth in Punjab to the development of the steel industry as backward-linkage efforts. The industry, which started with the manufacture of bars and rods and small smith shops, graduated to the manufacture of forging items, castings for machine tools, girders, heavy channels and joints of different compositions. This impressive growth despite Punjab's distance from coal mines, steel producing areas and ports was due to such factors as availability of cheap and good quality power, entrepreneurship and incentives given by government such as freight equalisation. However, the SSI units employ 75% of total workforce in the basic metal industry.

Melting and Re-rolling Industry :

• Re-rolling is one of the most important segments of the iron and steel industry, constituting an essential link in its supply chain. The rolling and re-rolling mills cluster in Punjab are located at Mandi Gobindgarh and adjoining areas. Mandi Gobindgarh is rightly Called the 'Steel Town of Punjab'. About 275 rolling and re-rolling mills, five arc furnaces and 100 induction furnaces are in operation in Punjab. The steel melting and re-rolling sector consists of small and medium scale units producing several 1000 tonnes annually of different type of structurals, rods, plates, flats, etc.

Forging Industry :

• The extension of road transport, the Green Revolution and the development of steel making and light engineering industry in the state, gave a boost to the forging industry. More than 90% of the forging units are located in Ludhiana and Jalandhar and remaining in Mandi Gobindgarh, Phagwara, Mohali and Amritsar.

Metal Products Industry :

• The metal products industry transforms basic metals into more useful products, such as conversion of metal sheets to trunks and almirahs and pipes into steel furniture. It also produces such industrial products as nuts and bolts, hand tools, etc. The metal products industry is concentrated in Amritsar, Jalandhar, Ludhiana and Kapurthala, Though, fabrication units are spread all over the state.

Machinery other than Electrical Industry :

• The machinery making industry of Punjab has played a very significant role in the industrial development of the country. This Is particularly true of the small-scale sector of the state engaged in the production of machines for the manufacture of a variety of industrial products. This industry includes diesel engines, tractors, oil expellers, textile machinery, etc. The industry is mainly concentrated in Batala and Ludhiana and produces a variety of machine tools of different sizes and types. Machine tools worth 80 crore and above are being exported annually from Punjab.

Traditional Rural and Tiny Units in Khadi and Village Industries :

• Since its inception in 1956, the Punjab Khadi and Village Industry Board (KVIB) has been implementing various schemes for generating sustainable employment for the traditional rural artisans and entrepreneurs, by providing financial assistance and technical help for setting up village and tiny industries.
• The KVIB has been promoting very small and tiny industries by traditional artisans, such as weavers, spinners, cobblers, blacksmiths, carpenters, potters, etc. With the advancement of technology, entrepreneurs have started making use of modern machinery and equipment and are manufacturing quality products. By 1999-2000, the number of units established under the schemes of the KVIB went upto 34678, with production valued at Rs. 220.46 crore and employment of about 45100 persons.

Rural Industries Including Khadi and Village Industries :

• The Punjab government has been making special efforts to promote small-scale/tiny and cottage Industrial services and business units at the Rural Focal Points, to create employment opportunities in rural area. So far, 594 Rural Focal Points have been identified, of which land has been made available for 263. These focal points are under the Control of the Department of Rural Development and Panchayats.

Electronics Industry :

• The major segments of the electronics hardware industry are information technology (comprising computers and computer peripherals), telecommunications (comprising switching equipment, transmission equipment and customer premises equipment) and consumer electronics (the major products being television, audio/video equipment, clocks and watches), control instrumentation, industrial electronics, strategic electronics and the electronic components industry, which supplies components to these segments.
• They have similar basic building blocks, value chain and issues. Convergence is increasingly blurring distinctions between these segments. Technological evolution is resulting in increasing convergence. Hence, in view of future trends, it will be appropriate to integrate these segments into one industry — Electronics Hardware Industry (EHI).
• SAS Nagar (Mohan) is the hub of electronics hardware industry and second largest centre after Bengaluru with top-grade units in communications, computers and peripherals, electronic components including picture tubes, semi-conductors, devices, active components, etc.

New Industrial Policy, 2009 :

• The State Government announced its New industrial Policy in 2009, which focuses on creating favourable destination for investment and to establish synergy between agriculture and industrial sectors and to rejuvenate small-scale sector.

Some of the incentives provided by the state are mentioned below :

• Special package of incentives and concession are provided for agro-based industries and food processing industries, information technology and knowledge-based industries, textile industry, hotel and health service industries.
• To enhance more private sector participation under PPP.
• To set-up Udyog Sahayak, a state level nodal agency for single window clearance approvals for industrial projects.
• To emphasis on revival of sick units and employment generation.
• To boost private investment in the state, 69 mega projects worth 42000 crore have been approved during the last 4 years.