Industrialization plays a vital role in the economic development of an economy. Rapid Industrialization is also a key driver of the structural change in the economy which represents a rising share of industry and services in the Gross State Domestic Product (GSDP) as compared to agriculture. Over the years Punjab has also witnessed an increase in the contribution of industrial sector in the GSDP, thus reflecting growing importance in the economy. The share of industry in the GSDP is 28.86% in 2012-13.

Industrial Scenario of the State :

• Both in India and Punjab, the growth rate of industrial sector has declined in recent years due to overall recession in the economy. As a consequence, the percentage contribution of this sector in the economy has also come down. The industrial sector has recorded a growth rate of 2.08% in 2013-14 and is estimated to grow at 2.04% in 2014-15.

Large and Medium Scale Units :

• The number of large & medium scale industrial units was 452 during the year 2013-14 with a fixed investment of Rs. 55000 crore, which provided employment to 2.90 lac persons. During the year 2014-15 these units are projected to increase to 463 with a fixed investment of Rs. 60000 crore, which will generate employment to 3.20 lac persons.

Small Scale Units :

• The industrial scene of Punjab is dominated by the micro and small scale industry. There are approximately 1.56 lac registered Micro, Small , Medium and Large Industrial units in the state producing industrial goods including items such as hosiery goods, bicycles and cycle parts, automobile parts, sewing machine parts, yarn and textile, hand tools and machine tools, sports goods and leather goods. The number of small scale industrial units was 156518 during the year 2013-14 which generate employment to 11.12 lac persons. During the year 2014-15, this number has increased to 160000 with a fixed investment of Rs. 14460 crore, which has provided employment to 11.48 lac persons.

Institutional Framework :

• The Punjab State Industrial Development Corporation Ltd. (PSIDC ) : It is a Punjab Government undertaking engaged in industrial development in Punjab. It plays an important role for the promotion of large and medium scale industries and helps in attracting considerable investments in the State.
• Punjab Agro Industries Corporation Ltd. (PAIC) :It is the premier organization of the State Government engaged in the promotion and facilitation of agro processing industries including agro processing, dairy processing, poultry processing, agro residue processing, food and horticulture processing, agro chemicals manufacturing etc. in the State. PAIC is the Nodal Agency in the state to facilitate investment in the agriculture sector.
• Punjab Information and Communication Technology Corporation Limited (INFOTECH) : Punjab Infotech was incorporated in 1976 as Nodal Agency of the Government of Punjab for the promotion of Electronic/IT industry in the state. Since then the Corporation has been actively engaged in promoting the state as one of the most favoured investor friendly destination. The Corporation has contributed towards development of Mohali as a hub for IT/Electronics/Knowledge Industry.
• Punjab Small Industries and Export Corporation Ltd. (PSIEC) : It was set in 1962 as a Nodal Agency for promotion of exports and nominated agency for the implementation of Central Government Scheme known as Assistance to State for Developing Export Infrastructure and Allied activities (ASID).

The State Government Initiatives for the development of Industrial Sector :

• Industrial Policy, 2009 : To overcome the global recessionary trend and to establish a congenial Industrial atmosphere in the state, the state Government has implemented the Industrial Policy, 2009. Thrust area of this policy is to play the role of facilitator and hand holder by lessening Government's control while outsourcing the regulatory measures. Special emphasis has also been given for the development of Industrial infrastructure, implementing the industrial reforms for the existing industries and measures for attracting new investments by providing specific concessions for the development of Information Technology and Knowledge based Industries and Agro based industries.
• Special Economic Zones Policy, 2009 : State Government has also enacted a Special Economic Zone Act, 2009 to facilitate the development of Special Economic Zones in the state. Under this Act, exemptions from all state taxes, duties, cess or levies, stamp duty registration fee and social security cess on purchase of land for Special Economic Zone for first transfer or release of land/plots in these areas have been provided. 17 Special Economic Zones have been approved by the Govt. of India, 2 Special Economic Zones have already been notified at Mohali. One more special Economic Zone has been recommended to Govt. of India for approval at Mohali.
• Agro Industrial Policy, 2009 : State Government has a lot of agro produce. The newly enacted Agro Industrial Policy, 2009 endeavours to make Punjab, the destination of investors and processors, both global and domestic.
• Fiscal Incentives for Industrial Promotion : To accelerate industrial and economic growth, the State Government has implemented Fiscal Incentives for Industrial Promotion Policy 2013 under which special package of 24 concessions such as concessions on VAT & CST, stamp duty, property tax and electricity duty, has been provided for Information Technology & Knowledge Based Industries, Food Agro-based Industries and Food processing Industries to boost Industrial Investments in the State.
• Punjab Bureau of Investment Promotion (PBIP) : For promoting ease of doing business, Punjab Bureau of Investment Promotion (PBIP) has been set up, which will act as a nodal agency to carry out the objectives of the package and to resolve and provide time bound clearance of all new investment in the state. 153 proposals with proposed investment of about Rs 9600 crores have been received in the Bureau.
• Progressive Punjab Investor Summit : As part of investment campaign, Progressive Punjab Investor Summit was organized in December, 2013 at the Indian School of Business, Mohali. This summit has attracted investment of about Rs.65,000 crore in textiles and engineering, information technology, agro and food processing, tourism, health, bio sciences, infrastructure sector. This investment would generate a number of jobs in these sectors.
• Integrated Mixed Use Industrial Park is being developed at Kapurthala.
• A Mixed Land use Industrial Park is being developed at Rajpura in about 1350 acres.
• State Government has also been pursuing with Government of India for approval of cluster Projects for different types of Industries in the State in order to provide R&D facilitates to industry and enable them to do cost cutting for competing in the global market.
• Project for Hand Tools Cluster at Jalandhar and Project for Fondry and Machine Tool cluster at Batala have been approved by Government of India.
• Four Textile Parks have been set up for the promotion of Textile Industry in the State.
• Footwear Design & Development Institute (FDDI) at Banur, District SAS Nagar (Mohali) is being set up.
• The Govt. of India has accorded approval for setting up an Apparel Park at Ludhiana. The park is being promoted by apparel Exporters Association of Ludhiana.
• Effluent Treatment Plants : State Government has taken the initiative of cleaning the rivers in the State and to ensure that no industrial effluents mix with the river water.
  a).For this purpose World's largest Common Effluent Treatment Plant of 115 MLD capacity is being set up at Tajpur road, Ludhiana for dyeing industry.
  b).Common Effluent Treatment Plant of 15 MLD capacity is being set up at Bahadur-ke road in Ludhiana.
  c).Common Effluent Treatment Plant of 3.3 MLD capacity is being set up for Electroplating Industry at Ludhiana.
  d).2 common Effluent Treatment Plants with capacity of 1.5 MLD and 5 MLD have been set up at Leather Complex, Jalandhar for leather industry.

• GAIL (India) Ltd. - Gas Pipeline Project : A project for laying of Natural Gas pipeline along with developing and operating optic fibre communication system having an estimated cost of Rs. 2100 crore, is being implemented by GAIL (India) Ltd. (A Government of India Undertaking) which will further boost the industrial development of the State of Punjab. Gas Pipeline (includes 583 Km long Dadri-Bawana-Nangal pipeline will pass through the Districts of Patiala, Fatehgarh Sahib, Ludhiana, Barnala, Moga, Bathinda, SBS Nagar, Hoshiarpur and Rupnagar in the State of Punjab.
• To alleviate the financing difficulties faced by micro and small entrepreneurs, the State Government has proposed to launch an 'Entrepreneurship Development Programme' for a period of five years. Under this programme an interest subvention at the rate of 3% will be provided on loan taken to set up a micro or small enterprise with investment of up to Rs. 5 crore.

Ease of Doing Business :

• The State strengthened the Invest Punjab initiative by setting up “Business First” portal to provide all regular services and fiscal incentives to the businesses through one common integrated platform and business friendly service delivery network.

Fiscal and Non Fiscal Incentives :

• The State has provided a variety of fiscal and non-fiscal incentives to support the growth of existing industries and to attract new investments. The policy provides strong support to MSMEs to enhance their access to Finance, Technology, Market, Infrastructure and other needs. The State has identified certain thrust sectors for growth and they have been provided higher incentives. It has also given a package of incentives for revival of sick industries. Extreme Border Zone has also been given special incentives.

Excise and Taxation :

• The Punjab Government has introduced a number of Trader Friendly and Welfare Schemes viz., Punjab Small Traders Rahat Scheme, 2014 Online Refund Disbursal and Star Rating Scheme Voluntary Disclosure Scheme Single Stage Taxation Social Security Scheme for Business Community of Punjab Revival Package for iron & Steel Industry.

Announcements made in Budget of Punjab 2018-19 : The main allocations under the annual plan are :

• Rs 1,440 crore - for subsidy to Industries which no other government has ever done in the history of the state by providing power to the industry at a variable cost of 5/- per unit.
• Rs. 100 crore - for Entrepreneurship Development Programme
• Rs. 55 crore - for Focal Points
• Rs. 1 crore - for Northern India Institute of Fashion Technology (NIFT) Scheme.