In India the early phase of modern industrialization started in the 1850s. Cotton and jute mills and mines gradually flourished in various parts of the country.

In the Pre independence period, Industrial development was predominantly regulated to suit the needs of British capitalism.  It not only stagnated, but thoroughly impoverished Indian economy. Industrialisation was marked by concentration in few hands , regional concentration , dominance of consumer industry, poor working conditions of the labour. Between the two world wars there was a phenomenal increase in the demands of factory products in India. However, the British government made no serious efforts to foster the growth of capital goods industries. Heavy industries were not permitted to grow.   Furthermore, in the long drawn struggle for freedom Indian industrialists and business community had thrown their lot along with the Indian masses against the British rule.

At the time of Independence, India did have an industrial foundation of sorts which included several jute and cotton textile mills, some sugar factories and two major iron and steel plants. However, even this very limited base was characterized by disparity and imbalance, especially in the capital goods sectors.

After Independence, India had opted for mixed economy. This being so, India decided to work within the over all framework of free enterprise and a market economy on the one hand and  banking on state planning where the state run public enterprise was to be gradually raised to the commanding heights. It was only after Independence that the Government of India made conscious and deliberate efforts for industrialization though its successive Five Year Plans. Between 1960 and 1965 the rate of growth of employment in the factories was 6.6% only. However in 1970 the factory employment absorbed only 2% of the labour force. In India since 1951 there has been a marginal shift of workers in favour of the industrial and recently the services sector.

Indian’s industrial  output grew until the mid-sixties, over a period of 15 years, at an annual rate of 7 to 8 per cent in real terms. But after this, the industrial economy faced a demand recession, leading to a sharp fall in capacity utilization and in public investment. Between 1965 and 1975, the growth came down to around 4 per cent per year. Liberalization of Licensing, as well as controls over foreign trade in the mid-seventies, reoriented the policy towards export, but the situation became critical with the oil crises of 1973 and 1979. However, the sixth plan saw a fresh effort at stopped up investment, mainly in the energy industries of the public sector, accompanied by a further Liberalization of licensing and pricing in a number of industries in 1980’s. Several industries immediately initiated expansion and modernization, upgrading technology.

Industrial dispersal

From the mid-60s, consistent efforts have been made towards industrial dispersal under various schemes to develop industries in industrially backward areas. This policy was based on the recognition of the wide disparities between states in terms of industrial progress. It is in relation to this backwardness that the Government of India has introduced a district Industrial Centre Programmer with a view to develop industrialization in the backward districts. The Industrial Policy Resolution 1980, indicated as one of its aims the correction of regional imbalance through a preferential treatment of industrially backward areas. It offered concessions and subsidies to entrepreneurs who set up industries in identified backward areas.

Indian Industries are not only varied but are also undergoing further diversification. Historically as well as in terms of actual employment opportunities, it is the agro based industries that still dominate the scene. Among the agro based industries the textile industry alone still dominates and tops the industrial scene. They include all branches of textiles inclusive of the synthetics with cottons , Woollens and silks and jute linens. The textile sector is followed by traditional edible or vegetable oils which was once a village industry. It has now emerged as an organized sector industry though highly dispersed throughout the length and breadth of the country. The old and traditional gur or jaggery industry again spread out over thousands of villages has undergone tremendous metamorphism to acquire the shape of a modern sugar industry. It has now the distinction to become the world leader.

Industrial dispersal implied change in the notion of industrialization from a urban phenomenon to a pan Indian phenomenon. Consequently it also brings about social changes not only in the context of urban areas but also in  wider social systems.