Chapter 14 · Economics

Indian Industries

Industrial History · Policies · Ratna Status · IIP · EPZ/SEZ · Schemes — BPSC / BSSC

Industry — Introduction
  • Conversion of primary products into secondary products
  • Process of production or manufacturing of goods
6.2%Industrial Growth Rate (2024–25)
27.6%Industrial Share in GVA (2024)

Industrial share in GDP was just 13% in 1950–51. Modernisation of the economy and increase in employment come via the industrial sector.

Consumer GoodsClothes, food items, sports goods
Capital GoodsMachines, equipment, tools
First Industrial Revolution (World)England
Industrial Sectors (By Ownership)
SectorDescription
Public SectorManaged, controlled, operated by the government
Joint SectorGovernment + Private partnership
Private SectorOwnership, control, management by a firm/individual/company
Cooperative SectorOwnership, control, management by state government and individuals/groups

Suggestions related to industrial licensing policy were first proposed by the Dutt Committee in 1970.

Iron and Steel Industry
Beginning of Production1870, by Bengal Iron Works Company (Kulti)
TISCO1907, Jamshedpur, Jharkhand
First Public Sector UnitRourkela Steel Plant, 1959 (Odisha)
Aluminium Industry
First Aluminium IndustryJ.K. Nagar, 1937 (West Bengal)
SecondMuri, 1938 (Jharkhand)
NALCOEstablished 1981, Bhubaneswar (Odisha) — country's largest Bauxite-Aluminium project
BALCO1965, Korba (Chhattisgarh) — first public sector undertaking in India
⚠ EXAM TRAP
BALCO is often confused for being related to steel due to its name — it is actually India's first PUBLIC SECTOR UNDERTAKING in the Aluminium industry.
Textiles Industry

India's oldest industry; country's largest organised sector; largest sector providing employment after agriculture.

First Modern Cotton Textile MillKolkata (1818)
Second MillBombay Spinning and Weaving Company, Mumbai (1854), founded by Cowasji Nanabhai Davar
NicknameCity
India's Cottonopolis / ManchesterMumbai
East's BostonAhmedabad
North India's ManchesterKanpur
South India's ManchesterCoimbatore
State with Most Cotton MillsTamil Nadu
Jute Industry (Golden Fibre)
  • India is the largest producer and second-largest exporter of jute goods in the world
  • First jute mill: 1855, Rishra, Kolkata
  • Largest jute producer state: West Bengal

International Jute Organisation: Established 1984, HQ Dhaka.

Silk Textile Industry
Beginning of Modern Silk Manufacturing1832, Howrah (by East India Company)
World Rank2nd largest producer (1st: China)
Largest Producer in IndiaKarnataka

Types of Silk: Eri, Mulberry, Muga, Tasar, Oak Tasar.

Other Industries
  • Electronic industry: began in the 1980s in radio manufacturing
  • Petrochemical industry: started by private sector in 1961
  • First public sector petrochemical unit: Indian Petro-chemical Limited, 1969 (Vadodara)
  • Country's first super phosphate factory: Ranipet (Tamil Nadu)
  • First modern woollen textile mill: 1876 (Kanpur)
Industrial Policy, 1948
Announced6th April, 1948
MinisterShyam Prasad Mukherjee (Industry and Commerce)

Four Categories

  • Central Government's monopoly
  • New ventures only by state government
  • Industry of foundational importance
  • Small, private, and cooperative industries
Industrial Policy, 1956
Announced30th April, 1956

Industries divided into 3 categories: Government sector (17), Government + Private (12), Private.

Industrial Policy, 1970
AnnouncedFebruary, 1970

Small-scale sector — Three categories

  • Cottage and household industries
  • Tiny industries
  • Small-scale industries

Special emphasis on small and cottage industries; establishment of District Industries Centre (DIC).

Industrial Policy, 1980
Announced23rd July, 1980

Promoted the concept of economic federation; emphasis on solving problems of sick industrial units.

New Industrial Policy — LPG (1991)
Announced24th July, 1991
  • L — Liberalisation: Abolition of licensing system; less government control
  • P — Privatisation (Nijikaran): Change in ownership/management of PSUs; direct sale of PSU companies
  • G — Globalisation: Integration of country's economy with world economy via trade and commerce
⚠ EXAM TRAP
MRTP Act (1969) was replaced by the Competition Act, 2002 — not amended, fully replaced. Both dealt with monopolistic/restrictive trade practices but under different frameworks.

Industries reserved for Public Sector: Atomic Energy and Rail Transport.

Related Policies & Acts
New Manufacturing PolicyAnnounced 4 November 2011 — Increase manufacturing GDP share to 25%, create 100 million jobs, double manufactured exports by 2022
MSMED Act2006 — promotes and facilitates MSME development

Industries Requiring Compulsory Licensing

  • Electronics, Aerospace, Defence equipment
  • Tobacco manufacturing, Hazardous chemicals
  • Distilled alcoholic beverages
  • Industrial explosives (including matchstick)
  • Cigars, cigarettes, other tobacco products
Maharatna
Started2010
CriteriaNavratna status + foreign business presence + stock exchange listing
  • Average annual turnover of ₹25,000 crore (3 years)
  • Average net profit of ₹5,000 crore (3 years)
  • Average annual net worth of ₹15,000 crore (3 years)
14Maharatna Companies

IOC, ONGC, CIL, SAIL, NTPC, BHEL, BPCL, PGCIL, PFC, RECL, OIL, GAIL, HPCL, HAL

Navratna
Started1997
Score Requirement60 out of 100 points
Current Number (May 2025)26

Scoring Parameters (6)

  • Acquisition per share
  • Net profit vs assets
  • Cost of production/services vs gross turnover
  • Gross profits, interest & tax vs capital planning
  • Gross profits, interest & tax vs turnover
Miniratna (Category I & II)
Category-I MiniratnaCategory-II Miniratna
3 years continuous profit; ₹30 crore profit in the year; capex autonomy up to ₹1500 crore or net worth (whichever lower)3 years profit + positive net worth; capex autonomy up to ₹300 crore or 50% of net worth (whichever lower)
Current: 49 (March 2025)Current: 10 (March 2025)
⚠ EXAM TRAP
Ratna hierarchy from highest to lowest: Maharatna > Navratna > Miniratna Category-I > Miniratna Category-II — don't reverse the sequence.
Index of Industrial Production (IIP)
Estimated ByNational Statistical Office (NSO), monthly
Base Year2011–12
SectorWeightage
Manufacturing77.63%
Mining14.37%
Electricity~8% (7.99%)
Eight Core Industries (Total Weightage: 40.27%)
Core IndustryWeightage
Refinery products28.04%
Electricity19.85%
Steel17.92%
Crude oil8.98%
Coal10.33%
Natural gas6.88%
Cement5.37%
Fertilisers2.63%
⚡ QUICK RECALL
Refinery Products carry the highest weightage (28.04%) among the 8 Core Industries, while Fertilisers carry the lowest (2.63%).
Export Processing Zone (EPZ) & SEZ
Asia's First EPZ1965, Kandla (Gujarat)

Objective: To provide a suitable environment for the export of goods from the country.

Converted EPZ to SEZ1st April, 2000
SEZ Act Passed2005
Public Sector Companies That Were Privatised
Public Sector CompanySold to Private Sector Company
Modern Food IndustriesHindustan Lever Limited
BALCOSterlite Industries
Videsh Sanchar Nigam LimitedPanatone Finvest Limited (Tata Group)
MSME Revised Classification (Budget 2025–26)
EnterpriseInvestment (Current)Investment (Revised)Turnover (Current/Revised)
Micro Enterprise₹1 crore₹2.5 crore₹5 crore / ₹10 crore
Small Enterprise₹10 crore₹25 crore₹50 crore / ₹100 crore
Medium Enterprise₹50 crore₹125 crore₹250 crore / ₹500 crore
⚠ EXAM TRAP
The Budget 2025-26 MSME revision roughly 2.5x'd the investment limits and 2x'd the turnover limits across all three categories — remember the pattern, not just isolated numbers.
Institutions Related to Small & Cottage Industries
InstitutionEstablished
Cottage Industries Board1948
Central Silk Board1948
All India Handicrafts Board1952
All India Khadi and Village Board1953
Small Scale Industries Development Organisation1954
Khadi and Village Industries Commission1957
Regional Rural Banks1975
District Industries Centre1978
SIDBI1990
All India Handloom Board1992
Major Export Promotion Centers
CenterIndustry
KanchipuramSilk
SalemTextiles
SivakasiMatch Box
AmbalaScientific Instruments
JamnagarDyes, Petrochemicals
RajkotEngine Pump
Vapi (Ankleshwar)Chemistry
BareillyZari
BhagalpurKnitting
TiruppurHosiery and Knitting
MoradabadBrass Handicrafts, Metallurgy
SaharanpurWood Carving
LudhianaHeavy Machinery and Hosiery
SuratGems and Jewellery
Panaji (Goa)Rubber Industry
PanipatHandloom
BhopalPesticide Industry
AlleppeyCoconut Fibre and Products
JalandharSports Goods
Mon (Nagaland)Wood Products
NalbariBamboo Products
PinjoreMachine Tools
NagpurHandloom
VisakhapatnamFish Products
MeerutSports Goods
AligarhBrass Locks
AgraLeather, Footwear
KhurjaPottery
⚡ QUICK RECALL
Two cities are known for Sports Goods (Jalandhar and Meerut) and two for Handloom (Panipat and Nagpur) — remember there are duplicate industry-city pairs.
Key Industrial Institutions

National Investment and Infrastructure Fund (NIIF)

Established2015, with ₹40,000 crore
ContributionCentral Government 50% + Private Sector 50%

To expedite infrastructure projects.

National Productivity Council (NPC)

Established1958

Objective: To increase productivity in industries.

National Steel Policy2017
MSMED Act2006 (passed)
Schemes Related to Industrial Sector
SchemeStartedObjective
Make in India25 September 2014Promote investment and manufacturing in India
Start Up IndiaJanuary 2016Nurture innovation and startups ecosystem
Stand Up India SchemeApril 2016Promote entrepreneurship among SC/ST women
Pradhan Mantri Mudra Yojana8 April 2015Refinancing of microfinance institutions
SAATHI SchemeOctober 2017Adopt modern, efficient textile technology in small industries
Power Tex India SchemeApril 2017Development of the powerloom sector
⚠ EXAM TRAP
Stand Up India (SC/ST women entrepreneurship) vs Start Up India (general innovation ecosystem) — very similar names but different target groups and objectives.
Quick Summary / Reference Table
TopicKey Fact
Industrial Growth Rate6.2% (2024–25)
Industrial Share in GVA27.6% (2024) | Was 13% in 1950–51
First Industrial RevolutionEngland
Dutt CommitteeFirst proposed industrial licensing policy — 1970
TISCO1907 | Jamshedpur, Jharkhand | Tata Iron and Steel Company
First Public Sector Steel PlantRourkela Steel Plant, 1959 (Odisha)
NALCO1981 | Bhubaneswar (Odisha) | Country's largest Bauxite-Aluminium project
BALCO1965 | Korba, Chhattisgarh | First public sector undertaking in India
Textiles — India's oldest industryLargest organised sector | Largest employment after agriculture
First Cotton Textile MillKolkata (1818)
India's CottonopolisMumbai
East's BostonAhmedabad
Most Cotton Mills StateTamil Nadu
North India's ManchesterKanpur
South India's ManchesterCoimbatore
Jute — India's positionLargest producer | Second largest exporter | First mill: 1855, Rishra, Kolkata
Largest Jute Producer StateWest Bengal
Silk — India's position2nd largest producer (1st: China) | Largest producer: Karnataka
First Industrial Policy1948 | Announced 6 April 1948 | 4 categories
Industrial Policy 19563 categories: Govt (17), Govt+Private (12), Private
New Industrial Policy LPG24 July 1991 | Liberalisation, Privatisation, Globalisation
Industries Reserved for Public SectorAtomic Energy and Rail Transport
MRTP Act1969 | Replaced by Competition Act, 2002
Navratna — Started1997 | Score 60/100 | Current: 26 (May 2025)
Maharatna — Started2010 | 14 companies
Miniratna Category I49 (March 2025) | 3 years continuous profit | ₹30 crore in a year
Miniratna Category II10 (March 2025)
IIP Base Year2011–12 | Estimated monthly by NSO
IIP — Manufacturing Weightage77.63%
Core IndustriesEight | Total weightage 40.27%
Highest Weightage Core IndustryRefinery products (28.04%)
Asia's First EPZ1965 | Kandla (Gujarat)
EPZ to SEZ1 April 2000 | SEZ Act: 2005
NIIFEstablished 2015 | ₹40,000 crore | Centre 50% + Private 50%
NPCEstablished 1958 | Increase productivity in industries
Make in India25 September 2014 | Promote investment and manufacturing
Stand Up IndiaApril 2016 | Entrepreneurship for SC/ST women
Start Up IndiaJanuary 2016 | Nurture innovation and startups
PM Mudra Yojana8 April 2015 | Refinancing of microfinance institutions
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