Phases of Industrialisation in India
🏭 PHASE I: Abortive Phase (1818–1854)
“An attempt was made… but the child could not be born 😊”
🧭 Context of the Phase:
This was a time when India tried to take its first steps toward modern industry. But all such efforts failed. Why? Because of the suppressive colonial policies.
🛠️ Major Industrial Attempts:
| Year | Industry Established | Location |
|---|---|---|
| 1818 | First textile mill | Fort Gloster, Kolkata |
| 1827 | Iron and steel smelting plant | Chennai |
| 1829 | Another textile mill | Ahmedabad |
| 1832 | Paper and pulp industry | Chennai and Ballygunj |
These were not random ventures—they were conscious efforts by Indian entrepreneurs or local rulers. But they all failed and shut down.
🚫 Why did they fail?
- British economic policy was designed not to promote Indian industry.
- Private capital was not encouraged.
- Instead, Britain saw India as a market for finished goods and a source of raw materials.
- No institutional support (banking, credit, transport, technical skills) was provided.
So, this phase was abortive—like seeds sown on barren land. The intent was there, but the environment wasn’t supportive.
🏭 PHASE II: Incipient Phase (1854–1907)
“The baby is born but is still learning to crawl 😊”
🌱 Beginning of Modern Industry:
This phase marks the real beginning of modern industrialization in India, especially in agro-based industries like textiles and jute.
🏗️ Key Developments:
| Year | Development |
|---|---|
| 1854 | First cotton textile mill in Bombay by Karsonji Devarji, a pioneering Indian entrepreneur. |
| 1855 | First jute mill in Rishra, near Kolkata. Jute exports to Australia began. |
| 1863 | Expansion of Ahmedabad textile mills (boosted by the American Civil War, which disrupted cotton supply from the U.S.) |
| 1870 | Woollen textile mills in Bangalore, Dharival, and Kanpur. |
| 1870 | First paper mill in Kolkata. |
| 1874 | Bengal Iron Works at Kulti. |
| 1875 | Over 50 cotton mills established. |
| 1907 | Around 120 mills—Bombay became known as “Cottonpolis of India.” |
| 1853 | First railway line between Mumbai and Thane (boosted transport and connectivity). |
🌾 Focus of Industrial Growth:
- Cotton textile industry: concentrated in Western India (Bombay, Ahmedabad).
- Jute industry: focused in the Hooghly valley (West Bengal and Bihar).
- Paper, pulp, and wool also saw beginnings.
British allowed agro-based industries to grow because they supported raw material exports and did not directly compete with British heavy industries.
🧩 Key Limitation:
- While industrial seeds were sown, basic and heavy industries like iron, steel, and chemicals were still absent.
This was an “incipient phase”—industries began to emerge, but the industrial base remained shallow and dependent.
🏭 PHASE III: Premature Phase (1907–1955)
“The child has started walking—but is still too weak to run 😊”
🔩 Beginning of Capital Goods Industry:
| Year | Industry |
|---|---|
| 1907 | Tata Iron and Steel Company (TISCO) founded at Jamshedpur (production began in 1912). |
| 1919 | Expansion of TISCO at Kulti and Hirapur. |
| 1923 | Visvesvaraya Iron and Steel Plant at Bhadravati, Karnataka. |
⚔️ During World War I (1914–1918):
- Demand for arms, uniforms, transport, and materials boosted Indian industries.
- Import hurdles (war-related transport issues) made domestic production cheaper.
- Indian Fiscal Commission (1921-22) granted protection to certain industries: textiles, iron & steel, cement, paper, and metals.
📈 Industrial Expansion Highlights:
- India became the 4th largest cotton manufacturer globally.
- Dispersal of textile mills beyond Bombay.
- India emerged as key supplier of liquor and textiles to British colonies.
⚙️ During World War II (1939–1945):
- Disruption by Japanese entry and resource shortages initially hit the industry.
- But soon, war demand led to:
- Growth in Ordnance industry (arms and ammunition)
- Expansion in chemical industry (H₂SO₄, caustic soda, synthetic ammonia)
- Emergence of aviation and metal industries
- Growth of engineering sector: electrical equipment, plastics, machine tools
🇮🇳 Post-War & Partition Challenges:
- Fall in demand, labour shortages, overused machinery
- Partition led to loss of 40% cotton and 80% jute-growing areas to Pakistan.
- Textile and jute industries suffered heavily.
🛠️ Industrial Policy Resolution, 1948 – A Defining Moment
🎯 Objectives:
- Employment generation
- High productivity
- Regional balance
- Self-sufficiency
- Promotion of public sector
📜 Key Features:
- India adopted a Mixed Economy model
- Small-scale and cottage industries promoted
- Restrictions on foreign investment introduced
🧩 Classification of Industries:
- Strategic (Public sector only) – e.g., arms, atomic energy, railways
- Basic/Key (Public-cum-private) – e.g., iron & steel, aircraft, mineral oil
- Important (Controlled private) – e.g., chemicals, textiles, cement
- Other (Private & cooperative) – everything else
📊 First Five-Year Plan (1951–56):
Designed by K.N. Raj, inspired by the Harrod-Domar model.
- Focus on agriculture to control inflation and food shortage.
- Utilization of existing industries prioritized over new setups.
- Some new industries:
- Sindri Fertilizer Factory
- Chittaranjan Locomotive Works
- Integral Coach Factory
✅ Conclusion of Phase III:
- India’s basic and capital goods industries finally took root.
- But industrial growth was still insufficient for a large, poor, newly-independent country.
- This phase laid the groundwork for the more structured industrialization to follow in the Nehru-Mahalanobis model (Phase IV).
🏭 PHASE IV (1955–1985): The Early Mature Phase
“Now the child is walking confidently… and slowly learning to run. This is the phase when India starts dreaming big.”😊
📜 Second Five Year Plan (1956–61): The Industrial Constitution of India
“A constitution is not just about politics—it’s about vision. And the Second Plan was India’s economic constitution.”
🧠 Inspired By:
- USSR’s socialist model
- The Mahalanobis Model (1953) – developed by Prasanta Chandra Mahalanobis, focusing on:
- Heavy industries
- Public sector dominance
- Long-term capital formation
🏗️ Salient Features:
| Focus Area | Highlights |
|---|---|
| 🚀 Rapid Industrialisation | Basic & heavy industries prioritized (steel, machinery, chemicals). |
| 🏛️ Industrial Policy of 1956 | Adopted a socialistic pattern of society – public sector in commanding role. |
| 📍 Growth Pole Theory | Idea: Develop key industrial centres to trigger growth in backward regions (trickle-down). |
| 🔩 Major Steel Plants Established | 🔹 Bhilai (USSR help) – 1954 🔹 Durgapur (UK) – 1959 🔹 Rourkela (Germany) – 1959 |
| 🔧 Expansion of Earlier Units | Jamshedpur, Burnpur, Kulti, Bhadravati steel plants upgraded. |
| 🛠️ New Institutions | HMT Bangalore, Sindri Fertilizer, Chittaranjan Locomotive workshops expanded. |
| 🌾 New Fertilizer Units | Rourkela & Nangal plants established to support agriculture. |
This was the first time India invested in long gestation but high return sectors. Nation-building through industry began here.
🔧 Third Five Year Plan (1961–66): Diversification Begins
“Now the industrial base is set. The focus shifts to diversification and deepening.”
📍 Highlights:
| Focus Area | Details |
|---|---|
| 🧱 Diversified Industries | Steel, chemicals, machine tools, fuel industries got major boost. |
| 🏭 New Plants | HMT units in Bangalore, Ranchi, Haryana, Ajmer; Heavy Electricals at Bhopal; Pharma at Haridwar. |
| 🔥 New Frontiers | Move into electrical, chemical, drug and heavy engineering industries. |
⚠️ Problems That Hit the Plan:
| Crisis | Impact |
|---|---|
| ⚔️ Indo-China War (1962) & Indo-Pak War (1965) | Shifted focus and funds to defence. |
| 🌾 1965 Drought | Agricultural crisis and food shortages. |
| 💸 Lack of Foreign Credit | Slowed machinery imports. |
| 🗂️ Rigid Administration | Inflexibility hampered quick decision-making. |
The plan’s ambitions were noble, but external shocks derailed the journey.
🗓️ 1966–69: The Plan Holiday – 3 Annual Plans
“Three years of learning from past mistakes. Sometimes a pause is preparation.”
📉 Why Plan Holiday?
- Failure of Third Plan
- Rupee devaluation (to promote exports)
- Recession + Inflation → “Stagflation”
🌾 Focus: Agriculture
- Birth of the New Agricultural Strategy:
- HYV seeds
- Chemical fertilizers
- Irrigation & soil conservation
These years laid the groundwork for the Green Revolution, especially in Punjab, Haryana, and Western UP.
🔁 Fourth Five Year Plan (1969–74): Recovery Mode
“The country dusts itself off and starts rebuilding—this time with inclusivity in mind.”
🔧 Industrial Highlights:
- Bokaro Steel Plant operational.
- Support for agro-based, small-scale, and household industries.
- Regional planning for industrial dispersal.
- Growth in:
- Alloy steel
- Aluminium
- Auto tyres
- Machine tools
- Tractors
- Heavy Electricals
🏢 Public Sector Performance:
PSUs like BHEL, HAL, SAIL started showing real industrial capability.
📈 Fifth Five Year Plan (1974–79): Core Strengthening
“The focus now was on self-reliance and mass production.”
🛠️ Key Highlights:
| Sector | Development |
|---|---|
| 🔩 Steel | Plants proposed at Salem, Vijayanagar, Visakhapatnam to boost capacity. |
| ⚗️ Chemicals & Drugs | Drug manufacturing & chemical fertilizers advanced rapidly. |
| 🛢️ Oil Refining | Accelerated due to global oil crisis. |
| 🧰 Heavy Engineering | Became India’s backbone for industrial infrastructure. |
| 🧱 SAIL | Established in 1973 to unify and manage public steel plants. |
⚠️ Global Crisis:
- World Energy Crisis (1973) hurt India’s industries due to high import costs.
💡 Sixth Five Year Plan (1980–85): Liberalization Begins
“The wind of change begins to blow—Rajiv Gandhi starts talking tech and reform.”
🔁 Key Shift:
- Efficiency over expansion
- Liberalization begins (though cautious)
- Private sector invited softly through deregulation and productivity push.
⚙️ Industrial Achievements:
| Sector | Highlights |
|---|---|
| 🧠 Electronics | Growth in consumer electronics, computers, semiconductors. |
| 🛠️ Productivity | Focus on optimum utilization of existing capacity. |
| 🚗 Capital & Consumer Goods | Rise in automobiles, petrochemicals, consumer durables. |
| 📦 New Output Milestones | Targets met in petroleum, machine tools, aluminium, zinc, lead. |
Industrial maturity sets in, though reforms are still half-hearted and bureaucratically controlled.
🧭 Summary of Phase IV:
| Plan | Industrial Milestone |
|---|---|
| 2nd FYP (1956–61) | Big Push to heavy industry, steel plants, Mahalanobis Model |
| 3rd FYP (1961–66) | Industrial diversification, new sectors |
| Plan Holiday (1966–69) | Green Revolution prep, agri support |
| 4th FYP (1969–74) | Recovery, PSUs rise, industrial dispersal |
| 5th FYP (1974–79) | Core sectors and energy focus, SAIL created |
| 6th FYP (1980–85) | Beginning of liberalization, productivity push |
🏭 PHASE V (1985–PRESENT): Mature Phase
📡 Seventh Five Year Plan (1985–1990): Tech Leap and Soft Opening
“This is the pre-liberalization warm-up. India begins embracing electronics, computing, and services.”
📍 Key Themes:
| Focus Area | Highlights |
|---|---|
| 🧪 Tech & Electronics | Growth of electronics and IT as future-facing industries. |
| 📍 Industrial Dispersion | Regional resource-based industries promoted; industrial growth no longer confined to old metros. |
| 🧑🏭 Skill Development | Focus on training and skilling youth to match industrial demand. |
| 📦 Domestic Market + Exports | Policy emphasized industries with large internal markets and strong export potential. |
| 🧑💼 Policy Relaxation Begins | Entry barriers softened, foreign collaboration and private sector participation encouraged. |
The plan laid the groundwork for the liberalisation that was to come. Winds of change had begun blowing.
🕰️ 1990–1992: Annual Plans & Crisis
“Political instability + economic crisis = pause button.”
⚠️ Why No Eighth Plan?
- Coalition politics, Gulf war, fiscal crisis.
- Balance of Payments (BoP) Crisis hit India hard.
- Interim period covered by two Annual Plans (1990–91 and 1991–92).
💼 Eighth Five Year Plan (1992–1997): The Liberalisation Era Begins
“1991 was not just a year—it was a turning point. Economic reforms changed the Indian industrial story forever.”
📜 The Rao-Manmohan Model: New Industrial Policy, 1991
| Reform Area | Key Moves |
|---|---|
| 🌐 Trade Liberalization | Entry barriers removed; tariffs lowered. |
| 🏭 Public Sector Shrinking | Many PSUs de-reserved; private sector allowed. |
| 🔓 MRTP Relaxed | Monopoly & Restrictive Trade Practices Act softened. |
| 🌍 FDI Liberalized | MNCs welcomed; global partnerships formed. |
| 🛂 FERA → FEMA | Foreign Exchange controls rationalized. |
| 🏢 SMEs Supported | Focus on employment-rich small & tiny industries. |
| 🧹 The 5 Ds | Deregulation, Disinvestment, Decentralization, De-licensing, Debureaucratization. |
📈 Outcomes:
- Boom in Telecom, Automobiles, FMCG.
- MNCs enter India – Coca-Cola, Suzuki, Hyundai, IBM, etc.
- India opens up to the world – WTO membership soon follows.
India becomes a market economy, and the private sector becomes a real driver of growth.
⚙️ Ninth Five Year Plan (1997–2002): Deepening the Reform Process
“The foundation has been laid. Now, policies aim at structural depth.”
🔧 Key Highlights:
- Full Current Account Convertibility
- FERA replaced fully by FEMA
- Almost all sectors (except Railways, Nuclear, and Space) opened to private sector
- Regional imbalance addressed
- Cement, coal, steel, and consumer goods industries optimized.
This plan tried to democratize industrial growth—more inclusive and broad-based.
💻 Tenth Five Year Plan (2002–2007): Global Competitiveness & Modernization
“Ab India sirf banata nahi, global market ke liye banata hai.
🔬 Highlights:
| Focus | Developments |
|---|---|
| 🚀 Technology Upgradation | Industries modernized with latest tech. |
| 📈 Exports Boosted | Focused on export competitiveness. |
| 🌍 IT & Services Boom | India becomes global IT hub. |
| 🚗 Auto & Pharma Growth | India becomes manufacturing + research destination. |
| 🏞️ Special Packages | For Uttarakhand, HP, NE, J&K |
| 🧵 Textile Push | TUFS (Tech Upgradation Fund Scheme), Infrastructure scheme launched |
| 🌐 Global Integration | SEZs launched, MAI initiated for export support |
For the first time, industrial policy aligned with global markets, not just internal development.
🌿 Eleventh Five Year Plan (2007–2012): Inclusive and Sustainable Growth
“Growth without equity is unjust. Growth without sustainability is dangerous.”
🌱 Core Philosophy:
- Inclusive industrialization
- Environmentally responsible policies
- Growth with employment & equity
🌍 Key Events:
| Area | Events |
|---|---|
| 💥 Global Crisis (2008) | Lehman Brothers collapse → slowed Indian growth. |
| 🧪 Environmental Impact | EIA made stricter for big industries. |
| 📊 Balanced Growth | Parallel focus on industry + agriculture. |
The plan tried to reconcile growth with social justice and ecological safety.
🧭 SUMMARY of PHASE V: The MATURE PHASE
| Plan | Core Focus | Outcomes |
|---|---|---|
| 7th (1985–90) | Tech & regional balance | Soft reforms begin |
| 8th (1992–97) | Liberalization | New Industrial Policy (1991), MNC boom |
| 9th (1997–02) | Structural Reforms | FEMA, convertibility, regional equity |
| 10th (2002–07) | Globalization | IT, pharma, exports, SEZs, services surge |
| 11th (2007–12) | Inclusion + Sustainability | Industrial + agri balance, crisis recovery |
🧭 POST-2012 TRENDS: NITI AAYOG & POLICY-DRIVEN INDUSTRIAL ERA
“Planning Commission gaya, NITI Aayog aaya. Planning se policy tak ka safar. Vision 21st century.”
🗂️ Twelfth Five Year Plan (2012–2017): The Last of the Five Year Plans
“Ye tha Planning Commission ka final farewell performance.”
🎯 Focus Areas:
| Focus | Explanation |
|---|---|
| 📦 Manufacturing Growth | Target: 25% share in GDP |
| 🌾 Inclusive Industrialization | Focus on MSMEs, rural industries |
| 🔋 Energy + Infrastructure | Power, roads, ports given a push |
| 🏙️ Urban Industrial Zones | New growth centres proposed |
| 💡 Innovation Push | National Manufacturing Policy drafted |
Despite being visionary, policy paralysis, scams, and global slowdown diluted its impact.
🔄 2015 ONWARDS: From Planning Commission to NITI Aayog
“Yeh turning point tha. Planning Commission dissolve ho gaya. 2015 mein NITI Aayog bana—a think tank, not a plan-maker.”
🧠 NITI Aayog = Policy Think Tank
- Does not prepare Five-Year Plans.
- Focus on vision documents, strategy papers, and real-time policy advisory.
- Supports competitive federalism and bottom-up approach.
🏭 NEW INDUSTRIAL STRATEGIES & INITIATIVES (2014–PRESENT)
Let’s break it down into key flagship initiatives:
🇮🇳 1. Make in India (2014)
“India ko factory of the world banana hai.”
| Objective | Impact |
|---|---|
| 🚀 Boost manufacturing to 25% of GDP | Yet to be fully achieved (~16–17% as of now) |
| 🧑🏭 Create 100 million jobs | Focus on sectors like defence, electronics, auto |
| 🌏 Attract FDI | India became top FDI destination in 2015–2020 |
| 🏗️ Improve infrastructure | Delhi–Mumbai Industrial Corridor (DMIC) promoted |
🔩 2. National Policy on Capital Goods (2016)
“Capital goods = backbone of industry. Without it, no self-reliance.”
- Goal: Increase production of capital goods to ₹7.5 lakh crore by 2025.
- Enhance skill development, R&D, exports.
🏢 3. Startup India (2016)
“Naukri do nahi, naukri banao.”
- Tax exemptions for startups.
- Startup India Fund (~₹10,000 crore corpus).
- Easier compliance & IPR support.
🧵 4. Industrial Corridors & Smart Cities
“Growth poles ka modern version.”
| Corridor | Features |
|---|---|
| 📍 DMIC | Covers 8 states; aims to build industrial hubs |
| 📍 Chennai–Bangalore | Auto and electronics zone |
| 📍 Bangalore–Mumbai | IT + manufacturing spine |
Also:
- 100 Smart Cities Mission launched for infrastructure-led industrial development.
🏭 5. Production Linked Incentive (PLI) Schemes (2020 onwards)
“Covid ke baad, self-reliance (Aatmanirbharta) became national slogan.”
| Sector | Focus |
|---|---|
| 📱 Mobile phones | Apple, Samsung invested |
| 🚗 Auto + EV | Battery manufacturing promoted |
| 💊 Pharma | Bulk drugs, APIs supported |
| 📺 White Goods | ACs, LEDs etc. |
| ⚙️ Electronics | Semiconductor ecosystem being built |
- Objective: Promote domestic production, reduce import dependence.
🔋 6. Other Key Industrial Reforms
| Reform | Details |
|---|---|
| 💼 Labour Code Reforms (2020) | Consolidation of 29 central laws into 4 Labour Codes (wages, IR, safety, social security) |
| 📦 Logistics Policy (2022) | Aim: Reduce logistics cost to <10% of GDP |
| 💡 National Single Window System (NSWS) | One-stop clearance for industrial approvals |
| 🏭 Industrial Policy 2022 (Draft) | Focuses on green industry, 4IR (AI, robotics), MSMEs |
📊 CURRENT STATUS & CHALLENGES (As of 2024–25)
“Growth toh hai… par hurdles bhi hain.”
| Aspect | Status |
|---|---|
| 📈 Manufacturing % of GDP | Still hovering around 16–17% |
| 🧪 R&D investment | Low (~0.6–0.7% of GDP) |
| 🌍 Exports | Improved in pharma, IT; weak in capital goods |
| 🧑🎓 Skilled Labour | Skill gap remains wide |
| 🌱 Sustainable Industry | Green manufacturing still in infancy |
| 🏭 MSMEs | Backbone of industry but struggling post-Covid |
📌 SUMMARY: Post-2012 Industrial Era
| Phase | Key Shift | Core Strategy |
|---|---|---|
| 🧠 2012–2017 | Last FYP | Inclusive, sustainable growth |
| 🧭 2015–Present | NITI Era | Policy > Planning |
| 🏭 Industrial Policy | Make in India, Startup India, PLI, Corridors | |
| 🔧 Reforms | Labour Codes, Logistics, Ease of Doing Business | |
| 🌱 Future Outlook | Green, digital, decentralized industries |
