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Industrial development is considered as one of the important indicators of socioeconomic and human development. Before the rise of modem industries, India was known all over the world for its cottage and household industries. Indian muslin, silk goods, and artistic pottery were in great demand the world over. The arrival of English resulted in the decay of traditional handicrafts. The East India Company developed a policy of export of raw material from India to Britain and the import of finished products to India from Europe. It was because of this policy that no industry could be developed in India before 1854. In the later part of the 19th century the growth and development of industries in India was stunted and slow.
The industrial development in India started after 1854 when some cotton and jute mills were established by the British in Mumbai and Calcutta (Kolkata) respectively. The beginning of modern industrial phase may be traced back to the establishment of the first iron and steel charcoal plant at Port Navo (Tamil Nadu). This mill was closed down in 1886. The first cotton textile factory was established at Mumbai in 1854, followed with the opening of a jute mill at Rishira near Calcutta (Kolkata) in 1855. The cotton textile industry expanded during 1870s when there was civil war in America. The number of cotton mills grew to 275 before the First World War. The progress in jute industry was, however, not satisfactory.
The beginning of iron and steel industry was even more delayed. The first iron and steel mill was established by Bengal Iron Works Ltd. at Kulti in 1874. It resulted in a failure and was shut down in 1881. The real development of iron and steel industry started in 1908 when a steel plant was established at Jamshedpur.
The first successful paper mill started at Ballygunj Circular Road in Kolkata in 1870. Two more paper mills in Kolkata and one in Lucknow (1879) started in 1905. It was in 1870, when the woollen textile mills were established in Bangalore (1886) (Karnataka), Dhariwal (1881) (Punjab), and Kanpur (1876) (Uttar Pradesh).
After the First World War, the Indian industries got a good boost as India became the main supplier of cotton and woollen textiles and liquors. The government gave protection to some of the industries. The period during the Second World War was a time of crisis as India got involved into war. After the Second World War, the production fell down due to decreasing demand for industrial products, lack of capital, political unrest, transport bottlenecks, and labour strikes. The partition of the country in 1947 gave a severe blow to jute and cotton textiles as the raw material producing areas of jute and good quality cotton went to Pakistan.
As stated above, the post Second World War period was characterised by industrial turmoil. Production in most of the industries declined. The condition of cotton textiles, cement, paper, iron and steel industries, and consumer goods was worst due to the non-availability of raw material.
After Independence, the Government of India realised the importance of an appropriate industrial policy, which led to the Industrial Policy Resolution, 1948. According to this policy, the concept of mixed economy was introduced in which the state and the private enterprise were allowed to co-exist and co-prosper in
the fields demarcated for them. This resolution divided the industries between public and private sectors.