The first industrial policy resolution was passed by the Government on 6th April 1948. It marked the dawn of the mixed economy and outlined the role of the public and private sectors in India

This resolution recognized a progressively active role for the state in the development of industries

The industries were classified into four broad categories.

I] First category – comprised of three industries.

The manufacture of arms and ammunition, the production and control of autonomic energy and the ownership and management of railway transport were to be the exclusive monopoly of the Central Government.

II] Second category – – comprised of six industries. Coal, iron and steel ,aircraft manufacture, ship building, manufacture of telephone, telegraphs and wireless apparatus [excluding radio receiving sets],and mineral oils.

New undertakings in these industries could henceforth be undertaken only by the State.

The inherent right of the State to acquire any existing undertaking in this category within ten years was emphasized.

III] Third category – – comprised of twenty basic industries of such basic importance that the Central Government would feel it necessary to plan and regulate them. They were

Salt, automobiles, tractors, prime movers, electric engineering, heavy machinery, machine tools, heavy chemicals, fertilizers, electro chemical industries, non-ferrous metals, rubber manufactures, textiles, sugar, paper and newsprint, air and sea transport, minerals and industries relating to defence.

IV] Fourth category – comprising of the remainder of the industrial field was left open to the private enterprise as well as co operatives.


Besides demarcating the spheres of the public and private sectors, the resolution indicated lines of policy in many other directions,

i) Role of cottage and small industries.

ii) Fair labour conditions and harmonious labour and management relations.

iii) Pragmatic and vigilant attitude towards foreign capital – the Government realized the need for foreign capital but made it clear , “that as a rule, the major interest in ownership and effective control should always be in Indian hands”.

Thus while recognizing the need for foreign capital in Indian industrialisation the Government insisted upon the progressive Indianisation of foreign concerns.


The four-fold classification of industries was based more on pragmatic than on ideological considerations.

The main thrust of the industrial policy resolution of 1948 was to lay the foundation of a mixed economy in which both private and public enterprises would co exist and accelerate the pace of industrial development.

No doubt there was the inherent threat of nationalization. It was also argued that at that time the Government was more interested in the control of private sector enterprises than in the public-private balance.


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