The term Industry & Manufacturing is an economic sector and concept that encompasses the production of goods by transforming raw materials into finished or semi-finished products using machinery, labor, or chemical processes. In the Indian economy, the broader Industrial Sector, or Secondary Sector, includes Manufacturing, Mining and Quarrying, Electricity, Gas, and Water Supply, and Construction, contributing around 28-30% to India's GDP.
The formal regulation of this sector began with the Industries (Development and Regulation) Act, 1951 (IDRA), which was enacted to control and direct the growth of industries, prevent the concentration of economic power, and ensure balanced industrial expansion. The IDRA, with its 31 sections and 3 schedules, was a key mechanism of the early post-independence industrial policy, which aimed for economic self-reliance. The first official industrial policy, the Industrial Policy Resolution of 1948, established a mixed economy, while the Industrial Policy Resolution of 1956 became the bedrock, often called the "Economic Constitution of India," by emphasizing state-led industrialization and heavy industries.
The IDRA's key mechanism was the licensing system, which mandated that private firms obtain a license from the Central Government to establish a new industrial undertaking, significantly expand capacity, or produce new articles. This system, part of the "License Raj," was intended to limit the production of non-essential items and control the concentration of economic power. The Act also empowers the Central Government to investigate scheduled industries and take over the management of an industrial undertaking in certain cases.
The concept of Industry and Manufacturing is intrinsically connected to the shift from a state-controlled to a liberalized economy, marked by the New Industrial Policy of 1991. This policy abolished industrial licensing for almost all industries, liberalized Foreign Direct Investment (FDI) rules, and relaxed the Monopolies and Restrictive Trade Practices (MRTP) Act, 1969. More recently, the sector is connected to initiatives like the 'Make in India' campaign, launched in 2014 to make India a global manufacturing hub, and the Production Linked Incentive (PLI) Scheme, introduced from 2020 onwards to offer incentives based on production levels across fourteen sectors. The recent changes have focused on de-licensing, de-regulating, and acting as a facilitator rather than a regulator, while the core objective of promoting industrial development for economic growth remains constant.