Evolution of modern industry in India
Industrialisation and urbanisation are two deeply interconnected processes that have profoundly transformed India’s economy and social fabric. Beginning in the early 19th century, India witnessed the gradual expansion of industrial activities which triggered rapid urban growth. This marked a significant transition from a predominantly agrarian economy to one increasingly dominated by industrial production and urban centres. Understanding the historical evolution of industrialisation in India provides insight into the complex interplay between technological, economic, and social changes that have shaped modern India.
At its core, industrialisation refers to the shift in economic focus from agriculture to industry. This transformation involves two critical elements. The first is technological advancement, which includes the adoption of superior production techniques that convert raw materials into finished goods efficiently. The second is the introduction of modern management practices, encompassing economic calculations, accountancy, and organizational methods aimed at maximizing industrial productivity and coordination.
India’s industrial heritage, however, did not begin in the colonial era but has roots stretching back to ancient times. Ancient India boasted a vibrant economy with highly skilled artisans producing exquisite textiles, metal works, pottery, and jewellery. Major industries such as textiles and iron and steel flourished, supported by a sophisticated trade and commerce network. India was a crucial hub on ancient international trade routes like the Silk Road and Spice Route, exporting prized commodities including spices, precious stones, and metals. The development of an advanced coinage system facilitated commercial transactions, while thriving trade cities such as Pataliputra, Taxila, and Ujjain served as important centres of economic activity.
During the medieval period, industrial growth accelerated with the rise of towns and cities that served as administrative, military, manufacturing, and trade hubs. Cities like Delhi, Agra, Lahore, and Dacca became focal points of economic activity. Delhi, in particular, emerged as the largest city of the time, according to the traveller Ibn Battuta. The textile industry dominated, alongside significant production in metalwork, leather goods, sugar, indigo, and paper. Indian goods reached markets across East Africa, Central Asia, Persia, and the Far East, facilitated by well-established merchant communities such as the Marwaris, Gujratis, and Muslim Bohras. Royal workshops, known as karkhanas, employed numerous craftsmen to produce goods for the elite. However, this period was also marked by stark social inequalities, with privileged ruling classes enjoying wealth and luxury, while large sections of the population endured poverty and exploitation.
Trade ports on both the west coast (Surat, Cambay, Calicut) and the east coast (Masulipatnam, Chennai) facilitated the vibrant exchange of goods. The guild system regulated commerce and craft production, setting quality standards, prices, and providing training to artisans. These guilds played an essential role in sustaining technological innovation and maintaining the reputation of Indian goods internationally.
The cumulative impact of these historical developments laid the groundwork for India’s industrialisation in the colonial and post-colonial eras. The evolution of industry was intimately linked to the rise of urban centres, as industrial activity concentrated in cities led to increased migration, diversification of occupations, and social changes. Urbanisation, therefore, can be seen as both a consequence and catalyst of industrialisation.
Evolution of Modern Industry in India
The evolution of modern industry in India is a complex narrative shaped by colonial legacies, nationalist aspirations, planned development, and liberalization reforms. This transformation from a primarily agrarian society to an emerging industrial and post-industrial economy reflects deep changes in India’s urban economy, industrial base, and social structure.
During the early British colonial period, India was a significant exporter of textiles, spices, and other goods. However, the British East India Company monopolized trade, exercising control over prices and markets. The imposition of heavy taxes and tariffs on Indian goods rendered them expensive and uncompetitive internationally. This resulted in the deindustrialization of traditional Indian industries as cheaper British manufactured goods flooded the market. Concurrently, agriculture saw a shift from food crops to cash crops such as tea, coffee, and indigo, which further disrupted rural livelihoods. Infrastructure development—especially railways and communication networks—was primarily designed to serve British economic interests by facilitating the extraction of raw materials from India and the export of British goods back into Indian markets.
The period between 1890 and 1947 witnessed the gradual establishment of heavy industries such as cement, iron, and steel, initially funded largely by British capital. However, post the rise of the Indian National Movement, indigenous entrepreneurs and a growing working class began to assert themselves, resulting in increased Indian ownership of industries. The two World Wars acted as catalysts for industrial growth and diversification. Trade unions gained prominence during this era, and several labor laws were enacted to protect workers’ rights, reflecting the social changes accompanying industrialisation.
Following independence in 1947, India adopted a planned economic model heavily influenced by socialist ideals, particularly those of the Fabian school of thought that emphasized democratic and gradual reforms. Prime Minister Jawaharlal Nehru envisioned a modern industrial economy driven by state-led growth. The government launched a series of Five-Year Plans focused on developing core heavy industries such as steel, coal, and power, with the public sector taking a dominant role in critical areas like banking, transportation, and telecommunications. Despite this focus on industrialisation, agriculture remained the backbone of the Indian economy, prompting land reforms and rural development initiatives to complement industrial growth.
The early post-independence years saw important achievements, including the establishment of a foundation for indigenous industries, expansion of infrastructure, and enhanced control over national resources. These efforts aimed to promote economic self-sufficiency and reduce vulnerability to external shocks. Nevertheless, challenges persisted, including high inflation, balance of payments crises, and rising external debt, which constrained the pace of development.
The economic reforms of 1991 marked a watershed moment in India’s industrial trajectory. Embracing the Liberalization, Globalization, and Privatization (LPG) model, the government encouraged foreign investment and expanded global trade. Key reforms included reducing bureaucratic red tape, easing regulations for business start-ups and operations, and lowering tariffs and import restrictions. This liberalized environment spurred the growth of new and dynamic industries, notably information technology (IT), telecommunications, and financial services. Alongside increased trade and infrastructure development in roads, airports, and ports, these reforms contributed to a better standard of living for many Indians, through improved access to education, healthcare, and essential services.
Yet, despite these gains, India still grapples with significant challenges such as high income inequality, unemployment, and persistent poverty. Sustained economic growth demands ongoing reforms that ensure inclusivity and social justice.
Looking beyond industrial production, the concept of a post-industrial society—coined by sociologist Daniel Bell in his 1973 work The Coming of Post-Industrial Society—offers a valuable framework for understanding India’s current and future economic evolution. Bell theorized a shift away from manufacturing toward services and knowledge-based industries, emphasizing the rise of science-based sectors and a new elite formed by technical expertise rather than traditional capital ownership.
India’s transition to the Information Age exemplifies this shift. The rapid expansion of sectors such as Information Technology and IT Enabled Services (ITeS), Business Process Outsourcing (BPO), Knowledge Process Outsourcing (KPO), banking, and tech startups highlights India’s emergence as a key player in the global knowledge economy. This transformation underscores the increasing centrality of information technology in shaping social and economic structures, influencing patterns of urbanisation, employment, and social stratification.
Consequences of LPG Reforms (1991 Onwards)
The Liberalization, Privatization, and Globalization (LPG) reforms initiated in India in 1991 marked a pivotal moment in the country’s economic and social history. These reforms unleashed unprecedented economic growth and structural transformation but also brought a complex set of social consequences, ranging from migration and urbanisation to inequality and cultural change.
Economically, the LPG reforms catalyzed rapid GDP growth, with the economy expanding at an average rate of approximately six percent annually—one of the highest sustained growth rates in Indian history. This expansion was driven by the growth of new sectors such as information technology, finance, and various service industries, which created numerous employment opportunities in urban centers. This, in turn, led to a significant rise of the urban middle class and an improved standard of living for many Indians, symbolizing newfound economic prosperity and consumer choice.
However, the reforms also had less positive effects on employment, especially in rural areas. While modern industries generated jobs in emerging sectors, many traditional livelihoods in agriculture and small-scale industries declined, leading to rising unemployment and underemployment among vulnerable rural populations. This imbalance triggered large-scale rural-to-urban migration, as people sought better economic opportunities in cities. Consequently, urbanisation accelerated rapidly, straining infrastructure and social services in many metropolitan areas.
The economic boom also intensified social inequalities. The income gap between the rich and poor widened considerably, with the benefits of growth unevenly distributed across regions, communities, and social classes. This unequal distribution has led to significant disparities in access to education, healthcare, and economic security, perpetuating existing social hierarchies despite expanded opportunities.
Culturally, LPG reforms contributed to a rise in consumerism as more Indians gained access to a diverse range of goods and services previously unavailable to many. This surge in consumer culture coincided with the forces of globalization, leading to cultural homogenisation on one hand, and a dynamic blending of global and local cultural practices—a phenomenon known as glocalisation—on the other.
Socially, rapid changes brought challenges to traditional structures. Increased migration weakened kinship bonds and disrupted longstanding caste-based social systems, causing shifts in social relations and identity formations. According to sociologist Robert K. Merton’s theory of anomie, this rapid social dislocation increased feelings of normlessness and social instability among many individuals, particularly those caught between traditional norms and modern expectations.
Several sociological thinkers provide valuable insights into these changes. Ulrich Beck’s concept of the “risk society” highlights how globalization and economic reforms introduce new uncertainties and vulnerabilities, even as they create opportunities. Pierre Bourdieu emphasizes that economic success is deeply intertwined with cultural capital, meaning that social hierarchies often persist despite economic liberalization. Amartya Sen argues for a broader understanding of development that prioritizes social justice and human well-being, cautioning that India’s economic growth post-LPG must address rising inequalities to be truly meaningful. Anthony Giddens points to globalization’s role in fostering reflexivity, making individuals more aware and critical of their cultural and social environments amid rapid change.
In summary, the LPG reforms transformed India’s economy and society in profound ways. While ushering in significant economic growth, urbanisation, and consumerism, they also brought challenges including rising inequality, cultural shifts, and social dislocation. The post-1991 era is thus marked by both opportunities and risks, requiring continued policy attention to ensure inclusive growth and social cohesion in an increasingly globalized India.