At the time of attaining independence, the condition of industrial sector of the Indian economy was extremely backward. The famous handicrafts were declining. India was unable to gain a powerful industrial base. Diplomatic objectives of the Britishers were behind all this to make India only an exporter of raw material and to provide a large market to the producers of England in order to absorb the goods produced in England. Apart from this, disinvestment was made only in consumer goods industries such as cotton textile and jute. TISCO (Tata Iron and Steel Company) was established in the form of a basic infrastructure industry in 1907.
After the Second World War, although attention was given on sugar, paper and cement industry, yet the capital goods industry was neglected. At that time, along with the low rate of development of industrial sector, the national income was also extremely low.