In the initial years of independence, the government of India was bogged down with the immediate problems of partition of the country leading to rehabilitation of refuges, the integration of the states, the food problem, etc.
On the industrial front, labour leaders talked of a policy of nationalisation of industries but the Indian capitalists were not in its power. To clear the foggy atmosphere, the government announced the Industrial policy of 1948.
The Policy of April 1948 envisaged a mixed economy for India in which the coexistence of the public sector and the private sector was accepted as the hallmark of the policy.
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The government classified industries into four broad categories.
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(a) Exclusive monopoly of the state:
The manufacture of arms and ammunition, production and control of atomic energy, ownership and management of railways transport were to be under state monopoly
(b) New undertakings to be established by the state:
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The industries included in this category were coal, iron and steel, aircraft manufacture, shipbuilding, manufacture of telephones, telegraph and wire apparatus and mineral oils.
(c) Industries of such basic importance that the Central Government would, if necessary, plan and regulate but allow the private sector to operate and develop them:
The industries included in the category were automobiles, tractors, prime movers, electric engineering, heavy machinery, machine tools, heavy chemicals, fertilizers, non-ferrous metals, cotton and woollen textiles, cement, sugar and newsprint, air and sea transport etc.
(d) Remainder of the industrial field was left open to the private sectors:
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Individuals as well as cooperative, the government announced that there would be no nationalisation for the next 10 years and in case of nationalisation, if considered necessary later, compensation would be paid.