INTERNATIONAL INVESTMENT IN INDIA 25 Government policy towards foreign enterprises The economy of pre-independence India showed two unmistakeable characteristics : (a) extreme specialization of its industries in textiles and agriculture-based goods and import-dependence in respect of a wide range of goods, and (b) the division of large-scale industry between foreign (mainly British) and Indian ownership, with little joint enterprise. The specialization of pre-independence industry can best be seen in the light of the subsequent diversification (Table 1); the post-independence growth has been especially rapid in technology-intensive industries like engineering and chemicals. A less autarchic trade policy might have led to a smaller shift in the industrial structure. But most of the industries that have grown are ones in which India has no particular disadvantage except for small scales and lack of indigenous technology; and these two lacunae are so widespread that they effect the level of industrialization TABLE 1Changes in the structure of industrial production 1951-1980 (Per cent 1951 1956 of total ind 1960 'ustrialproc 1970 iuction) 1980^ I Basic goods (25.1) (32.3) (35.3) of which Coal 67 7.0 6.0 5.9 Fertilizers 1.4 3.0 Chemicals 1.6 1.7 Cement 1.9 1.2 1.2 1.2 1.9 Iron and steel 5.9 7.5 6.2 7.0 6.4 Non-ferrous metals 2.1 1.8 1.8 1.4 Electricity 2.1 37 5.4 9.2 12.1 II Capital goods (11.8) (15.3) (17.0) of which Heavy electrical equipment 1.5 1.9 Railway equipment 35 3.0 2.1 Heavy road vehicles 2.5 2.2 III Intrermediate goods (25.9) (21.0) (19.6> of which Cotton yarn 11.8 6.2 5.1 Jute goods 11.9 5.6 4.0 2.7 2.3 Tyres and tubes 1.5 1.4 1.6 Synthetic fibres 0.6 1.2 1.4 Refined oil products 3.8 1.3 1.6 1.5 IV Consumer durables (3.4) (3.7) of which Motor cycles and bicycles 0.5 0.8 1.2 V Non-durable consumer goods (37.3) (28.1) (24.7) of which Sugar 4.3 4.5 3.6 2.8 1.8 Tea 5.9 7.4 5.1 2.6 2.4 Cotton cloth2 36.1 32.1 9.4 5.3 3.5 Paper 1.6 1.4 1.6 2.2 1.9 Drugs 2.2 3.1 3.2 1. Calculated from the 1970 weights and the 1980 index. 2. Large mills only, whose share in output has been falling. 1951 and 1956 figures. include cotton yam. Sources : Reserve Bank of India (2, 3, 4).