Industrialization in the state of Himachal Pradesh – HPAS Mains

By | November 26, 2021


In a growing state of economy, industrialization occupies an important place. Besides contributing its share to the overall economic growth and to the state domestic product, it is able to provide gainful employment opportunities to a large section of rural and urban population. It also helps in the utilization of immense natural resources of the state on scientific lines.


During the last few years Himachal Pradesh has made significant achievements in the field of industrialization.

Before grant of statehood only a few industries unit namely –

  1. Nahan Foundry limited at Nahan, 1875
  2. Mohan Meakins Breweries at Kasauli, 1855
  3. Resin and Turpentine factory at Nahan, 1945
  4. Palampur tea co-operative farm, 1939
  5. Salt mines at Darang
  6. 4 small gun factories at Mandi

After attaining statehood, the concerned efforts were made for significant infrastructure development and industrial were developed at

  1. Parwanoo Barotiwala
  2. Chambaghat
  3. Bilaspur
  4. Nagrota Bagwan
  5. Kangra
  6. Shamshi
  7. Amb
  • Industrial growth attained momentum after 1978 when the district industries centre came into existence as a 100 % centrally sponsored scheme.
  • Till 2003-04 , the growth was slow. Then PM Atal Bihari Vajpayee ji announced the industrial package for the state in January 2003, which proved to be a growth accelerator in the industrial sector.
  • The Baddi-Barotiwala-Nalagarh sector has emerged as the biggest pharmaceutical hub in the country.
  • With a 7% contribution to state GDP in 1970, today the secondary sector boasts of contribution of 39.66 %.
  • The state contribution recognized the importance of industrial policy and graded incentives are being offered with higher incentives to the inner areas of HP.

Industrial areas in HP






Pharmaceuticals/textiles 1. Located in the Solan district

2. Baddi area has several pharmaceutical,textile ,paper and printing units.

Eg-Ranbaxy, cipla, Dr Reddy

BAROTIWALA   Multi-industry 1. Located in the Solan district

2 .Hub for small scale industries

PARWANOO   Light engineering 1. Located in the Solan district

2. This area is an industrial cluster for high density polyethylene(HDPE) pipe companies.

CHAMBAGHAT       Electronics 1. Located on the Shimla-Kalka highway in the     Solan district.

2. The industrial area has prominent companies such as Himachal Futuristic Communications Limited and Shivalik Bimetal Controls limited.

PAONTA SAHIB  Pharmaceuticals/Chemicals 1. Located in the Sirmaur district

2. The industrial area has a number of pharmaceutical and chemical companies.

TAHILWAL AND GAGRET       Electronics 1. Located in the Una district

2. It has prominent telecommunication companies.

AMB INDUSTRIAL AREA      Engineering/Auto 1. Located in the Una district.

2. It has prominent engineering and automotive companies such as International Cars and Motors Limited.

SANSARPUR TERRACE       Engineering 1. Located in the Kangra district

2. It has some of the leading engineering companies of north india.

Problems of industries in HP

Infrastructural facilities-

  1. Road, railways, air service, communication services etc are not proper and adequate.
  2. In many cases, the approach road has not been provided to the units.
  3. Due to the lack of railway connectivity in these areas the industry faces transportation problems.

Non availability of skilled and semi-skilled labour:

  1. Involvement of local labour is quite negligible.
  2. Almost skilled and semi-skilled labour is imported from outside.


  1. Material cost and transportation charges are higher in HP relative to other states due to harsh climatic condition and difficult topography.

Eg- cost of cement bag  in HP around Rs 350  whereas same bag of cement in Punjab, Haryana around Rs 300.

Lack of facilities and incentives are provided by the government to the investors.

Eg – No assurance of quantitative electricity facilities

No assurance of quantitative water facilities

Limited working season – Since the area remained snow bound and land closed for almost four months i.e form December to march and working season for development activities is limited to six months.

Therefore, it resulting in delay in completion of works and higher cost of construction.

Cottage industry in state 

  • Handloom industry in HP is one of the important cottage industries which is providing gainful employment to about 45000 handloom weavers. The main area of handloom concentration are kullu, mandi, kangra, kinnaur, chamba, lahaul and spiti district.
  • The main handloom products are shawls, stoles, tweeds and dress material like choli dora, launchari (kangra), luhi (sirmaur).
  • Handloom products registered under ‘Geographical act 1999’ are
  1. GI tag to Kullu shawl, 2005
  2. GI tag to Chamba rumal, 2008
  3. GI tag to Kinnauri shawl, 2011
  4. GI tag to Lahauli socks and gloves, 2021

Characteristics of cottage industry 

  • Cottage industry in the state is in the concentrated form of small-scale industries where the productivity of the goods take place in the house of the laborers and the workforce include the member of the family.
  • Started with low investment, help in earning additional income
  • Use of local raw materials, help in optimum utilization of natural resources
  • Generate seasonal as well as perennial employment for labor

Issues and challenges

  • Lack of proper marketing facilities- Most of the product is sold through intermediaries and direct marketing is very less.
  • Lack of financial resources- Handloom weavers are poor artisans and they do not have enough resources to purchase raw materials, sell the product after manufacturing.
  • Competition from large industries- The product manufactured on the power looms are cheap and such the low-end market of handloom products is being captured by these cheap products.
  • Co-operative societies- has utterly failed in selling finished products as the handloom co-operative societies is riddled with corruption and political interference.
  • Lack of modern technology- Inadequate training for up-gradation of skill along with research and development activities are insufficient for the Indian handloom sector due to the poor financial condition of the weavers. 

Recent Initiatives Taken By The State Govt To Boost Industrialisation

Developing Industrial Hub-

  • The government will develop new industrial areas in Channour in Kangra, Gehrwin in Bilaspur and Basouli Bangarh in Una district.
  • Ministry of Food Processing, Govt of India has included Pandoga industrial area in Una, Kandrouri industrial area in Kangra and Aduwal industrial area in Solan in the list of approved food parks.

Attracting Private Investment-

  • The state govt hold a ‘Global Investors Summit’ in Dharamshala in 2019 to attract investment in the state on sustainable basis.
  • The state govt has been streamline the processes of clearances under FCA and FRA.

Policy Initiative

  • New micro, small and medium industrial policy has been designed to promote small and medium enterprises with special emphasis on encouraging women entrepreneurs, local youth.
  • Any new small industrial unit will not be charged electricity duty for first 5 years.

Providing Economic Empowerment-

  • ‘Mukhya mantri swablamban yojna’ was started in 2018-19 to encourage local youth to establish their own enterprises.
  • The maximum age of limit for applying under the scheme will be increased from 35 to 45 years.
  • Project cost will be increased from Rs 40 lakh to 60 lakh.

Ensuring Transparency-

  • An online Geo-Portal will also be developed to keep a close watch on illegal mining activities and better management of mining leases.
  • ‘HIM PRAGTI’ online monitoring system where power projects will be monitored by CM to ensure faster clearances and approval from all the departments.

Read also: 

  1. Diversification in Agriculture and allied activities, Land tenure and size of landholdings in Himachal Pradesh – HPAS Mains
  2. Himachal Pradesh State Biodiversity Strategy and Action Plan, Endangered and threatened species of Himachal Pradesh, Factors responsible for Biodiversity decline in Himachal Pradesh. – HPAS Mains
  3. Social, Economic and Cultural implications of Tourism in Himachal Pradesh – HPAS Mains
  4. Types of tourism: religious, adventure, heritage, Important tourist destinations in Himachal Pradesh – HPAS Mains
  5. Concept of Eco-Tourism and green tourism and their role in the sustainable development of the State of Himachal Pradesh – HPAS Mains
  6. Himachal Pradesh Industrial Investment Policy, 2019 – HPAS Mains
  7. Environmental concerns of the tourism industry, both positive and negative effects including climate change with reference to Himachal Pradesh – HPAS Mains
  8. Concept of Himachal State Wide Area Network (HIMSWAN) – HPAS Mains
  9. Concept of LokMitra Kendra in Himachal Pradesh – HPAS Mains
  10. What is Mukhya Mantri Seva Sankalp Helpline?
  11. Aryabhatta Geo-Informatics Space Application Centre (AGISAC) – HPAS Mains
  12. Kangra Tea – Himachal Pradesh
  13. Relevance and role of Intellectual Property Rights, Geographical Indications and Traditional wisdom and knowledge in sustainable development of the State

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