The level of its industrial development generally determines the economic development of a region. Punjab, which has done remarkably well in the field of agriculture, is now well on its way to rapid industrialization through coordinated development of small, medium and large scale industries.

The industrial sector is the fastest growing sector in the State. It has registered an average rate of growth of about 8% during 1991-97. The major industrial centers of Punjab are Ludhiana, Amritsar, Jalandhar, Batala, Pathankot, Phagwara, Gobindgarh, Rajpura, Mohali, Bathinda and Patiala. Around 1.3 million people are employed in industrial sector in state. Exports from Punjab is estimated to be more than Rs 42,000 million per annum. Engineering goods, hosiery items, pharmaceuticals, leather goods, food and agro products, textiles, electronics, hand and machine tools are some of the prominent range of products of Punjab. The output of some important industrial items is given below.

The industrial development in the state of Punjab can be categorised into five periods: viz., the post-1947 phase, the development of small-scale units, large and medium scale industries, the high-tech phase and the diversification of industries.

Post-1947 phase :
Before partition Punjab had very little industry. The industries that existed were a few woolen mills in Dhariwal and Amritsar, some old iron foundries in Batala and Mandi Gobindgarh and a couple of sugar mills. The economy of the state was totally dominated by agriculture while processing of agricultural products was virtually unknown.

During the 1950s and '60s, there was an explosion of growth in small scale units, which centered on Ludhiana, Jalandhar, Amritsar, Goraya. Most of these units produced bicycles, sewing machines, agricultural implements, medical instruments, hosiery, machine tools and sports goods or parts for these goods. This period saw the emergence of a few units to process agricultural produce such as sugar mills at Batala and Bhogpur. Small scale industrial units number more than 0.2 million in Punjab today; they employ more than 0.8 million workers and constitute a vital segment of industry in the state.

Unavailability of major raw materials like iron or coal, was a hindrance for the establishing of large and medium scale units in Punjab. As a result the Punjab Government has to step in to help make large and medium scale production profitable in Punjab. The establishment of the Punjab State Industrial Development Corporation in (PSIDC) the 1960s was intended to fill the gap in the development of the state. Acting as an entrepreneur, the PSIDC, on its own promoted projects and also set up larger units in the joint sector. These objects reached their fruition in the ‘70s and ‘80s. Punjab Tractors Ltd (PTL), Punjab Wireless (PUNWIRE), Punjab Alkalies Ltd, Punjab Communication Ltd (PCL) are some of them.

The 1970s witnessed the foundation of electronics production. The state government set up an electronic township called ELTOP on a 290-acre site in Mohali, near Chandigarh. This township has emerged as one of the fastest growing centres for electronic production in India. Projects set up in the township cover micro-electronic devices, computers, computer peripherals, communications, electronic typewriters, nickel cadmium batteries, uninterrupted power supply systems, colour picture TV tubes, medical electronics, X-ray equipment, EPABX systems, many with technical collaboration with companies like Granger of USA, OKI and NEC of Japan, and ARE of Italy. The only facility in the country for the design and fabrication of very large scale integrated circuits, the Semiconductor Complex (SCL) is also located in this township. Punjab Leads in manufacture of machines and hand tools, printing and paper machinery, auto parts and electrical switchgears. Punjab produces around 75% of country's production of bicycle and bicycle parts, sewing machines, Woolen and other Hosiery items, shoddy blanket, jacket clothes and sports goods.