Public sector has played an important role in the industrial development of India. Before independence there were a few public sector enterprises in India such as Railways, the Posts and Telegraphs, the Port Trusts, the Ordinance Factories, and All India Radio etc. In the early years of independence, capital was scarce and the entrepreneurial resource was not strong enough. Therefore, the 1956 Industrial Policy Resolution gave primacy to the role of the State which was directly responsible for industrial development. The public sector provided the required thrust to the economy and developed and nurtured the human resources. During this era public sector enterprises came to be known as the commanding heights of the Indian economy.
In 1991, when the government decided to shift to a liberalized economy with greater reliance upon market forces, a larger role for the private sector was envisaged. Since then the policy thrust has been on reforms such as reduction in the scope of industrial licensing, reforms in the Monopolies and Restrictive Trade Practices (MRTP) Act, reduction of areas reserved exclusively for public sector, disinvestment of equity of selected public sector enterprises (PSEs).
Central Public Sector Enterprises (CPSEs) were classified into two categories - strategic and non-strategic. Strategic CPSEs were identified in the areas of: