At the time of independence of Pakistan, major part of the manufacturing sector was located in Indian Territory. Out of 921 major Industrial Units only 34 were located in Pakistan, employing 26,400 persons which was 6.5% of the total employment. Punjab inherited quite a few industrial units after partition, only two textile units were setup in the province. The partition created a vacuum in the management, technical and entrepreneurial skills. Punjab has an agrarian economy; in order to develop more industries, Industrial Planning Committee was setup in 1948. This committee made stern efforts for the development of industries in Punjab. Planning section of the Directorate of Industries resulted in 310 new industrial units, discussed as below:

  04 - Automobiles 01 - Gota Tilla 34 - Soap and Oil
  03 - Bone Crushing 17 - Hosiery 01 - Sulphuric Acid
  43 - Calendaring & Finishing of Cloth 43 - Ice Factories 03 - Surgical Cotton and Bandages
  01 - Cement 04 - Misc Industries 11 - Tanneries
  12 - Cold Storages 05 - Paints and Colours 05 - Textile (Cotton Spinning & Weaving)
     08 - Cotton Ginning & Pressing 07 - Pharmaceutical 05 - Textile (Woolen Spinning & Weaving)
  02 - Emboridery and Lace Working 02 - Pottery 01 - Thread Ball Manufacturing
  35 - Engineering 02 - Refractory Works 04 - Wood Work
  09 - Food Industry 14 - Rubber 30 - Silk and Rayon
  04 - Glass    

In order to utilize the infrastructure and manpower numerous efforts were made. A policy was introduced in which import substitutions and agro-based industries were given priority to reduce the import bill and resulted in the development of sizeable capacities in textile and food sub sectors.

The Government introduced a development patron through five years plans. The first five years plan was taken up in late 1950s. The first four five years plans resulted in establishment of 6236 industrial units in Punjab. The Nationalization Policy of Government in early 1970s  adversely affected the investment climate in the country and the total number of industrial units including small sectors could rose to 8729 in Punjab. Subsequently, the Government introduced simplified and de-regulated policy to improve investment climate. Consequently, the number of industrial units of all sizes rose to 11856 by 1985,  44650 by 1988 and 61103 by 2002. During 2004-2005 the survey of large, medium and small selected sectors were conducted and the total number of units covered in this survey was 18006. Whereas small scale and cottage level industrial units were covered by Punjab Small Industries Corporation. In 2010, this number decreased to 17857; as a number of industrial units were reported to be closed. Major part of investment was made in textile and food Industries. Punjab is deficient in chemical and metal products/engineering goods; particularly electronic industries.

Directorate General had been dealing with the following subject till 1980s:

  • Industrial Education
  • Planning and Development of Industries
  • Inspection of Boilers, Factories and Shops (the work relating to inspection of shops is now being done by the Labour Department)
  • Grant of loans and subsidies under the State Aid to Industries Act, 1935
  • Iron and Steel control
  • Industrial Rehabilitation
  • Industrial Research
  • Provision of technical assistance to the industrialists
  • Running of commercial undertakings
  • Trade and Commerce
  • Purchase of stores for Punjab Government Departments
  • Registration of Firms and Joint Stock Companies

After 1985, liberal industrial policy was introduced to facilitate entrepreneurs and to promote industries in the province. The role of the Directorate General changed from regulatory to facilitation. Moreover, many functions were assigned to the other departments.

Punjab has a very strong base for industrialization. The major industrial sectors in Punjab are fertilizer, synthetic fiber, cement, sugar, chemicals, pharmaceutical, metallurgical, engineering, surgical instruments, leather and leather products, cotton and textile, apparel and ready made garments, knitwear, food processing, hydrogenated oil and edible oil, sports goods and computer software.

The main industries are located in Lahore, Faisalabad, Gujranwala, Sheikhupura, Sialkot, Kasur, Gujrat and Multan Districts. At present there are about 17857 industrial units comprising large, medium and some selected small scale industries.