The harvesting of forests in Punjab from the year 1974 onwards was done partly through Forest Utilisation Division (now defunct) of the Forest Deptt. Punjab which was harvesting only about 10-12% of the annual cut available and the rest of the wood (standing trees) was auctioned to the private contractors. On the winding up of the Utilization Division of Punjab Forest Department, the work of harvesting was handed over to the Punjab State Forest Development Corporation Limited.
The Punjab State Forest Development Corporation Limited came into existence on 23.5.1983 under the Companies Act, 1956 in pursuance of the recommendations made by the National Commission on Agriculture, Government of India which inter alia included that the system of contracting away forest areas to private contractors be done away with for better conservation of forest areas and development of forest resources in the national interest. Observing that the forestry sector in the country was handicapped due to paucity of funds, the commission emphasised the need to switch over to production of forestry as a business by helping the sector come out of rut of low investment in the face of mounting demands of various forest products.