Location and Classification of Industries

Location of Industries

  • Industrial locations are influenced by the availability of raw material, labour, capital, power and market, etc. It is rarely possible to find all these factors available in one place.
  • Manufacturing activity tends to locate at the most appropriate place where all the factors of industrial location are either available or can be arranged at a lower cost.
  • Urbanisation follows after the industrial activity starts, hence industrialisation and urbanisation go hand in hand.
  • Many industries tend to come together to make use of the advantages offered by the urban centres known as agglomeration economies.
  • Certain pockets of industrially developed urban centres surrounded by a huge agricultural rural hinterland emerged gradually after independence.
  • The key to the decision of the factory location is the least cost. Government policies and specialised labour also influence the location of industry.

Classification of Industries

Industries may be classified as follows:

1. On the basis of source of raw materials used:

  • Agro-based: cotton, woollen, jute, silk textile, rubber and sugar, tea, coffee, edible oil.
  • Mineral-based: iron and steel, cement, aluminium, machine tools, petrochemicals.

2. On the basis of their main role:

  • Basic or key industries: are those which supply their products as raw materials to manufacture other goods e.g. iron and steel and copper smelting, aluminium smelting.
  • Consumer industries:  that produce goods for direct use by consumers – sugar, toothpaste, paper, sewing machines, fans etc.

3. On the basis of capital investment:

  • A small scale industry is defined with reference to the maximum investment allowed on the assets of a unit. This limit has changed over a period of time. At present, the maximum investment allowed is rupees one crore.

4. On the basis of ownership:

  • Public sector: owned and operated by government agencies – BHEL, SAIL etc.
  • Private sector: industries owned and operated by individuals or a group of individuals –TISCO, Bajaj Auto Ltd., Dabur Industries.
  • Joint sector: industries which are jointly run by the state and individuals or a group of individuals. Oil India Ltd. (OIL) is jointly owned by the public and private sector.
  • Cooperative sector: industries are owned and operated by the producers or suppliers of raw materials, workers or both. The pool in the resources and share the profits or losses proportionately. Such examples are the sugar industry in Maharashtra, the coir industry in Kerala.

5. On the bulk and weight of raw material and finished goods:

  • Heavy industries: that uses heavy raw materials, such as iron and steel
  •  Light industries: that use light raw materials and produce light goods such as electrical goods industries.

Various types of industries

1. Agro-based Industries: based on agricultural raw materials. e.g. Cotton, jute, silk, woollen textiles, sugar and
edible oil, etc.

2. Textile Industry: The textile industry occupies a unique position in the Indian economy because it contributes significantly to industrial production, employment generation and foreign exchange earnings. It is the only self-reliant industry and has valued supply chain.

3. Cotton Textiles: In ancient India, cotton textiles were produced with hand spinning and handloom weaving techniques. After the 18th century, power-looms came into use. This industry has close links with agriculture and provides a living to farmers.

  • Spinning continues to be centralised in Maharashtra, Gujarat and Tamil Nadu.
  • India exports yarn to Japan. Other importers of cotton goods from India are the U.S.A., U.K., Russia, France, East European countries, Nepal, Singapore, Sri Lanka, and African countries.


  • India has world-class production in spinning, but weaving supplies low quality of fabric as it cannot use much of the high-quality yarn produced in the country.

4. Jute Textiles: India is the largest producer of raw jute and jute goods and stands at second place as an exporter after Bangladesh.

Most of the mills are located in West Bengal, mainly along the banks of the Hugli river due to proximity of the jute
producing areas, inexpensive water transport, supported by a good network of railways, roadways and waterways to facilitate the movement of raw material to the mills, abundant water for processing raw jute, cheap labour from adjoining states.


  • Stiff competition in the international market from synthetic substitutes and from other competitors like Bangladesh, Brazil, Philippines, Egypt and Thailand.
  • Diversified products required due to high demand.


  • U.S.A., Canada, Ghana, Saudi Arabia, U.K. and Australia.

5. Sugar Industry: India stands second as a world producer of sugar but occupies the first place in the
production of gur and khandsari. The raw the material used in this industry is bulky, and in haulage its sucrose content reduces.


  • The mills are located in Uttar Pradesh, Bihar, Maharashtra, Karnataka, Tamil Nadu, Andhra Pradesh, Gujarat, Punjab, Haryana and Madhya Pradesh.


  • Seasonal nature of the industry, old and inefficient methods of production, transport delay in reaching cane to factories and the need to maximize the use of baggase.

6. Mineral-based industries: Industries that use minerals and metals as raw materials.

7. Iron and steel industry: is the basic industry since all the other industries — heavy, medium and light, depend on it for their machinery. Production and consumption of steel are often regarded as the index of a country’s development. It is a heavy industry because all the raw materials, as well as finished goods, are heavy and bulky
entailing heavy transportation costs. Most of the public sector undertakings market their steel through the Steel Authority of India Ltd. (SAIL).


  • India is not able to perform to our full potential largely due to: (a) High costs and limited availability of coking coal (b) Lower productivity of labour (c) Irregular supply of energy and (d) Poor infrastructure.
  • There is a need to allocate resources for research and development to produce steel more competitively.

Market: Chhotanagpur plateau region has the maximum concentration of iron and steel
industries concentration of iron and steel industries.

7. Aluminum Smelting: Aluminium smelting is the second most important metallurgical industry in India. It has gained popularity as a substitute for steel, copper, zinc and lead in a number of industries.


  • Odisha, West Bengal, Kerala, Uttar Pradesh, Chhattisgarh, Maharashtra and Tamil Nadu.


  • Bauxite, the raw material used in the smelters is very bulky.
  • A regular supply of electricity and an assured source of raw material at a minimum cost.

8. Chemical Industries: Fast-growing industry, both inorganic and organic sectors. The chemical industry is its own largest consumer.

  • Inorganic chemicals include sulphuric acid (used to manufacture fertilizers, synthetic fibres, plastics,
    adhesives, paints, dyes stuff).
  • Nitric acid, alkalies, soda ash (used to make glass, soaps and detergents, paper)
  • Organic chemicals include petrochemicals, which are used for manufacturing of synthetic fibres, synthetic rubber, plastics, dye-stuffs, drugs and pharmaceuticals.
  • Organic chemical plants are located near oil refineries or petrochemical plants.
  • Basic chemicals undergo processing to further produce other chemicals that are used for industrial

9. Fertilizer industry: The fertilizer industry is centred around the production of nitrogenous fertilizers
(mainly urea), phosphatic fertilizers and ammonium phosphate (DAP) and a combination of nitrogen (N), phosphate (P), and potash (K).

  • Potash is entirely imported as the country does not have any reserves.


  • Gujarat, Tamil Nadu, Uttar Pradesh, Punjab and Kerala contribute towards half of the fertilizer production.

10. Cement industry: Cement is essential for construction activity such as building houses, factories etc.

  • The first cement plant was set up in Chennai in 1904. After Independence, the industry expanded.
  • This industry requires bulky and heavy raw materials like limestone, silica and gypsum.
  • Coal and electric power are needed apart from rail transportation.


  • East Asia, Middle East, Africa and South Asia apart from a large demand within the country


  • Efforts are being made to generate adequate domestic demand and supply in order to sustain this

11. Automobile Industry: It provides a vehicle for quick transport of good services and passengers. Trucks, buses, cars, motorcycles, scooters, three-wheelers and multi-utility vehicles. After the liberalisation, the industry expanded due to increased demand.


  • Delhi, Gurugram, Mumbai, Pune, Chennai, Kolkata, Lucknow, Indore, Hyderabad, Jamshedpur and Bengaluru.

12. Information Technology and Electronics Industry: The electronics industry covers a wide range
of products from transistor sets to television, telephones and many other types of equipment required by the
telecommunication industry.


  • Bengaluru has emerged as the electronic capital of India.
  • Other important centres for electronic goods are Mumbai, Delhi, Hyderabad, Pune, Chennai, Kolkata, Lucknow and Coimbatore.
  • The major industry concentration is at Bengaluru, Noida, Mumbai, Chennai, Hyderabad and Pune.


  • A major impact of this industry has been on employment generation and constant generation of hardware and software.

Related Questions.

1. Give one difference between public and private sectors.
Ans. (i) The public sector is owned and operated by government agencies, e.g., BHEL and SAIL, etc.
(ii) Private Sector—These industries are owned and operated by individuals or a group of
individuals, e.g., TISCO, Bajaj Auto Ltd., Dabur Industries.

2. Why are more cotton textile mills located in Gujarat and Maharashtra?
Ans. Availability of raw cotton, market, transport including accessible port facilities, labour, moist
climate, etc., contributed towards its localisation.

3. Name the people who are provided employment opportunities by cotton textile industries.
Ans. Cotton farmers, cotton boll pluckers, workers engaged in ginning, spinning, weaving, dyeing,
designing, packaging, tailoring and sewing. People who have industries of chemical and dyes, mill
stores, packaging materials and engineering works.

4. Why has an aluminium metal great importance? [CBSE (AI) 2016]
Ans. Aluminium metal has great importance because:
It combines the strength of metals such as Iron with extreme lightness and also with good conductivity and great malleability.

5. How did the ‘Bailadila’ Iron ore field get its name? [CBSE (F) 2016]
Ans. The Bailadila hills look like the hump of an ox, hence ‘Bialadila’ name given to the iron-ore field.

6. . What problems are faced by the cotton textile industry?
Ans. The problems faced by cotton textile industries are:

  • Power supply remains erratic, thereby, affecting its production.
  • Machinery needs to be upgraded in the weaving and processing sectors particularly.
  • There is a lower output of labour since they are not skilled in their jobs.
  • There is stiff competition with the synthetic fibre industry.

7. What are the challenges faced by the sugar industry?
Ans. Challenges:
(i) The industry is seasonal, so getting labour becomes difficult.

(ii) India is still using old and inefficient methods of production, thereby, affecting its production.
(iii) There are transport delays in transporting sugarcane to factories, with the result that it loses
its sugar content.
(iv) There is a need to maximise the use of bagasse to face the problem of power break up.

8. “Though India is an important iron and steel producing country in the world, yet we are
not able to perform to our full potential.” Why? [CBSE (AI) 2017]
Ans. It is largely due to high costs and limited availability of coking coal. There is a low productivity of labour. Moreover, there is the irregularity of supply of energy and of course, the poor infrastructure.

9. “Jute industry is concentrated in the Hugli basin”. Validate the statement with three suitable reasons. [CBSE Sample Paper 2017]
Ans. Reasons for the concentration of jute mills along the Hoogly river:

  • West Bengal is the storehouse of jute. It produces the highest quantity of jute.
  • The industry requires a lot of water which is easily available from the Hoogly river.
  •  Cheap labour is easily available because of migrating labour from neighbouring states of Bihar and Odisha.
  • Inexpensive water transport in the river Hoogly is available.
  • A large urban sector in Kolkata provides banking, insurance and loan facilities.
  •  Kolkata is a good harbour which can provide facilities for the export of jute products in
    various parts of the world.

10. Explain any two main challenges faced by the jute industry in India. Explain any three objectives of National Jute Policy. [CBSE Delhi 2017]
Ans. Challenges faced by the jute industry:
(i) Stiff competition in the international market from synthetic substitutes.

(ii) To stimulate the demand for the products need to be diversified.
(iii) Stiff competition from the other competitors like Bangladesh, Brazil etc.
The objective of the National Jute policy:
(i) Increasing productivity
(ii) Improving quality.
(iii) Ensuring good prices to the jute farmers.
(iv) Enhancing the yield per hectare.

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