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Geography > Manufacturing Industries > What are Manufacturing Industries?
Manufacturing Industries

What are Manufacturing Industries?

Have you ever wondered where do the goods that you use come from? How do industries manufacture car equipment? It is intriguing if you wonder how industries manufacture all this! In this chapter, we will discuss the manufacturing industries in our country. We will look at the different aspects of manufacturing, the contribution of the industry and the classification as well.

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What is Manufacturing?

To start with, what exactly is manufacturing? Manufacturing is the production of goods in large quantities after processing the raw materials into more valuable products. So, why is this process so important?

Manufacturing Industries

Importance of Manufacturing

  • Agriculture forms the backbone of our economy. The manufacturing industries help in modernizing agriculture. Apart from this, manufacturing industries also reduce the heavy dependence of people on agricultural income. This becomes possible because of the creation of new jobs in secondary and tertiary sectors.
  • Industrial development helps in the eradication of unemployment and poverty.
  • Export of manufactured goods expands trade and commerce and brings in much needed foreign exchange.
  • A country with high level of manufacturing activities becomes prosperous.

Contribution of Industry to National Economy

The share of manufacturing sector in the GDP (Gross Domestic Product) has been stagnant at 17% over the last two decades. The total contribution of industry to the GDP is 27% out of which 10% comes from mining, quarrying, electricity, and gas.

The manufacturing sector has been growing at the rate of 7% since the last decade. Since 2003, the growth rate has been 9 to 10% per annum. The desired growth rate over the next decade is 12%.

The National Manufacturing Competitiveness Council (NMCC) has been set with the objectives of improving productivity through proper policy interventions by the government and renewed efforts by the industry.

Industrial Location

So, how do you decide where to set up a manufacturing industry? You can never choose the site of your industrial unit randomly. There are some of the factors that affect the industrial location. They are:

  • Availability of raw materials
  • Access to easy labour
  • Availability of capital
  • Proper supply of power
  • Availability of market
  • Infrastructure

Agglomeration Economy

Sometimes, industries are located in or near cities. Cities provide markets and also provide services like banking, insurance, transport, labour, consultants, etc. Many industries tend to come together to make use of the advantages of an urban centre. This is called as an agglomeration economy.

In the pre-independence period, most of the manufacturing units were located in places which were near the ports, e.g. Mumbai, Kolkata, Chennai, etc. As a result, these belts developed as industrial urban centres surrounded by huge agricultural rural hinterland.

Classification Of Industries

We can classify industries into various types depending on a number of factors. Raw materials, ownership etc. are some of the factors upon which industries are classified. Let us look at them in more detail.

On The Basis of Raw Materials

Industries are divided into two types, on the basis of the raw materials used.

  • Agro Based Industries: Cotton, wool, jute, silk textile, rubber, sugar, tea, coffee, etc.
  • Mineral Based Industries: Iron and steel, cement, aluminum, petrochemicals, etc.

On The Basis Of Their Role

Industries are classified into two types based on this distinction.

  • Basic or Key Industries: These industries supply their products or raw materials to manufacture other goods, e.g. iron and steel, copper smelting, aluminium smelting.
  • Consumer Industries: These industries produce goods which are directly used by consumers, e.g. sugar, paper, electronics, soap, etc.

On The Basis of Capital Investment

Industries are of two types, based on the capital investment.

  • Small Scale Industry: If the invested capital is up to Rs. one crore, then the industry is called a small scale industry.
  • Large Scale Industry: If the invested capital is more than Rs. one crore, then the industry is called a large-scale industry.

On The Basis of Ownership

Based on the ownership, industries can be classified into the following four categories:

  • Public Sector: Government agencies own and operate these industries, e.g. SAIL, BHEL, ONGC, etc.
  • Private Sector: Individuals or a group of individuals own and operate these industries,  e.g. TISCO, Reliance, Mahindra, etc.
  • Joint Sector: Government and individuals jointly own these industries, e.g. Oil India Limited.
  • Cooperative Sector: Producers or suppliers of raw materials, workers or both own these industries. The stakeholders pool the resources. They share the profit or loss proportionately. AMUL which is milk cooperative is a good example. The sugar industry in Maharashtra is another example.

Question For You

Q. Classify the manufacturing industries based on the use of raw materials.

Ans: Industries are divided into two types, on the basis of the raw materials used. They are described below:

  • Agro Based Industries: Cotton, woollen, jute, silk textile, rubber, sugar, tea, coffee, etc.
  • Mineral Based Industries: Iron and steel, cement, aluminum, petrochemicals, etc.
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