In this blog, we are going to learn about the classification of industries. Let us first understand what is an Industrial System. An industrial system consists of inputs, processes, and outputs. The inputs are the raw materials, labor, and costs of land, transport, power, and other infrastructure. The processes include a wide range of activities that convert the raw material into finished products.

The outputs are the end product and the income earned from it. In the case of the textile industry, the inputs may be cotton, human labor, factory, and transport cost. The processes include ginning, spinning, weaving, dyeing, and printing. The output is the shirt you wear.

INDUSTRIAL REGIONS

Industrial regions emerge when a number of industries locate close to each other and share the benefits of their closeness. Major industrial regions of the world are eastern North America, western and central Europe, eastern Europe, and eastern Asia. Major industrial regions tend to be located in the temperate areas, near seaports, and especially near coalfields.

India has several industrial regions like the Mumbai-Pune cluster, Bangalore-Tamil Nadu region, the Hugli region, the Ahmedabad-Baroda region, Chottanagpur industrial belt, Vishakhapatnam-Guntur belt, Gurgaon-Delhi-Meerut region, and the Kollam-Thiruvanathapuram industrial cluster.

The industry refers to economic activity that is concerned with the production of goods, extraction of minerals, or the provision of services. Thus we have the iron and steel industry (production of goods), coal mining industry (extraction of coal), and tourism industry (service provider).

CLASSIFICATION OF INDUSTRIES

Industries can be classified on the basis of raw materials, size, and ownership. Let us understand the classification of industries one by one.

Raw Materials: Industries may be agro-based, mineral-based, marine-based, and forest-based depending on the type of raw materials they use.

Agro-based industries use plant and animal-based products as their raw materials. Food processing, vegetable oil, cotton textile, dairy products, and leather industries are examples of agro-based industries.

Mineral-based industries are primary industries that use mineral ores as their raw materials. The products of these industries feed other industries. Iron made from iron ore is the product of mineral-based industry. This is used as raw material for the manufacture of a number of other products, such as heavy machinery, building materials, and railway coaches.

Marine-based industries use products from the sea and oceans as raw materials. Industries processing seafood or manufacturing fish oil are some examples.

Forest-based industries utilize forest produce as raw materials. The industries associated with forests are pulp and paper, pharmaceuticals, furniture, and buildings.

Size: It refers to the amount of capital invested, the number of people employed, and the volume of production. Classification of industries has also been done based on size, industries can be classified into small-scale and large-scale industries.

Small scale industries use a lesser amount of capital and technology as compared to large scale industries that produce large volumes of products. Silk weaving and food processing industries are small-scale industries. Cottage or household industries are a type of small-scale industry where the products are manufactured by hand, by the artisans. Basket weaving, pottery, and other handicrafts are examples of cottage industry.

Large Scale Industries: Investment of capital is higher and the technology used is superior in large-scale industries. Production of automobiles and heavy machinery are large-scale industries.

Ownership: Industries can be classified into the private sector, state-owned or public sector, joint sector, and cooperative sector.

• Private-sector industries are owned and operated by individuals or a group of individuals.
• The public sector industries are owned and operated by the government, such as Hindustan Aeronautics Limited and Steel Authority of India Limited.
• Joint sector industries are owned and operated by the state and individuals or a group of individuals. Maruti Udyog Limited is an example of a joint sector industry.
• Co-operative sector industries are owned and operated by the producers or suppliers of raw materials, workers, or both. Anand Milk Union Limited and Sudha Dairy are success stories of a cooperative venture.

FACTORS AFFECTING LOCATION OF INDUSTRIES

The factors affecting the location of industries are the availability of raw material, land, water, labor, power, capital, transport, and market. Industries are situated where some or all of these factors are easily available. Sometimes, the government provides incentives like subsidized power, lower transport cost, and other infrastructure so that industries may be located in backward areas. Industrialization often leads to the development and growth of towns and cities.

The location of an industry plays a crucial role in its success and growth. There are several factors that affect the location of industries, some of which are mentioned below:

• Availability of raw materials: Raw materials are the main inputs required for any industry. Hence, the availability of raw materials in a particular area is one of the major factors that affect the location of an industry.
• Transportation facilities: Good transportation facilities, such as roads, railways, and ports, are essential for industries as they facilitate the movement of goods and raw materials. An area with well-developed transportation facilities attracts industries.
• Labour: Availability of skilled and unskilled labour is an important factor that affects the location of industries. Industries prefer to set up in areas where they can easily access a large pool of labour.
• Power and water supply: Industries require a constant and reliable supply of power and water. An area with adequate power and water supply attracts industries.
• Market: The market for the products of an industry is another important factor affecting its location. Industries prefer to set up near their target market to reduce the cost of transportation and to increase sales.
• Government policies: Government policies play a significant role in the location of industries. Tax incentives, subsidies, and other benefits provided by the government attract industries to set up in a particular area.
• Environmental considerations: Industries need to comply with environmental regulations and standards. An area with favourable environmental conditions attracts industries.

In conclusion, the location of industries is influenced by various factors such as availability of raw materials, transportation facilities, labour, power and water supply, market, government policies, and environmental considerations. The right location can help an industry to grow and succeed, while the wrong location can cause various challenges and difficulties.

FAQs

What is Industry Classification?
Industry classification is the process of grouping industries into categories based on common characteristics, such as production methods, products, and end-use.

Why is Industry Classification important?

Industry classification is important as it provides a way to understand and analyze the structure of the economy and helps in the formulation of economic policies and planning.

What are the different methods of Industry Classification?

The different methods of Industry Classification include the following:

• Based on Raw Materials: Industries can be classified based on the raw materials they use, such as agriculture, mining, and forestry.
• Based on Type of Product: Industries can be classified based on the type of product they produce, such as consumer goods, capital goods, and intermediate goods.
• Based on Size of Industry: Industries can be classified based on their size, such as large scale, medium scale, and small scale industries.
• Based on Ownership: Industries can be classified based on ownership, such as public sector, private sector, and joint sector industries.
• Based on Mode of Production: Industries can be classified based on the mode of production, such as cottage industry, home-based industry, and organized industry.

What are the different types of Industries?

The different types of Industries are:

• Agricultural Industry: This industry deals with the production of crops, livestock, and dairy products.
• Manufacturing Industry: This industry deals with the production of goods through the use of machinery and other physical processes.
• Service Industry: This industry deals with the production of intangible goods and services, such as finance, healthcare, and education.
• Information Technology Industry: This industry deals with the production and distribution of software, hardware, and related services.
• Energy Industry: This industry deals with the production and distribution of energy, such as coal, oil, and natural gas.

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