Topic: Industrialization & Industrial Location

Subject: Growth & Structure of Industries

Course- BBA II

Unit- 1

Prepared by: Prof. RITIKA SINGH

Meaning of industry and industrialization,Significance of industrialization in India

Factors hampering industrial development ofIndia/ Problems of industrialization

Meaning and importance of location, Factors affecting industrial location Classification of industries

Industry is characterized by the conversion ofraw materials into final product with the help ofhuman efforts working with machines.

Raw material human labor + machines(process) final product

Ex. Cotton weaving, bleaching, dying withhelp of labor cloth = cotton textile industry

Ex. Cement industry, Jute industry, oil industry,ship building industry, sugar industry,

Cotton is spun in small villages with verysimple tools such as Charkha or handloom,all managed manually , it is called ‘Cottageindustry’

Human efforts play an important role

It refers to large scale modern industries which are characterized by the use of-

- complex modern machinery- A large number of people handling machines- Factory system of production- Mass production of goods and services at rapid

speed- Use of electricity or such power- Wide domestic and often foreign markets for

goods produced in such factories or plants

1. Substitute for agricultural product:

- ex. Man-made fibers for cotton yarn, synthetic rubber,

plastic wrappings and materials

2. To reduce unemployment and poverty

3. Value addition process in India

- Using raw material in India only to prepare final

product, which increase income of people

4. To raise income of people engaged in agriculture

5. Modernization of India's agricultural sector:- By increase in the supply of industrial goods i.e.,

tractors, electrical engines, pump, hybrid seeds etc.6. More self reliance- Reduction in imports, less dependence in foreign

countries7. To develop defense system- Vast network of modern industries are required to

produce bombs, warships, missiles, rifles and gunsetc.

8. Decreasing importance of agriculture

1. Economic factor: - Lack of infrastructure facilities (transport,

communication, training insti., fin. Insti.)- Lack of power2. Socio-demographic environment:- Rapid growth of population -> low per capita

income -> low rate of saving -> Low rate ofinvestment, poverty

- Variety of cast, religion, culture in India, onlycertain castes and community will associate withindustry and commerce. Hindrance toentrepreneurs

- Mentality on life is influenced by fatalism, theory of Karma (deeds of past life)

3. Public administrative machinery:- Lack of decision making ability, bureaucratic

delays, corruption, waste of various types ofresources and inefficient implementation ofdevelopmental schemes.

4. International environment:- Developed countries may put restrictions on

exports of capital goods and equipment forcountries like India

Industries classified into:

1. Nature- Capital goods, Producing goods, consumption goods

2. Ownership- Private, Public & Joint sector

3. Size- Small scale, medium scale & large scale industries

Definition:• Facility or Plant location is a place where a

factory, warehouse, office or any businessenterprise is built

• Selection of a location depends on the type ofbusiness.

• The objective of selection of a location is toobtain the maximum efficiency andeffectiveness by minimizing operating cost andachieve maximum revenues.

1. Starting new business2. Introduction of new product or service3. Insufficient capacity4. Changes in technology5. Mergers6. Changes in input resources7. Shifts in geographical demand may occur8. govt.

1. Efficiency and effectiveness

Efficiency and effectiveness are dependentupon location.

Location affect the operating cost such asproduction and distribution costs.

In service, it affects the demand andeffectiveness of the entire operation.

2. Long term commitment Involve huge amount of capital.3. Fixed Cost Involve the cost of constructing or purchasing

new plant, renovating (if renting).

4. Revenues Revenue may depend on having the facility near

the potential customer.

5. Variable Costs Cost of labor, and material also depend on

location.

1. Land and raw material:- Land includes water, forest wealth, rivers, coastline,

wind etc.- Rent of land- Climate and transportation- Ex. Moist climate suites textile industry of Mumbai- Ex. Fishing industry-

coastline area, paper industry- bamboo tree area

2. Labour:- Skilled, semiskilled, unskilled- Labor union- Rate of wages3. Capital and finance:- Nearness of bank- Rate of interest- Relation with bank personnel

4. Proximity of markets:- Perishable and heavy products units should be

near to market5. Availability of transport:- water, road, rail- Ex. Steel plant at Vishakhapattanam6. Power:- Coal for iron and steel- Electricity at reasonable rates- Other sources i.e., wind, water, solar etc.

7.Infrastructural facilities

8. Historical factors

9. Entrepreneurship

10. Strategic considerations

11. Government policy