Concept Notes 1: Industrial Location Drivers, Agglomeration & Classification
1. Importance of Manufacturing
Manufacturing transforms raw commodities into high-value consumer and capital goods:
- Reduces agrarian over-dependence by creating secondary/tertiary employment.
- Expands manufactured exports to earn vital foreign exchange.
- Modernizes agricultural productivity via tractors, fertilizers, and pump sets.
2. Agglomeration Economies
When diverse industries cluster in or near urban centers to collectively utilize common infrastructure—such as transport, electricity, banking, insurance, and specialized labor—the cost advantages obtained are called Agglomeration Economies.
3. Classification of Industries
| Criterion | Category | Defining Principle | Industrial Examples |
|---|---|---|---|
| Raw Material | Agro-Based | Uses agricultural raw plant/animal produce. | Cotton textiles, jute, sugar, tea, edible oil. |
| Mineral-Based | Uses mineral and metallic ores. | Iron and steel, cement, aluminium, machine tools. | |
| Main Role | Basic / Key | Furnishes products as raw material for other industries. | Iron & steel, copper smelting, aluminium smelting. |
| Consumer | Manufactures goods for direct consumer usage. | Sugar, paper, toothpaste, fans, sewing machines. | |
| Capital Investment | Small-Scale | Investment in plant and machinery up to permissible ceiling (₹1 crore). | Small garments, toy making, sports goods. |
| Large-Scale | Capital investment exceeding small-scale ceiling. | Integrated steel plants, automobile factories. | |
| Ownership | Public | Owned and operated by government agencies. | BHEL, SAIL, Indian Oil Corporation. |
| Private | Owned and run by individuals or private firms. | TISCO, Bajaj Auto, Reliance Industries, Dabur. | |
| Joint | Jointly managed by the state and private individuals. | Oil India Ltd (OIL). | |
| Cooperative | Owned and operated by primary producers/suppliers of raw materials. | Amul (dairy in Gujarat), sugar mills in Maharashtra. |