Topic: Industrialization & Industrial LocationSubject: Growth & Structure of IndustriesCourse- BBA IIUnit- 1Prepared by: Prof. RITIKA SINGH

Covering Topics

Meaning of industry and industrialization, Significance of industrialization in India

Factors hampering industrial development of India/ Problems of industrialization

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

What is Industry?

Industry is characterized by the conversion of raw materials into final product with the help of human efforts working with machines.

Raw material human labor + machines (process) final product

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

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

Cotton to textile process

Cotton Gin

Spinning /Weaving of cotton

Bleaching of cotton

Dying

Cotton is spun in small villages with very simple tools such as Charkha or handloom, all managed manually , it is called ‘Cottage industry’

Human efforts play an important role

Industrialization

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

Why industrialization in India?

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 guns etc.

8. Decreasing importance of agriculture

Factors hampering rapid industrial development of India

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 of investment, poverty

- Variety of cast, religion, culture in India, only certain castes and community will associate with industry and commerce. Hindrance to entrepreneurs

- 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 of resources and inefficient implementation of developmental schemes.

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

exports of capital goods and equipment for countries like India

Classification of Industries 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

Industrial Location

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

factory, warehouse, office or any business enterprise is built

• Selection of a location depends on the type of business.

• The objective of selection of a location is to obtain the maximum efficiency and effectiveness by minimizing operating cost and achieve maximum revenues.

Reasons for Plant/Facility Location

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.

Importance of Location Decision

1. Efficiency and effectiveness

Efficiency and effectiveness are dependent

upon location. Location affect the operating cost such

as production and distribution costs. In service, it affects the demand and effectiveness 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.

Factors influencing industrial 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