• The manufacturing sector consists of establishments that are involved in the mechanical, physical or chemical transformations of materials, substances or components to make them into new and finished products.
  • Industries are classified in a number of ways. On the basis of size, capital investment and labour force employed, industries are classified as large, medium, small scale, and cottage industries.




On the basis of raw materials

1. Agro based Industries: Raw material sourced from agriculture sector. E.g.: Cotton, sugar etc.

2. Mineral based Industries: Raw material sources from mining, E.g.: Iron & steel, cement etc.

3. Forest based Industries: Raw material sourced from forest. E.g.: Paper industry, Timber etc.

On the basis of input

1. Basic or key industries: Supply their goods to other industries. E.g.: Iron & steel

2. Consumer Industries: Produce goods for direct consumption. E.g. Toothpaste, Television etc.

On the basis of ownership

1. Public sector: Owned & operated by govt. E.g. BHEL, SAIL etc.

2. Private sector: Owned & operated by private individuals. E.g. TISCO, RIL.

3. Joint sector: Jointly run by state & private players. E.g. OIL

4. Cooperative sector: Owned & operated by the producers and suppliers of raw materials, workers or both. E.g. Sugar industry in Maharashtra.

On the basis of mode of operation

1. Labour Intensive Industry: Large no. of skilled unskilled or semi-skilled labour is employed. E.g. Textile, leather & footwear.

2. Capital goods Industry: Manufactures machine tools, heavy electrical equipment, heavy transport vehicles, mining & earth moving tools etc.

3. Industries with strategic significance: Industries which are critical for the purpose of earning foreign exchange, research & defense. E.g. Aerospace, shipping, electronics & telecommunication, defense equipment etc.

On basis of size

It refers to the amount of capital invested, number of people employed and the volume of production.

1. Small scale industries: Use lesser amount of capital investment and technology, and produce small volume of products. E.g. : handicrafts, cottage industries etc.

2. Large scale industries: Investment of capital is higher and the technology used is superior in large scale industries. E.g. : automobile industry, heavy machinery industry etc..



Factors influencing location of industries in india:

Availability of Raw Materials:

  • Raw materials are one of the most important determinants of location of industries.
  • Industries using weight-losing raw materials are located in the regions where raw materials are located. This includes Sugar mills, iron and steel industries, pulp industry, copper smelting and pig iron industries.
  • For example, most of the iron and steel industries are located either near the coal-fields (Bokaro, Durgapur, etc.) or near sources of iron ore (Bhadravati, Bhilai, and Rourkela) as iron ore and coal both are weight-losing raw materials.
  • Similarly, industries based on perishable raw materials are also located close to raw material sources. E.g., sugar mills.


Availability of Power and Energy supply:

  • Power supply has to be ensured before the location of any industry as it provides the motive force for machines.
  • However, certain power intensive industries, like aluminum and synthetic nitrogen manufacturing industries tend to be located near sources of power because they require huge quantum of electricity.
  • However, since electricity can be easily transmitted, and petroleum can be transported, these industries can also be dispersed.



  • The entire process of manufacturing is useless until the finished goods reaches the market.
  • Nearness to market is essential for quick disposal of manufactured goods.
  • It helps in reducing the transport cost and enables the consumer to get things at cheaper rates.



  • Modern industries are capital-intensive and require huge investments.
  • In India, Big cities like Mumbai, Kolkata, Delhi, and Chennai are big industrial centers, where capital is available for investment.



  • Transport by land or water is necessary for the collection of raw materials and for the marketing of the finished products.
  • It was the major factor behind the development of Great Lakes-Pittsburg industrial area in the US.
  • In India, Kolkata, Mumbai and Chennai were the only major industrial centre earlier, and the industries shifted to interior locations, only when railway lines were expanded to the hinterlands.
  • All major industrial plants are located on the trunk rail routes.



  • The availability of both unskilled and skilled, or technically qualified manpower, is an important factor in the location of industries.
  • One characteristic feature of the labour factor is its mobility.
  • Some of the small-scale industries traditionally associated with labour are glass-work (Ferozabad), brass-work (Moradabad), utensils (Yamunanagar in Haryana), silk sarees (Varanasi), carpets (Mirzapur), etc.


  • Water is another important requirement for industries.
  • Many industries are established near rivers, canals and lakes, because of this reason. Iron and steel industry, textile industries and chemical industries require large quantities of water, for their proper functioning.


  • Site requirements for industrial development are of considerable significance.
  • Sites, generally, should be flat and well served by adequate transport facilities.
  • Large areas are required to build factories.
  • Now, there is a tendency to set up industries in rural areas because the cost of land has shot up in urban centers.


  • Climate plays an important role in the establishment of industries at a place.
  • Harsh climate is not much suitable for the establishment of industries.
  • There can be no industrial development in extremely hot, humid, dry or cold climate.


Capital and Finance Facilities:

  • Establishment of industries involves the daily exchange of crores of rupees which is possible through banking facilities only.
  • So, the areas with better banking facilities are better suited to the establishment of industries.


Government Policies:

  • Government activity in different spheres like in planning the future distribution of industries, for reducing regional disparities, elimination of pollution of air and water and for avoiding their heavy clustering in big cities, has become no less an important locational factor.


Industrial Inertia:

  • Industrial inertia is when a firm remains in its original location even after the initial advantage or alluring factors that led to them locating there has disappeared.
  • Industrial inertia is the predisposition of industries or companies to avoid relocating facilities even in the face of changing economic circumstances that would otherwise induce them to leave.
  • Often the costs associated with relocating fixed capital assets and labour far outweigh the costs of adapting to the changing conditions of an existing location.


Other social factors:

There are also a number of other factors that may influence Industrial location such as:

  • The attitude of the local community.
  • Proximity of complementary industry.
  • Prospects of development of the region.
  • Recreational and social facilities.
  • proximity to important metropolitan centres.
  • Personal bias of entrepreneurs.
  • Historical factor



Major Industrial Regions of India

  • Industries tend to concentrate on certain locations because of the favourable locational factors.
  • Such regions are classified into eight major and thirteen minor industrial centers.


  1. Mumbai-Pune Industrial Region:
    • This region extends from Thane to Pune and in adjoining districts of Nashik and Solapur. In addition, industries have grown at a rapid pace in Kolaba, Ahmednagar, Satara, Sangli and Jalgaon districts also. This region owes its origin to the British rule in India.
    • The growth of this industrial region is fully connected with the growth of cotton textile industry in India. As the coal was far from the region, hydel power was developed in Western Ghats. Cotton was cultivated in the black cotton soil area of the Narmada and Tapi basins.
    • Cheap labour-force came from the hinterland, the port facilities for export-import and communication links with the peninsular hinterland made Mumbai the ‘Cottonopolis of India’. With the development of cotton textile industry, the chemical industry developed too.
    • Opening of the Mumbai High petroleum field and erection of nuclear energy plants added additional magnetic force to this region. Now the industrial centres have developed, from Mumbai to Kurla, Kolaba, Thane, Ghatkopar, Ville Parle, Jogeshwari, Andheri, Thane, Bhandup, Kalyan, Pimpri, Pune, Nashik, Manmad, Solapur, Ahmednagar, Satara and Sangli.
    • In addition to cotton textile and chemical industries, engineering goods, leather, oil refineries; petrochemicals, synthetic and plastic goods, chemicals, drugs, fertilizers, electricals, electronics, software, ship-building, transport and food industries have also developed here.

Issues faced by the region:

Ø The partition of the country in 1947 adversely affected this region because 81% of the total irrigated cotton area growing long staple cotton went to Pakistan.

Ø Mumbai, the nucleus of this industrial region, is facing the current limitation of space for the expansion of the industry.

Ø Dispersal of industries is essential to bring about decongestion.


  1. The Hugli Industrial Region:

Located in West Bengal, this region extends as a narrow belt running along the river Hugli for a distance of about 100 km from Bansbaria and Naihati in the north to Birlanagar in the south. Industries

    • have also developed in Midnapur district in the west. The river Hugli offered the best site for the development of an inland river port as nucleus for the development of Hugli industrial region.
    • The discovery of coal and iron ore in Chotanagpur plateau, tea plantations in Assam and northern parts of West Bengal and the processing of deltaic Bengal’s jute led to the industrial development in this region. Cheap labour could be found easily from the thickly populated states of Orissa, Bihar, Jharkhand and eastern part of U.P.
    • Establishment of first jute mill at Rishra in 1855 ushered in the era of modem industrial clustering in this region. A chain of jute mills and other factories could be established on either side of Hugli River with the help of Damodar valley coal.
    • Kolkata’s industries have established by drawing in the raw materials from adjoining regions and distributing the finished goods to consuming points. Thus, the role of transport and communication network has been as important as the favourable locational factors in the growth of this region
    • Just after the partition of old Bengal province in 1947, the region faced, for some years, the problem of shortage of jute as most of the jute-growing areas went to East Pakistan (now Bangladesh). The problem was solved by gradually increasing home production of jute. Cotton textile industry also grew along with jute industry.
    • Paper, engineering, textile machinery, electrical, chemical, pharmaceuticals, fertilizers and petrochemical industries have also developed in this region. Factory of the Hindustan Motors Limited at Konanagar and diesel engine factory at Chittaranjan are landmarks of this region.
    • Location of petroleum refinery at Haldia has facilitated the development of a variety of industries. The major centres of this industrial region are Kolkata, Haora, Haldia, Serampur, Rishra, Shibpur, Naihati, Kakinara, Shamnagar, Titagarh, Sodepur, Budge Budge, Birlanagar, Bansbaria, Belgurriah, Triveni, Hugli, Belur, etc.


3. Bangalore-Tamil Nadu Industrial Region:

    • Spread in two states of Karnataka and Tamil Nadu, this region experienced the fastest industrial growth in the post-independence era.
    • This region is a cotton-growing tract and is dominated by the cotton-textile industry. In fact, cotton textile industry was the first to take roots in this region. But it has large number of silk-manufacturing units, sugar mills, leather industry, chemicals, rail wagons, diesel engines, radio, light engineering goods, rubber goods, medicines, aluminium, cement, glass, paper, cigarette, match box and machine tools, etc.
    • This region is away from the main coal-producing areas of the country but cheap hydroelectric power is available from Mettur, Sivasamudram, Papanasam, Pykara and Sharavati dams. Cheap skilled labour and proximity to vast local market as well as good climate have also favoured the concentration of industries in this region.
    • Madurai is known for its cotton textiles. Visvesvaraya Iron and Steel Works is located at The other important centres of this region are Sivakasi, Tiruchirapalli, Madukottai, Mettur, Mysore and Mandya. Petroleum refinery at Chennai and Narimanam and iron and steel plant at Salem are recent developments.


4. Gujarat Industrial Region:

    • The nucleus of this region lies between Ahmedabad and Vadodara as a result of which it is also known as Ahmedabad-Vadodara industrial region. However, this region extends upto Valsad and Surat in the south and Jamnagar in the west. The region corresponds to the cotton growing tracts of the Gujarat plains and the development of this region is associated with the location of textile industry since 1860s.
    • This region became important textile region with the decline of cotton textile industry in Mumbai. Mumbai has the disadvantage of paying double freight charges for first bringing the raw cotton from the peninsular hinterland and then dispatching the finished products to inland consuming points in India.
    • But Ahmedabad is nearer the sources of raw material as well as the marketing centres of the Ganga and Satlui plains. Availability of cheap land, cheap skilled labour and other advantages helped the cotton textile industry to develop. This major industrial region of the country, mainly consisting of cotton textile industry, is expanding at a much faster rate in providing a greater factory employment.
    • The discovery and production of oil at a number of places in the Gulf of Khambhat area led to the establishment of petrochemical industries around Ankleshwar, Vadodara and Jamnagar. Petroleum refineries at Koyali and Jamnagar provide necessary raw materials for the proper growth of petrochemical industries.
    • The Kandla port, which was developed immediately after independence, provides the basic infrastructure for imports and exports and helps in rapid growth of industries in this region. The region can now boast of diversified industries.
    • Besides textiles (cotton, silk and synthetic fibres) and petrochemical industries, other industries are heavy and basic chemicals, dyes, pesticides, engineering, diesel engines, textile machinery, pharmaceuticads, dairy products and food processing. The main industrial centres of this region are Ahmedabad, Vadodara, Bharuch, Koyali, Anand, Khera, Surendranagar, Surat, Jamnagar, Rajkot and Valsad. The region may become more important in the years to come.


5. Chotanagpur Industrial Region:

    • As its name indicates, this region is located on the Chotanagpur plateau and extends over Jharkhand, Northern Orissa and Western part of West Bengal. The birth and growth of this region is linked with the discovery of coal in Damodar Valley and iron ore in the Jharkhand-Orissa mineral belt. As both are found in close proximity, the region is known as the ‘Ruhr of India’.
    • Besides raw materials, power is available from the dam sites in the Damodar Valley and the thermal power stations based on the local coal. This region is surrounded by highly populated states of Jharkhand, Bihar, Orissa and West Bengal which provide cheap labour.
    • The Kolkata region provides a large market for the goods produced in the Chotanagpur region. It also provides the port facility to the region. It has the advantages for developing ferrous metal industries. The Tata Iron and Steel Company at Jamshedpur, Indian Iron Steel Co., at Bumpur-Kulti, Hindustan Steel Limited at Durgapur, Rourkela and Bokaro are the important steel plants located in this region.
    • Heavy engineering, machine tools, fertilizers, cement, paper, locomotives and heavy electricals are some of the other important industries in this region. Important nodal centres of this region are Ranchi, Dhanbad, Chaibasa, Sindri, Hazaribagh, Jamshedpur, Daltonganj, Garwa and Japla.


6. Vishakhapatnam-Guntur Industrial Region:

    • This industrial region extends from Vishakhapatnam district in the north-eastern part of Andhra Pradesh to Kurnool and Prakasham districts in the south-east and covers most of the coastal Andhra Pradesh. The industrial development of this region mainly depends upon Vishakhapatnam and Machilipatnam ports.
    • Developed agriculture and rich mineral resources in the hinterlands of these ports provide solid base to the industrial growth in this region. Coal fields of the Godavari basin are the main source of energy.
    • Petroleum refinery at Vishakhapatnam facilitated the growth of several petrochemical industries. It uses high quality iron ore from Bailadila in Chhattisgarh.
    • One lead-zinc smelter is functioning in Guntur district. The other industries of this region include sugar, textiles, paper, fertilizers, cement, aluminium and light engineering. The important industrial centres of this region are Vishakhapatnam, Vijaywada, Vijaynagar, Rajahmundry, Kurnool, Elum and Guntur. Recent discovery of natural gas in Krishna- Godavari basin is likely to provide much needed energy and help in accelerated growth of this industrial region.


7. Gurgaon-Delhi-Meerut Industrial Region:

    • This region developed after independence, but is one of the fastest growing regions of India. It consists of two industrial belts adjoining Delhi. One belt extends over Agra-Mathura-Meerut and Saharanpur in U.P. and the other between Faridabad-Gurgaon- Ambala in Haryana.
    • The region is located far away from the mineral and power resources, and therefore, the industries are light and market oriented. The region owes its development and growth to hydro-electricity from Bhakra-Nangal complex and thermal power from Harduaganj, Faridabad and Panipat.
    • Sugar, agricultural implements, vanaspati, textile, glass, chemicals, engineering, paper, electronics and cycle are some of the important industries of this region. Software industry is a recent addition, Agra and its environs have glass industry. Mathura has an oil refinery with its petro-chemical complex. One oil refinery has been set up at Panipat also.
    • Gurgaon has Maruti car factory as well as one unit of the IDPL. Faridabad has a number of engineering and electronic industries. Ghaziabad is a large-centre of agro­-industries. Saharanpur and Yamunanagar have paper mills. Modinagar, Sonipat, Panipat and Ballabhgarh are other important industrial nodes of this region.


8. Kollam-Thiruvananthapuram Industrial Region:

    • This is comparatively small industrial region and spreads over Thiruvananthapuram, Kollam, Alwaye, Emakulam and Allapuzha districts of south Kerala. The region is located far away from the mineral belt of the country as a result of which the industrial scene here is dominated by agricultural products processing and market oriented light industries.
    • Plantation agriculture and hydroelectricity provide the industrial base to this region. The main industries are textiles, sugar, rubber, match box, glass, chemical fertilizers, food and fish processing, paper, coconut coir products, aluminium and cement. Oil refinery set up in 1966 at Kochi provides solid base to petrochemical industries. Important industrial centres are Kollam, Thiruvananthapuram, Alluva, Kochi, Alappuzha and Punalur.



  • It is a basic industry and provides inputs to the other industries such as automobiles, locomotives, rail tracks, ship building, bridges and a host of other industrial and commercial activities.
  • Before 1800 A.D. iron and steel industry was located where raw materials, power supply and running water were easily available.
  • Later the ideal location for the industry was near coal fields and close to canals and railways.



Factors affecting location of iron & steel industry

  1. Raw material availability:
  • The essential bulk inputs of iron & steel industry are iron ore (gross/weight-losing raw material), fuel (coal; weight-losing), limestone (flux) & water (required for cooling & worker safety).
  • These bulk inputs, especially iron ore and coal, have a significant influence on the location of the industry.
    Other raw material like dolomite (refractory material), manganese, chromite (stainless steel making) are required only in small quantities.
  • Mostly large integrated steel plants are located close to source of raw materials, as they use large quantity of heavy and weight losing raw materials. E.g: Concentration of Iron and steel industry in Chota Nagpur region – Presence of Iron ore & coal in this region. TISCO at Jamshedpur.


  1. Other Factors:
  • China is the leading producer and consumer of iron and steel in the world.
  • But most of the Chinese iron and steel industry depends on imported iron ore from Australia, Brazil and imported cocking coal from Australia and Indonesia. This is because of the poor quality of both iron ore and coal in China. Despite the raw material imports, Chinese steel is highly competitive in the global markets due to the ‘economies of scale’ production and cheap labour.
  • Availability of electricity and water for cooling. Eg: Bokaro steel plant on banks of river Damodar, Visveswaraya steel plant.


  1. Minimising transportation costs:
  • Steel plants are located close to the ports to effectively import raw materials and export finished product.
  • For mini steel plants which use electric furnaces and operate at a smaller scale, access to markets is more important than inputs.
  • These are less expensive to build and operate and can be located near markets because of the abundance of scrap metal, which is the primary input.

Osaka – Kobe Region, Japan

  • With the beginning of the 20th century, colonial powers like Japan, with no significant iron ore or coal resource base, began to set up iron and steel plants near the ports in Osaka.

Great Lakes & St. Lawrence Region, USA

· Lake Superior region of Michigan has significant iron ore deposits but has no coal or markets nearby.

· The only profitable way to exploit the ore was to transport it in bulk to distant blast furnaces on the lower Great Lakes — to places like Cleveland and Chicago.

· On the other hand, Pittsburgh’s (Pennsylvania) iron and steel industry was facing a shortage of local iron ore but had abundant coal reserves.

· Hence Pittsburgh started importing iron ore from the Lake Superior region of Michigan and Minnesota and started exporting coal to Duluth in Minnesota (Lake Superior region).

· In the USA, the industry cropped up in the cities of Pittsburgh, Buffalo, Cleveland, Detroit, Chicago that used imported coal from Canada (through Saint Lawrence Seaway) and Appalachian coalfields.

Ruhr Region, Germany

· Ruhr has been one of the major industrial regions of Europe for a long time.

· Coal and iron and steel formed the basis of the economy. But after the 1950s, the demand for coal declined (due to competition from cheaper imported coal and oil), and the iron ore was also exhausted.

· However, the iron and steel industry thrived using imported ore brought by Rhine River waterway to the Ruhr from deeper water ports such as Rotterdam (Netherlands).

· The Ruhr region is responsible for 80 per cent of Germany’s total steel production.

· The future prosperity of the Ruhr is based less on coal and iron ore and more on the automobile industry.

Ural Kuznetsk Region, Russia

· The Ural-Kuznetsk industrial combine was formed in the early 1930s.

· The Ural of Russia is rich in iron ore deposits.

· Kuznetsk Basin in Western Siberia is rich in coal

· deposits.

· Coal from Kuznetsk Basin is sent to the Ural region by Railways.

· The returning wagons after emptying coal, bring iron ore from the Ural region. In India too, steel plants were set up at Vishakhapatnam, Ratnagiri and Mangalore.

· Nearness to market is important for mini steel plants in order to minimize transportation cost.

Bokaro – Rourkela Combine, India

· Bokaro Steel Plant steel plant was set up in 1964 at Bokaro with Russian collaboration.

· This plant was set up on the principle of cost minimisation by creating Bokaro-Rourkela combine.

· It receives iron ore from the Rourkela region and the wagons on return take coal to Rourkela.

· Other raw materials come to Bokaro from within a radius of about 350 km.

· The Damodar Valley Corporation supplies water and hydel power.


Important Plants Location
Tata Iron and Steel Corporation (TISCO) Jamshedpur, Jharkhand


Visvesvaraya Steel Plant Bhadravati, Karnataka
Bhilai Steel Plant Chhattisgarh
Durgapur Steel Plant Durgapur, West Bengal
Bokaro Steel Plant Jharkhand
IISCO Steel Plant Asansol, West Bengal
Salem Steel Plant Tamil Nadu
Rourkela Steel Plant Odisha
Visakhapatnam Steel Plant Visakhapatnam, AP



Challenges For Indian Iron & Steel Industry:

  • Low productivity: Per – capita labour productivity in India is at 90-100 tonnes which is one of the lowest in the world (labour productivity in Japan, Korea is about 600-700 tonnes per man per year).
  • External competition from cheap imports: Domestic iron & steel industry faces an unfair competition from dumping of cheap steel in the Indian market by the industries of China and Japan.
  • Low potential utilisation: The potential utilisation of iron and steel industrial units with units rarely utilising more than 80% of their potential capacity.
  • Inadequate capital and technological investment: Most of the industrial units set up in India have been established with help of foreign aid as the huge amount of capital requires is not domestically available.
  • Shortage of metallurgical coal: Although India has huge reserves of high grade iron ore, the reserves of high grade coking coal for smelting iron are limited.



  • A cotton mill houses spinning or weaving machinery for the production of yarn or cloth from cotton.
  • Till the industrial revolution, cotton cloth was made using hand-spinning techniques (wheels) and looms.
  • In 18th century, power looms facilitated the development of cotton textile industry, first in Britain and later in other parts of the world.


Cotton textile industry in india:

  • Tropical climate and abundant yield of cotton crop are the main reasons for development of cotton textile industry in India.
  • India was famous worldwide for the production of muslin, a very fine variety of cotton cloth, calicos, chintz and other different types of fine cotton cloth.
  • With the beginning of the industrial revolution, Indian cotton textiles industry was decimated due to competition from the mill industry of Britain.
  • In 1854, the first modern cotton mill was established in Mumbai which eventually developed into a hub for cotton textile industry.
  • This industry around Mumbai grew tremendously in the 1870s due to a spurt in demand in the wake of the American Civil War.
  • Indian industries made rapid strides during WW I due to a rise in demand for industrial goods. The cotton textile industry was concentrated in the cotton belt of Rajasthan, Maharashtra & Gujarat.
  • Localization of textile mills largely depends on raw material assemblage, uninterrupted power supply and nearness to market.
  • This industry is located in almost every state in India, where one or more of the locational factors have been favourable.
  • Uninterrupted supply of raw cotton from large cotton-growing areas of West India benefited the industry in centres like Ahmedabad (Manchester of India), Nagpur, Surat, Indore and Coimbatore.
  • At present, the industry is also getting diffused to regions nearer to the large urban centres and ports to gain easy access to domestic and foreign markets.


Factors Affecting Cotton Textile Industry:

  1. Raw material :
  • In India and the U.S., the industry is coterminous with the cotton-growing tracts.
  • For example, Ahmedabad (Manchester of India), Solapur, Nagpur & Coimbatore (Manchester of South India) are located in the areas of large-scale cotton cultivation.
  • In the U.S., the industry is concentrated in the cotton-growing southern states.
  • Since the cotton industry is not a weight losing industry, it isn’t always necessary to set up the industry close to the cotton-producing areas.
  • E.g. Cotton textiles industry in Kanpur (market, local investment), Kolkata (port), Manchester (market, coal, water) & Bangladesh (cheap labour, government support).


  1. Transportation
  • The most favourable location for setting up the cotton textile industry is the one that is well connected with cotton- producing areas and markets.
  • This is because raw cotton and finished cloth can be transported without adding much to the total cost of production.
  • In India, dispersal of the industry from the old nuclei (Mumbai, Ahmedabad) started after 1921 with railway lines penetrating into the peninsular region (Madurai, Bengaluru).


  1. Access to market
  • With a tropical and sub- tropical climate, all parts of India provide vast market potential for the cotton textile industry.
  • For example, West Bengal, Bihar, Uttar Pradesh, Kerala and Odisha do not grow cotton and still has cotton textile industry. This is because raw cotton and finished cloth can be transported without adding much to the total cost of production.



  • Wool and Woollen Textiles Industry is a rural based, export-oriented industry in which the organized sector, the decentralized sector, and the rural sector complement each other.
  • Best quality wool is obtained from sheep and goats in dry and cooler climates. Hot and humid climate in India is not ideal for wool production.



Woollen Textile In India:

  • The main concentration of woollen textile industry is found in Punjab, Maharashtra and Uttar Pradesh.
  • These states account for about three-fourths of the total spindle capacity. Gujarat, Karnataka, West Bengal and Jammu and Kashmir are next in order of importance.



Factors Affecting Woollen Textile Industry


Raw material

· The woollen industry is not weight losing.

· Hence mills can be established at faraway places from wool producing areas.

· For example, mills in the northern hemisphere import fine quality wool from faraway places like Australia and New Zealand.


· As wool is non-perishable and lightweight, it can be transported over longer distances economically through waterways.

· Mills that work on imported wool are usually located close to the ports to reduce transportation costs. E.g. mills in Mumbai and Chennai.

Access to market

· The woollen industry is primarily market-oriented.

· Wool fabrics hold more air which makes them excellent insulators against cold.

· Hence most of the woollen apparel industry is located in the temperate coastal regions of the northern hemisphere.

· Industry located in the tropics is mostly export- oriented.

Power Just like cotton, woollen industry also need power supply for mill units.

On the other hand, cheap labour plays an essential factor in the establishment of mills in the tropics.



Challenges For Indian Woollen Textile Industry:

  • Shortage of raw wool: India does not produce sufficient quantity of fine quality raw wool. Also the productivity of Indian sheep is very low. On an average, an Indian sheep yields only 0.86 kg of wool per annum against 4.08 kg yielded by an Australian sheep.
  • Lack of Market: Most parts of India have tropical and sub-tropical climate which restricts the demand for woollen clothes. The southern part of the country enjoys warm weather throughout the year and people do not require woollen clothes at all. Even in the northern parts of India, the winter season lasts only for four to five months in a year and it is only during this period that woollen clothes are required to some extent.
  • Lack of Modern Equipment: Most of the equipment in woollen textile industry, like other textile industries, is obsolete and outdated as a result of which, its products are not able to cope with the ever-changing designs and patterns, especially in the international market.
  • Low Quality: Leaving aside a few exceptions, Indian woollen goods are considered to be of low quality in the international markets which results in lack of demand.



  • Jute industry is the second most important textile industry in India after cotton.
  • The British setup the first jute industry in India in 1855 in the Hooghly valley near Kolkata.
  • As of 2018, there are 97 jute mills in India.
  • West Bengal (71) has the highest number of jute mills, followed by Andhra Pradesh (12).
  • All the mills in West Bengal are located in a narrow belt about 100 km long along river Hooghly.
  • The remaining mills are located in Uttar Pradesh (3), Bihar (3), Orissa (3) and Assam (2).
  • The mills in Uttar Pradesh (sugar and cement industry) and Andhra Pradesh (Paddy) were set up to meet the increasing local demand for gunny bags.
  • Also, there is the availability of local fibres like Mesta (important commercial fibre crop after cotton and Jute. Jute and Mesta fibre together is known as raw jute).


Factors Affecting Jute Textile Industry:

Raw material

· India is the world’s largest producer of jute and WB alone accounts for 72% of India’s jute production.

· Soil and climatic conditions in the delta region are ideal for jute cultivation.


· Hooghly is well connected through waterways (Ganga-Bhagirathi – Hooghly Waterway – National Waterway 1) and rail with the jute growing areas.

· Kolkata port helps in the import of machinery and export of finished jute products.

Access to market · There is a vast domestic market throughout India for jute products (gunny bags).
Power · Thermal stations in the Hooghly basin (come under Damodar Valley Corporation) use coal from Raniganj coalfields (~170 km).


· The Ganga-Brahmaputra Delta region has a very high population density, and most of the population here is poor.

· Cheap labour is also available from the surrounding regions of Bihar and Uttar Pradesh.


Challenges For Jute Textile Industry:

  • After partition, most of the jute producing areas went to Bangladesh while most of the jute mills remained in India.
  • This problem was overcome to a large extent by extending the area in India under jute and mesta.
  • However, domestic production is simply not enough to satisfy the demand of Indian jute mills.
  • The constant increase in rice cropped area in the delta region further complicates the situation.
  • India imports significant quantities of jute fibre from Bangladesh to meet the shortfall.
  • Antiquated technology and machinery, shortage of power and industrial sickness affect production.
  • Newly established factories in Bangladesh are posing a tough competition.
  • Adoption of synthetic alternatives (polythene, nylon) has resulted in the decline of demand for jute.




  • Approximately 80% of the world’s sugar is produced from sugarcane in tropical and subtropical climates with the remaining 20% derived from sugar beet.
  • In the 2018-2019 crop year, sugar production was 179 million metric tons (MT) in India.
  • India (33 MT) became the world’s largest sugar producer in 2018/2019.
  • It overtook Brazil (29.5 MT) for the first time in 16 years.
  • Brazil, Thailand, Australia, India are the leading exporters of sugar.
  • Uttar Pradesh is the leading sugarcane producing State. Sugar production in U.P. in 2018-19 is estimated to be around 13.5 MT.
  • Sugar production in Maharashtra in 2018-19 is estimated to be around 11.5 MT. In Feb 2020, for better use of surplus sugar stock, GOI approved an increase in the price of ethanol to be procured by public sector oil marketing companies (OMCs) from sugar mills for blending with petrol.
  • The decision will help in further increasing the ethanol blend levels in petrol from the current 6%.
  • For 2019 – 2020, India expects sugar production to drop to 26%. This is because of droughts in 2018 and floods in 2019 in Maharashtra.


Factors affecting sugar industry

Raw material

· The quality of sugarcane plays the most important role in production costs.

· Fifty per cent cost of production is accounted for by sugarcane alone.

· Hence the sugarcane mills are confined to the sugarcane growing regions of the tropics (hot, humid, less windy areas).


· Sugarcane is highly perishable significantly weight losing raw material.

· Once the sugarcane is harvested, the cane starts to dry up, and the sucrose content starts to decline rapidly.

· It is prohibitively expensive to transport sugarcane over long-distances.

· Hence the sugar mills are always located close to the cane growing areas (Hence the cane is always grown close to the mills ― usually within a 100 km radius).


· Sugarcane is a water- intensive crop with a crop season of 12 to 18 months.

· The germination to ripening phase is itself close to a year.

· Hence the availability of water year-round is a critical factor for cane cultivation.


· Sugarcane is not harvested year-round & the crushing season varies from 4 to 8 months.

· Hence the availability of seasonal labour is critical for both harvesting and processing.

· In India, harvesting and milling is done by migrant workers.

Challenges For Sugar Industry:

  • The Indian sugarcane has low sucrose content and gives poor yields compared to the global average.
    The production cost of sugar in India is one of the highest in the world.
  • Since the harvesting can be done only in a particular season, the crushing is confined to a limited period, and the sugar factories remain idle for the rest of the period.
  • Most of the machinery used in Indian sugar mills, particularly those of UP and Bihar are old and obsolete.
    Due to low profitability, the industry is unwilling to modernize.
  • Low rate of recovery: the average rate of recovery in India is less than 10 per cent compared to other major sugar-producing countries (14- 16 per cent).



Sugar Industry – North Vs South

North India (Sutlej- Ganga plain from Punjab to Bihar) South India (Maharashtra, Karnataka, Tamil Nadu, Andhra Pradesh)
· Low yield and productivity.

· High summer temperatures ranging from 30° to 35°C and Loo (dry, scorching wind in May and June with a desiccating effect) leads to low growth and fibrous crop.

· In winter months (December and January) the crop is likely to be damaged by severe cold and frost.

· Hence it must be harvested before frost season.

· The tropical climate gives a higher yield per unit area as compared to north India.

· No winds like ‘loo’ during summer.

· Reasonably high temperature during winter.

· Frost-free climate throughout the year.

· High maritime influence = moderate climate = decreased crop duration and higher sucrose content.

· Perennial rivers and large scale irrigation facilities. · Non-perennial rivers.

· Irrigational facilities have improved over time.

· The crushing season ranges from 4 to 8 months.

· Yearlong crushing (factories keep running throughout the year)
· Has more mills than the south but they are of comparatively smaller size and use antiquated technology. · Mills are comparatively large and modern.



  • Crude petroleum is refined to get various petroleum products like LPG, petrol, diesel, naphtha, polymers, synthetic fibres, surfactants, and other compounds.
  • These industrial units are located along the western coast of the country because of proximity to the crude oil producing regions of the India and Gulf states.
  • Few of the industrial units are also located in the north east to exploit the reserves of Brahmaputra Valley.
  • Industries manufacturing nylon and polyester yarns are located at Kota, Pimpri, Mumbai, Modinagar, Pune, Ujjain, Nagpur and Udhna.


Factors affecting petrochemical industries:

  • These industrial units are located along the western coast of the country because of proximity to the crude oil producing regions of the India and Gulf states.
  • Mumbai is the hub of the petrochemical industries. National Organic Chemicals Industries Limited (NOCIL), established in private sector in 1961, started the first naphtha based chemical industry in Mumbai.
  • Similarly, Digboi, Guwahati are the locations in the north east where crude petroleum reserves are found.
  • Other centres are Barauni, Mathura etc. which are located along the pipelines set up to transport raw materials.
  • Synthetic fibres are widely used in the manufacturing of fabrics because of their inherent strength, durability, washability, and resistance to shrinkage.
  • Industries manufacturing nylon and polyester yarns are located at Kota, Pimpri, Mumbai, Modinagar, Pune, Ujjain, Nagpur and Udhna.


Challenges faced by petrochemical industries:

  • High import cost of the raw material, i.e. crude oil and natural gas, from petroleum exporting countries.
  • High cost of energy and feedstock and the consequent impact on demand.
  • The manufacturing units mostly use obsolete form of technology and are not able to produce optimally.
  • High excise duty on synthetic fibres to promote the natural fibre industry.



  • Fertiliser industry is one of the eight core industries. The significant contribution made by the chemical fertilisers can be seen from the impact of green revolution on Indian agriculture.
  • The localisation of fertiliser industry is closely related to that of petrochemicals. About 70% of units producing nitrogenous fertilisers use naphtha as basic raw material. That’s why they are located near oil refineries.
  • In recent years, transportation cost of raw materials through pipelines has facilitated the widespread distribution of fertiliser plants.
  • The Hajira – Vijaipur – Jagdishpur gas pipeline has given birth to plants at Vijaipur, Jagdishpur, Babrala
  • Phosphatic fertiliser plants are dependent on mineral phosphate which is largely imported but reserves are also found in Rajasthan, Madhya Pradesh and Jharkhand.


Challenges Faced By Fertiliser Industry

  • Urgent need to bridge demand supply gap: During the last one-and-a-half decade or so, hardly any investment has been made for adding to indigenous urea production capacity. As a result, indigenous production of fertilisers is not sufficient to fulfill local demand.
  • High import dependence: insufficient indigenous production leads to high import dependence. In phosphate and potash, acute lack of natural resources leads to high dependence on imports which makes Indian industry highly vulnerable. Thus, we depend on imports to the extent of 85-90% in phosphates, 95% in sulphur and 100% in potash. The high import dependence often leads to our exploitation in international market which is cartelized by a few suppliers.
  • Increasing imbalance in fertiliser use: subsidised urea prices coupled with costly Phosphatic and Potash fertilisers have encouraged farmers to apply excess of urea. This has resulted in harmful impact on soil fertility in the long run.
  • Shortage of gas and its high price: Gas is the predominant feedstock in production ofAUTOMOBILE INDUSTRYfertilizers in India. Gas based plants account for about 80% of total urea production capacity of 22 million tons. Fertilisers get top priority in gas allocation. LPG is at number two and power gets the third slot. Yet, requirements of fertilizer plants are far from fully covered. The situation will only deteriorate in years ahead


  • India has emerged as Asia’s fourth largest exporter of automobiles, behind Japan, South Korea and Thailand.
  • The country is expected to top the world in car volumes with approximately 611 million vehicles on the nation’s roads by 2050.
  • The Economic progress of this industry is indicated by the amount of goods and services produced which give the capacity for transportation and boost the sale of vehicles.
  • There is a huge increase in automobile production with a catalyst effect by indirectly increasing the demand for a number of raw materials like steel, rubber, plastics, glass, paint, electronics and services.


Factors affecting location of automobile industry:

  • The automobile industry tends to be located near iron and steel producing centres because steel is the basic raw material used in this industry.
  • The proximity of places producing tyres, tubes, storage batteries, paints and other ancillary industries is considered to be an added advantage.
  • Port cities also find favour with this industry because of the import and export facilities offered by such places.
  • Of late, automobile industry has become market oriented and prefers those locations which offer ready market for the manufactured vehicles.
  • Under the Government plans for decentralization of industries, some locations in remote and industrially backward areas are given priority.


Challenges Faced By Automobile Industry:

  • Stricter environmental safeguards: to counter the global environmental concerns, national and international policies are heading towards a strict regime of emission standards, fuel categorisations, use of biofuels and electric vehicles.
  • Infrastructure constraints: automobile plants need investment in terms of land, capital and skilled labour. Availability of these resources has been an issue recently, especially land acquisition problems. Ex: in Bengal and Orissa.
  • Diverse market base: in India, the consumer base of the industry is highly diverse because of varying terrestrial and socio-economic reasons. The industry must improve its product portfolio to serve the needs of middle income urban population and large rural populace.
  • Lack in R&D: Lack of research and development in fuel efficient technologies, emission standards and production cost reduction.


  • The Indian leather industry accounts for around 12.93 per cent of the world’s leather production of hides/skins.
  • The country ranks second in terms of footwear and leather garments production in the world and accounts for 9 per cent of the world’s footwear production.
  • India’s leather industry has grown drastically, transforming from a mere raw material supplier to a value-added product exporter. It is a significant industry with huge employment and export potential.


Factors Affecting Location Of Leather Industry:

  • Leather tanneries are distributed mainly along the predominantly rural regions of Uttar Pradesh, Maharashtra, Tamil Nadu, West Bengal, Haryana and Punjab.
  • Footwear manufacturing units are localised around the leather tanneries from where they can source raw materials at low transport cost.
  • Tanneries also require large quantities of water and regular power supply. So, locations near water bodies and with power availability are preferred.


Challenges Faced By Leather Industry:

  • Logistics: The costs and time involved in getting goods from factory to destination are greater in India than those in other developing countries. For leather and footwear industries, logistics efficiency is very important as it is an industry with bulky inputs and outputs.
  • Strict labour regulations: Labour costs, India’s source of comparative advantage in this sector, also seem not to work in its favour. The problems are well-known such as – regulations on minimum overtime pay, onerous mandatory contributions towards pension and insurance products, lack of flexibility in part-time work and high minimum wages in some cases.
  • Tax and tariff policies: Policies of the state governments impose high tariffs and taxes on footwear and leather industries eroding their export competitiveness. However, these policies are being gradually amended to incentivise investment and promoting exports.
  • Reduction in global demand: the global demand for footwear is shifting from leather footwear to non-leather footwear owing to host of reasons like physical comfort, aesthetics and price affordability which work in favor of non-leather shoes as opposed to leather shoes.


  • The advancement in information technology has had a profound influence on the country’s economy.
    The Information Technology (IT) revolution opened up new possibilities of economic and social transformation.
  • The IT and IT enabled business process outsourcing (ITES-BPO) services continue to be on a robust growth path.
  • Indian software industry has emerged as one of the fastest growing sectors in the economy. The software industry has surpassed electronic hardware production.
  • The Indian government has created a number of software parks in the country.
  • India’s software industry has achieved a remarkable distinction for providing quality products. A large number of Indian software companies have acquired international quality certification.
  • A majority of the multinational companies (MNCs) operating in the area of information technology have either software development centres or research development centres in India.
  • A major impact of this growth has been on employment creation, which is almost doubled every year.


NITI Aayog – [email protected]: India’s manufacturing sector:

  • India’s manufacturing sector has evolved through several phases – from initial industrialization and license raj to liberalization and the current global competitiveness. In 2017, the manufacturing sector contributed only about 16% of India’s GDP.
  • India is the fifth largest manufacturer in the world with a gross value added (GVA) of INR 21,531.47 billion in 2017-18
  • The sector registered a compound annual growth rate (CAGR) of around 7.7 % between 2012-13 and 2017-18


Potential or Opportunity:

  • India has three Ds (Democracy, demography and demand) for the growth of the manufacturing sector.
  • Demographic dividend65% of India’s population is below the age of 35 – an advantage when compared to other counties.
  • Spillover effect – Studies have shown that every job created in the manufacturing sector has a multiplier effect in creating 2 to 3 jobs in the service sector.
  • Domestic demand – High domestic demand, increasing middle class and young population and high returns make India attractive for the manufacturers.
  • Low cost manpower -The manpower cost is low when compared to other nations.
  • Absorb huge labor force – Labor intensive manufacturing sector is ray of hope for India to absorb its huge unemployment.


Issues and challenges faced by manufacturing sector

  • The reluctance of Banks to extend financial loans.
  • Biased trade regime
  • Small enterprises are of disproportionate size and age of industrial units:Indian MSMEs suffer from the ‘bane of dwarfism’ as mentioned in Economic Survey 2018-19.
  • Low Productivity: According to McKinsey report
  • Low spending on R&D – only 0.9% of GDP on R&D
  • Tough competition due to the cheap imports from China
  • Black money and corruption
  • Investment and consumption crisis.
  • Unfavorable land and labour laws
  • High transportation cost accompanied by poor transport facilities.
  • Geo-economic challenges like trade war, US-Iran tensions, Covid-19 etc.
  • Less Labour productivity
  • Risky and expensive Intellectual Property Protection and Enforcement
  • Poor Infrastructure facilities.
  • Red Tapism and policy paralysis.
  • Service sector driven growth
  • Import-oriented


Government initiatives

  • Make in India initiative aims to make India the global manufacturing hub. It also aims to increase the sector’s GDP share to 25% from the existing 16%.
  • Start-up India initiative to promote entrepreneurship and nurture innovation
  • Micro Units Development and Refinance Agency (MUDRA) and Stand-up India to facilitate access to credit.
  • Major infrastructure projects, such as the setting up of industrial corridors, to boost manufacturing.
  • Skill India aims to create jobs and promote entrepreneurship within India
  • National Manufacturing Policy (NMP) provides for Technology Acquisition and Development Fund (TADF) that facilitates the acquisition of clean, green and energy-efficient technology by MSMEs.
  • Special economic zones (SEZs).
  • Zero Effect Zero Defect
  • Industrial corridor
  • Labour code reform 2020
  • Special focus on North east region
  • Sharm Suvidha is a web portal that provides a single platform for all labour law compliances.


Way Forward according to NITI AYOG @75

  • Demand generation, augmentation of industrial infrastructure and promotion of MSMEs
  • Mega public projects such as Sagar- mala, Bharatmala, industrial corridors, and the Pradhan Mantri Awas Yojana (PMAY) can stimulate domestic manufacturing activities e.g. Madhepura Electric Locomotive Project, a joint venture between the Indian Railways and the French multinational Alstom, provides a good example of how mega projects can be leveraged to boost domestic production.
  • Portal to monitor projects beyond a given threshold so that any roadblocks are identified and addressed on a real time basis.
  • Liberalize further FDI in manufacturing à Harmonize Indian quality standards with global standards in many sectors. (Task to be given to QCI, BIS)
  • Review of standards of engineering education and its linkages with industry and prepare employable workforce.
Ways to addressing the issues of MSMEs

  • Setting up of mega parks and manufacturing clusters in labour intensive sectors with common facilities to reduce costs and improve quality.
  • Workers of industrial units in the new mega parks should have decent accommodation within reasonable proximity of the work place.
  • An expert committee should examine sector-specific pain points and make its recommendations within three months.
  • The Department of Public Enterprises (DPE) should ensure registration of all public sector units (PSUs) on the Trade Receivables Discounting System (TREDS) portal.
  • Initiate a small business research programme in some select ministries for encouraging R&D in MSMEs.






Download IGP- Current Affairs for Interview 2022
Enter your details to get the ebook!
1.5 Year Current Affairs
Download Free Ebook
Enter your details to get the ebook!
Basics Of UPSC Interview
Download Free Ebook
DAF Based Question
Whatsapp Your DAF-II
Fill form NOW
Get Your Personalized
Get Your Personalized
DAF Based Question
Fill form NOW
Whatsapp Your DAF-II
Mentors Guided
Prelims Test Series UPSC 2023
Program starts from 15th of January 2023
Online mode
Whatsapp Now
Offline mode
Enroll now
Whatsapp now