NCERT Textbook: Manufacturing Industries Notes | Study Geography for UPSC CSE - UPSC

 Page 1


Production of goods in large quantities after
processing from raw materials to more
valuable products is called manufacturing. Do
you know that paper is manufactured from
wood, sugar from sugarcane, iron and steel
from iron ore and aluminium from bauxite?
Do you also know that some types of clothes
are manufactured from yarn which itself is an
industrial product?
People employed in the secondary activities
manufacture the primary materials into
finished goods. The workers employed in steel
factories, car, breweries, textile industries,
bakeries etc. fall into this category. Some people
are employed in providing services. In this
chapter, we are mainly concerned with
manufacturing industries which fall in the
secondary sector.
The economic strength of a country is
measured by the development of
manufacturing industries.
IMPORTANCE OF M ANUF ACTURING
Manufacturing sector is considered the backbone
of development in general and economic
development in particular mainly because–
• Manufacturing industries not only help in
modernising agriculture, which forms the
backbone of our economy, they also reduce
the heavy dependence of people on
agricultural income by providing them jobs
in secondary and tertiary sectors.
• Industrial development is a precondition for
eradication of unemployment and poverty
from our country. This was the main
philosophy behind public sector industries
and joint sector ventures in India. It was also
aimed at bringing down regional disparities
by establishing industries in tribal and
backward areas.
• Export of manufactured goods expands
trade and commerce, and brings in much
needed foreign exchange.
• Countries that transform their raw
materials into a wide variety of furnished
goods of higher value are prosperous.
India’s prosperity lies in increasing and
diversifying its manufacturing industries as
quickly as possible.
Agriculture and industry are not exclusive
of each other. They move hand in hand.  For
instance, the agro-industries in India have given
a major boost to agriculture by raising its
productivity. They depend on the latter for raw
materials and sell their products such as
irrigation pumps, fertilisers, insecticides,
pesticides, plastic and PVC pipes, machines and
tools, etc. to the farmers. Thus, development and
competitiveness of manufacturing industry has
not only assisted agriculturists in increasing
On the occassion of Diwali, Harish went to
a market with his parents. They purchased
shoes and clothes for him. His mother
purchased utensils, sugar, tea and diyas
(earthen lamps). Harish observed that the
shops in the market were flooded with
items for sale. He wondered how so many
items could be made in such large
quantities. His father explained that shoes,
clothes, sugar etc. are manufactured by
machines in large industries, some utensils
are manufactured in small industries, while
items like diyas are made by individual
artisans in household industry.
Do you have some ideas about these
industries?
2015-16
Page 2


Production of goods in large quantities after
processing from raw materials to more
valuable products is called manufacturing. Do
you know that paper is manufactured from
wood, sugar from sugarcane, iron and steel
from iron ore and aluminium from bauxite?
Do you also know that some types of clothes
are manufactured from yarn which itself is an
industrial product?
People employed in the secondary activities
manufacture the primary materials into
finished goods. The workers employed in steel
factories, car, breweries, textile industries,
bakeries etc. fall into this category. Some people
are employed in providing services. In this
chapter, we are mainly concerned with
manufacturing industries which fall in the
secondary sector.
The economic strength of a country is
measured by the development of
manufacturing industries.
IMPORTANCE OF M ANUF ACTURING
Manufacturing sector is considered the backbone
of development in general and economic
development in particular mainly because–
• Manufacturing industries not only help in
modernising agriculture, which forms the
backbone of our economy, they also reduce
the heavy dependence of people on
agricultural income by providing them jobs
in secondary and tertiary sectors.
• Industrial development is a precondition for
eradication of unemployment and poverty
from our country. This was the main
philosophy behind public sector industries
and joint sector ventures in India. It was also
aimed at bringing down regional disparities
by establishing industries in tribal and
backward areas.
• Export of manufactured goods expands
trade and commerce, and brings in much
needed foreign exchange.
• Countries that transform their raw
materials into a wide variety of furnished
goods of higher value are prosperous.
India’s prosperity lies in increasing and
diversifying its manufacturing industries as
quickly as possible.
Agriculture and industry are not exclusive
of each other. They move hand in hand.  For
instance, the agro-industries in India have given
a major boost to agriculture by raising its
productivity. They depend on the latter for raw
materials and sell their products such as
irrigation pumps, fertilisers, insecticides,
pesticides, plastic and PVC pipes, machines and
tools, etc. to the farmers. Thus, development and
competitiveness of manufacturing industry has
not only assisted agriculturists in increasing
On the occassion of Diwali, Harish went to
a market with his parents. They purchased
shoes and clothes for him. His mother
purchased utensils, sugar, tea and diyas
(earthen lamps). Harish observed that the
shops in the market were flooded with
items for sale. He wondered how so many
items could be made in such large
quantities. His father explained that shoes,
clothes, sugar etc. are manufactured by
machines in large industries, some utensils
are manufactured in small industries, while
items like diyas are made by individual
artisans in household industry.
Do you have some ideas about these
industries?
2015-16
66 CONTEMPORARY INDIA – II
their production but also made the production
processes very efficient.
In the present day world of globalisation,
our industry needs to be more efficient and
competitive. Self-sufficiency alone is not
enough. Our manufactured goods must be at
par in quality with those in the international
market. Only then, will we be able to compete
in the international market.
Contribution of Industry to National
Economy
Over the last two decades, the share of
manufacturing sector has stagnated at 17 per
cent of GDP – out of a total of 27 per cent for
the industry which includes 10 per cent for
mining, quarrying, electricity and gas.
This is much lower in comparison to some
East Asian economies, where it is 25 to 35 per
cent. The trend of growth rate in manufacturing
over the last decade has been around 7 per
cent per annum.  The desired growth rate over
the next decade is 12 per cent.  Since 2003,
manufacturing is once again growing at the
rate of 9 to 10 per cent per annum.  With
appropriate policy interventions by the
government and renewed efforts by the
industry to improve productivity, economists
predict that manufacturing can achieve its
target over the next decade.  The National
Manufacturing Competitiveness Council
(NMCC) has been set up with this objective.
Industrial Location
Industrial locations are complex in nature.
These are influenced by availability of raw
material, labour, capital, power and market,
etc. It is rarely possible to find all these factors
available at one place. Consequently,
manufacturing activity tends to locate at the
most appropriate place where all the factors of
industrial location are either available or can
be arranged at lower cost. After an industrial
activity starts, urbanisation follows. Sometimes,
industries are located in or near the cities.
Thus, industrialisation and urbanisation go
hand in hand. Cities provide markets and also
provide services such as banking, insurance,
transport, labour, consultants and financial
advice, etc. to the industry. Many industries
tend to come together to make use of the
advantages offered by the urban centres known
as agglomeration economies. Gradually, a
large industrial agglomeration takes place.
In the pre-Independence period, most
manufacturing units were located in places
from the point of view of overseas trade such as
Mumbai, Kolkata, Chennai, etc. Consequently,
there emerged certain pockets of industrially
developed urban centres surrounded by a huge
agricultural rural hinterland.
Industry – Market Linkage
The key to decision of the factory location
is the least cost. Government policies and
specialised labour also influence the location
of industry.
Fig. 6.1
Fig. 6.2
2015-16
Page 3


Production of goods in large quantities after
processing from raw materials to more
valuable products is called manufacturing. Do
you know that paper is manufactured from
wood, sugar from sugarcane, iron and steel
from iron ore and aluminium from bauxite?
Do you also know that some types of clothes
are manufactured from yarn which itself is an
industrial product?
People employed in the secondary activities
manufacture the primary materials into
finished goods. The workers employed in steel
factories, car, breweries, textile industries,
bakeries etc. fall into this category. Some people
are employed in providing services. In this
chapter, we are mainly concerned with
manufacturing industries which fall in the
secondary sector.
The economic strength of a country is
measured by the development of
manufacturing industries.
IMPORTANCE OF M ANUF ACTURING
Manufacturing sector is considered the backbone
of development in general and economic
development in particular mainly because–
• Manufacturing industries not only help in
modernising agriculture, which forms the
backbone of our economy, they also reduce
the heavy dependence of people on
agricultural income by providing them jobs
in secondary and tertiary sectors.
• Industrial development is a precondition for
eradication of unemployment and poverty
from our country. This was the main
philosophy behind public sector industries
and joint sector ventures in India. It was also
aimed at bringing down regional disparities
by establishing industries in tribal and
backward areas.
• Export of manufactured goods expands
trade and commerce, and brings in much
needed foreign exchange.
• Countries that transform their raw
materials into a wide variety of furnished
goods of higher value are prosperous.
India’s prosperity lies in increasing and
diversifying its manufacturing industries as
quickly as possible.
Agriculture and industry are not exclusive
of each other. They move hand in hand.  For
instance, the agro-industries in India have given
a major boost to agriculture by raising its
productivity. They depend on the latter for raw
materials and sell their products such as
irrigation pumps, fertilisers, insecticides,
pesticides, plastic and PVC pipes, machines and
tools, etc. to the farmers. Thus, development and
competitiveness of manufacturing industry has
not only assisted agriculturists in increasing
On the occassion of Diwali, Harish went to
a market with his parents. They purchased
shoes and clothes for him. His mother
purchased utensils, sugar, tea and diyas
(earthen lamps). Harish observed that the
shops in the market were flooded with
items for sale. He wondered how so many
items could be made in such large
quantities. His father explained that shoes,
clothes, sugar etc. are manufactured by
machines in large industries, some utensils
are manufactured in small industries, while
items like diyas are made by individual
artisans in household industry.
Do you have some ideas about these
industries?
2015-16
66 CONTEMPORARY INDIA – II
their production but also made the production
processes very efficient.
In the present day world of globalisation,
our industry needs to be more efficient and
competitive. Self-sufficiency alone is not
enough. Our manufactured goods must be at
par in quality with those in the international
market. Only then, will we be able to compete
in the international market.
Contribution of Industry to National
Economy
Over the last two decades, the share of
manufacturing sector has stagnated at 17 per
cent of GDP – out of a total of 27 per cent for
the industry which includes 10 per cent for
mining, quarrying, electricity and gas.
This is much lower in comparison to some
East Asian economies, where it is 25 to 35 per
cent. The trend of growth rate in manufacturing
over the last decade has been around 7 per
cent per annum.  The desired growth rate over
the next decade is 12 per cent.  Since 2003,
manufacturing is once again growing at the
rate of 9 to 10 per cent per annum.  With
appropriate policy interventions by the
government and renewed efforts by the
industry to improve productivity, economists
predict that manufacturing can achieve its
target over the next decade.  The National
Manufacturing Competitiveness Council
(NMCC) has been set up with this objective.
Industrial Location
Industrial locations are complex in nature.
These are influenced by availability of raw
material, labour, capital, power and market,
etc. It is rarely possible to find all these factors
available at one place. Consequently,
manufacturing activity tends to locate at the
most appropriate place where all the factors of
industrial location are either available or can
be arranged at lower cost. After an industrial
activity starts, urbanisation follows. Sometimes,
industries are located in or near the cities.
Thus, industrialisation and urbanisation go
hand in hand. Cities provide markets and also
provide services such as banking, insurance,
transport, labour, consultants and financial
advice, etc. to the industry. Many industries
tend to come together to make use of the
advantages offered by the urban centres known
as agglomeration economies. Gradually, a
large industrial agglomeration takes place.
In the pre-Independence period, most
manufacturing units were located in places
from the point of view of overseas trade such as
Mumbai, Kolkata, Chennai, etc. Consequently,
there emerged certain pockets of industrially
developed urban centres surrounded by a huge
agricultural rural hinterland.
Industry – Market Linkage
The key to decision of the factory location
is the least cost. Government policies and
specialised labour also influence the location
of industry.
Fig. 6.1
Fig. 6.2
2015-16
67 MANUFACTURING INDUSTRIES
Classification of Industries
List the various manufactured products you
use in your daily life such as – transistors,
electric bulbs, vegetable oil, cement,
glassware, petrol, matches, scooters,
automobiles, medicines and so on. If we
classify the various industries based on a
particular criterion then we would be
able to understand their manufacturing
better.  Industries may be classified as
follows:
On the basis of source of raw materials
used:
• Agro based: cotton, woollen, jute, silk
textile, rubber and sugar, tea, coffee,
edible oil.
• Mineral based: iron and steel, cement,
aluminium, machine tools,
petrochemicals.
According to their main role:
• Basic or key industries which supply their
products or raw materials to manufacture
other goods e.g. iron and steel and copper
smelting, aluminum smelting.
• Consumer industries that produce goods
for direct use by consumers – sugar,
toothpaste, paper, sewing machines,
fans etc.
On the basis of capital investment:
• A small scale industry is defined with
reference to the maximum investment
allowed on the assets of a unit. This limit
has changed over a period of time. At
present the maximum investment allowed
is rupees one crore.
On the basis of ownership:
• Public sector, owned and operated by
government agencies – BHEL, SAIL etc.
• Private sector industries owned and
operated by individuals or a group of
individuals –TISCO, Bajaj Auto Ltd.,
Dabur Industries.
• Joint sector industries which are jointly run
by the state and individuals or a group of
individuals. Oil India Ltd. (OIL) is jointly
owned by public and private sector.
• Cooperative sector industries are owned
and operated by the producers or
suppliers of raw materials, workers or
both.  They pool in the resources and share
the profits or losses proportionately such
as the sugar industry in Maharashtra, the
coir industry in Kerala.
Based on the bulk and weight of raw material
and finished goods:
• Heavy industries such as iron and steel
• Light industries that use light raw
materials and produce light goods such
as electrical industries.
Classify the following into two groups on the
basis of bulk and weight of raw material and
finished goods.
(i) Oil (vi) Sewing Machines
(ii) Knitting needles (vii) Shipbuilding
(iii) Brassware (viii) Electric Bulbs
(iv) Fuse wires (ix) Paint brushes
(v) Watches (x) Automobiles
Agro Based Industries
Cotton, jute, silk, woollen textiles, sugar and
edible oil, etc. industries are  based on
agricultural raw materials.
Textile Industry: The textile industry
occupies unique position in the Indian
economy, because it contributes significantly
to industrial production (14 per cent),
employment generation (35 million persons
directly – the second largest after agriculture)
and foreign exchange earnings (about 24.6
per cent).  It contributes 4 per cent towards
GDP.  It is the only industry in the country,
which is self-reliant and complete in the value
chain i.e., from raw material to the highest
value added products.
2015-16
Page 4


Production of goods in large quantities after
processing from raw materials to more
valuable products is called manufacturing. Do
you know that paper is manufactured from
wood, sugar from sugarcane, iron and steel
from iron ore and aluminium from bauxite?
Do you also know that some types of clothes
are manufactured from yarn which itself is an
industrial product?
People employed in the secondary activities
manufacture the primary materials into
finished goods. The workers employed in steel
factories, car, breweries, textile industries,
bakeries etc. fall into this category. Some people
are employed in providing services. In this
chapter, we are mainly concerned with
manufacturing industries which fall in the
secondary sector.
The economic strength of a country is
measured by the development of
manufacturing industries.
IMPORTANCE OF M ANUF ACTURING
Manufacturing sector is considered the backbone
of development in general and economic
development in particular mainly because–
• Manufacturing industries not only help in
modernising agriculture, which forms the
backbone of our economy, they also reduce
the heavy dependence of people on
agricultural income by providing them jobs
in secondary and tertiary sectors.
• Industrial development is a precondition for
eradication of unemployment and poverty
from our country. This was the main
philosophy behind public sector industries
and joint sector ventures in India. It was also
aimed at bringing down regional disparities
by establishing industries in tribal and
backward areas.
• Export of manufactured goods expands
trade and commerce, and brings in much
needed foreign exchange.
• Countries that transform their raw
materials into a wide variety of furnished
goods of higher value are prosperous.
India’s prosperity lies in increasing and
diversifying its manufacturing industries as
quickly as possible.
Agriculture and industry are not exclusive
of each other. They move hand in hand.  For
instance, the agro-industries in India have given
a major boost to agriculture by raising its
productivity. They depend on the latter for raw
materials and sell their products such as
irrigation pumps, fertilisers, insecticides,
pesticides, plastic and PVC pipes, machines and
tools, etc. to the farmers. Thus, development and
competitiveness of manufacturing industry has
not only assisted agriculturists in increasing
On the occassion of Diwali, Harish went to
a market with his parents. They purchased
shoes and clothes for him. His mother
purchased utensils, sugar, tea and diyas
(earthen lamps). Harish observed that the
shops in the market were flooded with
items for sale. He wondered how so many
items could be made in such large
quantities. His father explained that shoes,
clothes, sugar etc. are manufactured by
machines in large industries, some utensils
are manufactured in small industries, while
items like diyas are made by individual
artisans in household industry.
Do you have some ideas about these
industries?
2015-16
66 CONTEMPORARY INDIA – II
their production but also made the production
processes very efficient.
In the present day world of globalisation,
our industry needs to be more efficient and
competitive. Self-sufficiency alone is not
enough. Our manufactured goods must be at
par in quality with those in the international
market. Only then, will we be able to compete
in the international market.
Contribution of Industry to National
Economy
Over the last two decades, the share of
manufacturing sector has stagnated at 17 per
cent of GDP – out of a total of 27 per cent for
the industry which includes 10 per cent for
mining, quarrying, electricity and gas.
This is much lower in comparison to some
East Asian economies, where it is 25 to 35 per
cent. The trend of growth rate in manufacturing
over the last decade has been around 7 per
cent per annum.  The desired growth rate over
the next decade is 12 per cent.  Since 2003,
manufacturing is once again growing at the
rate of 9 to 10 per cent per annum.  With
appropriate policy interventions by the
government and renewed efforts by the
industry to improve productivity, economists
predict that manufacturing can achieve its
target over the next decade.  The National
Manufacturing Competitiveness Council
(NMCC) has been set up with this objective.
Industrial Location
Industrial locations are complex in nature.
These are influenced by availability of raw
material, labour, capital, power and market,
etc. It is rarely possible to find all these factors
available at one place. Consequently,
manufacturing activity tends to locate at the
most appropriate place where all the factors of
industrial location are either available or can
be arranged at lower cost. After an industrial
activity starts, urbanisation follows. Sometimes,
industries are located in or near the cities.
Thus, industrialisation and urbanisation go
hand in hand. Cities provide markets and also
provide services such as banking, insurance,
transport, labour, consultants and financial
advice, etc. to the industry. Many industries
tend to come together to make use of the
advantages offered by the urban centres known
as agglomeration economies. Gradually, a
large industrial agglomeration takes place.
In the pre-Independence period, most
manufacturing units were located in places
from the point of view of overseas trade such as
Mumbai, Kolkata, Chennai, etc. Consequently,
there emerged certain pockets of industrially
developed urban centres surrounded by a huge
agricultural rural hinterland.
Industry – Market Linkage
The key to decision of the factory location
is the least cost. Government policies and
specialised labour also influence the location
of industry.
Fig. 6.1
Fig. 6.2
2015-16
67 MANUFACTURING INDUSTRIES
Classification of Industries
List the various manufactured products you
use in your daily life such as – transistors,
electric bulbs, vegetable oil, cement,
glassware, petrol, matches, scooters,
automobiles, medicines and so on. If we
classify the various industries based on a
particular criterion then we would be
able to understand their manufacturing
better.  Industries may be classified as
follows:
On the basis of source of raw materials
used:
• Agro based: cotton, woollen, jute, silk
textile, rubber and sugar, tea, coffee,
edible oil.
• Mineral based: iron and steel, cement,
aluminium, machine tools,
petrochemicals.
According to their main role:
• Basic or key industries which supply their
products or raw materials to manufacture
other goods e.g. iron and steel and copper
smelting, aluminum smelting.
• Consumer industries that produce goods
for direct use by consumers – sugar,
toothpaste, paper, sewing machines,
fans etc.
On the basis of capital investment:
• A small scale industry is defined with
reference to the maximum investment
allowed on the assets of a unit. This limit
has changed over a period of time. At
present the maximum investment allowed
is rupees one crore.
On the basis of ownership:
• Public sector, owned and operated by
government agencies – BHEL, SAIL etc.
• Private sector industries owned and
operated by individuals or a group of
individuals –TISCO, Bajaj Auto Ltd.,
Dabur Industries.
• Joint sector industries which are jointly run
by the state and individuals or a group of
individuals. Oil India Ltd. (OIL) is jointly
owned by public and private sector.
• Cooperative sector industries are owned
and operated by the producers or
suppliers of raw materials, workers or
both.  They pool in the resources and share
the profits or losses proportionately such
as the sugar industry in Maharashtra, the
coir industry in Kerala.
Based on the bulk and weight of raw material
and finished goods:
• Heavy industries such as iron and steel
• Light industries that use light raw
materials and produce light goods such
as electrical industries.
Classify the following into two groups on the
basis of bulk and weight of raw material and
finished goods.
(i) Oil (vi) Sewing Machines
(ii) Knitting needles (vii) Shipbuilding
(iii) Brassware (viii) Electric Bulbs
(iv) Fuse wires (ix) Paint brushes
(v) Watches (x) Automobiles
Agro Based Industries
Cotton, jute, silk, woollen textiles, sugar and
edible oil, etc. industries are  based on
agricultural raw materials.
Textile Industry: The textile industry
occupies unique position in the Indian
economy, because it contributes significantly
to industrial production (14 per cent),
employment generation (35 million persons
directly – the second largest after agriculture)
and foreign exchange earnings (about 24.6
per cent).  It contributes 4 per cent towards
GDP.  It is the only industry in the country,
which is self-reliant and complete in the value
chain i.e., from raw material to the highest
value added products.
2015-16
68 CONTEMPORARY INDIA – II
Cotton Textiles: In ancient India, cotton
textiles were produced with hand spinning
and handloom weaving techniques. After the
18
th
 century, power-looms came into use.
Our traditional industries suffered a setback
during the colonial period because they
could not compete with the mill-made cloth
from England.
While spinning continues to be centralised
in Maharashtra, Gujarat and Tamil Nadu,
weaving is highly decentralised to provide
scope for incorporating traditional skills and
designs of weaving in cotton, silk, zari,
embroidery, etc. India has world class
production in spinning, but weaving supplies
low quality of fabric as it cannot use much of
the high quality yarn produced in the country.
Weaving is done by handloom, powerloom and
in mills.
The handspun khadi provides large scale
employment to weavers in their homes as a
cottage industry.
Why did Mahatma Gandhi lay emphasis on
spinning yarn and weaving khadi?
Fig. 6.3:  Value addition in the textile industry
• The first successful textile mill was
established in Mumbai in 1854.
• The two world wars were fought in Europe,
India was a British colony. There was a
demand for cloth in U.K. hence, they gave
a boost to the development of the cotton
textile industry.
As on 30 November 2011, there were 1946
cotton and human-made fibre textile milk in
the country. About 80 per cent of these are
in the private sector and the rest in the public
and cooperative sectors. Apart from these,
there are several thousand small factories
with four to ten looms.
In the early years, the cotton textile
industry was concentrated in the cotton
growing belt of Maharashtra and Gujarat.
Availability of raw cotton, market, transport
including accessible port facilities, labour,
moist climate, etc. contributed towards its
localisation.  This industry has close links
with agriculture and provides a living to
farmers, cotton boll pluckers and workers
engaged in ginning, spinning, weaving,
dyeing, designing, packaging, tailoring and
sewing. The industry by creating demands
supports many other industries, such as,
chemicals and dyes, mill stores, packaging
materials and engineering works.
Study the figures above and note the share
of mills in the production of fabric.
Why is it important for our country to keep
the mill sector loomage lower than power
loom and handloom?
India exports yarn to Japan.  Other
importers of cotton goods from India are
U.S.A., U.K., Russia, France, East European
countries, Nepal, Singapore, Sri Lanka, and
African countries.
Table 4.2: India: Production of Fabrics in India
 Sector 2009-10 2010-11*
(Provisional)
Mill Sector 3.3 3.5
Powerlooms (in Hosiery) 84.1 84.1
Handlooms 11.3 11.1
Others 1.3 1.3
Total 100% 100%
Source: Office of Textile Commissioner, Mumbai,
Economic Survey, 2011-12.
Note: 90 per cent of the weaving, cutting and
processing is in decentralised sector.
2015-16
Page 5


Production of goods in large quantities after
processing from raw materials to more
valuable products is called manufacturing. Do
you know that paper is manufactured from
wood, sugar from sugarcane, iron and steel
from iron ore and aluminium from bauxite?
Do you also know that some types of clothes
are manufactured from yarn which itself is an
industrial product?
People employed in the secondary activities
manufacture the primary materials into
finished goods. The workers employed in steel
factories, car, breweries, textile industries,
bakeries etc. fall into this category. Some people
are employed in providing services. In this
chapter, we are mainly concerned with
manufacturing industries which fall in the
secondary sector.
The economic strength of a country is
measured by the development of
manufacturing industries.
IMPORTANCE OF M ANUF ACTURING
Manufacturing sector is considered the backbone
of development in general and economic
development in particular mainly because–
• Manufacturing industries not only help in
modernising agriculture, which forms the
backbone of our economy, they also reduce
the heavy dependence of people on
agricultural income by providing them jobs
in secondary and tertiary sectors.
• Industrial development is a precondition for
eradication of unemployment and poverty
from our country. This was the main
philosophy behind public sector industries
and joint sector ventures in India. It was also
aimed at bringing down regional disparities
by establishing industries in tribal and
backward areas.
• Export of manufactured goods expands
trade and commerce, and brings in much
needed foreign exchange.
• Countries that transform their raw
materials into a wide variety of furnished
goods of higher value are prosperous.
India’s prosperity lies in increasing and
diversifying its manufacturing industries as
quickly as possible.
Agriculture and industry are not exclusive
of each other. They move hand in hand.  For
instance, the agro-industries in India have given
a major boost to agriculture by raising its
productivity. They depend on the latter for raw
materials and sell their products such as
irrigation pumps, fertilisers, insecticides,
pesticides, plastic and PVC pipes, machines and
tools, etc. to the farmers. Thus, development and
competitiveness of manufacturing industry has
not only assisted agriculturists in increasing
On the occassion of Diwali, Harish went to
a market with his parents. They purchased
shoes and clothes for him. His mother
purchased utensils, sugar, tea and diyas
(earthen lamps). Harish observed that the
shops in the market were flooded with
items for sale. He wondered how so many
items could be made in such large
quantities. His father explained that shoes,
clothes, sugar etc. are manufactured by
machines in large industries, some utensils
are manufactured in small industries, while
items like diyas are made by individual
artisans in household industry.
Do you have some ideas about these
industries?
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66 CONTEMPORARY INDIA – II
their production but also made the production
processes very efficient.
In the present day world of globalisation,
our industry needs to be more efficient and
competitive. Self-sufficiency alone is not
enough. Our manufactured goods must be at
par in quality with those in the international
market. Only then, will we be able to compete
in the international market.
Contribution of Industry to National
Economy
Over the last two decades, the share of
manufacturing sector has stagnated at 17 per
cent of GDP – out of a total of 27 per cent for
the industry which includes 10 per cent for
mining, quarrying, electricity and gas.
This is much lower in comparison to some
East Asian economies, where it is 25 to 35 per
cent. The trend of growth rate in manufacturing
over the last decade has been around 7 per
cent per annum.  The desired growth rate over
the next decade is 12 per cent.  Since 2003,
manufacturing is once again growing at the
rate of 9 to 10 per cent per annum.  With
appropriate policy interventions by the
government and renewed efforts by the
industry to improve productivity, economists
predict that manufacturing can achieve its
target over the next decade.  The National
Manufacturing Competitiveness Council
(NMCC) has been set up with this objective.
Industrial Location
Industrial locations are complex in nature.
These are influenced by availability of raw
material, labour, capital, power and market,
etc. It is rarely possible to find all these factors
available at one place. Consequently,
manufacturing activity tends to locate at the
most appropriate place where all the factors of
industrial location are either available or can
be arranged at lower cost. After an industrial
activity starts, urbanisation follows. Sometimes,
industries are located in or near the cities.
Thus, industrialisation and urbanisation go
hand in hand. Cities provide markets and also
provide services such as banking, insurance,
transport, labour, consultants and financial
advice, etc. to the industry. Many industries
tend to come together to make use of the
advantages offered by the urban centres known
as agglomeration economies. Gradually, a
large industrial agglomeration takes place.
In the pre-Independence period, most
manufacturing units were located in places
from the point of view of overseas trade such as
Mumbai, Kolkata, Chennai, etc. Consequently,
there emerged certain pockets of industrially
developed urban centres surrounded by a huge
agricultural rural hinterland.
Industry – Market Linkage
The key to decision of the factory location
is the least cost. Government policies and
specialised labour also influence the location
of industry.
Fig. 6.1
Fig. 6.2
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67 MANUFACTURING INDUSTRIES
Classification of Industries
List the various manufactured products you
use in your daily life such as – transistors,
electric bulbs, vegetable oil, cement,
glassware, petrol, matches, scooters,
automobiles, medicines and so on. If we
classify the various industries based on a
particular criterion then we would be
able to understand their manufacturing
better.  Industries may be classified as
follows:
On the basis of source of raw materials
used:
• Agro based: cotton, woollen, jute, silk
textile, rubber and sugar, tea, coffee,
edible oil.
• Mineral based: iron and steel, cement,
aluminium, machine tools,
petrochemicals.
According to their main role:
• Basic or key industries which supply their
products or raw materials to manufacture
other goods e.g. iron and steel and copper
smelting, aluminum smelting.
• Consumer industries that produce goods
for direct use by consumers – sugar,
toothpaste, paper, sewing machines,
fans etc.
On the basis of capital investment:
• A small scale industry is defined with
reference to the maximum investment
allowed on the assets of a unit. This limit
has changed over a period of time. At
present the maximum investment allowed
is rupees one crore.
On the basis of ownership:
• Public sector, owned and operated by
government agencies – BHEL, SAIL etc.
• Private sector industries owned and
operated by individuals or a group of
individuals –TISCO, Bajaj Auto Ltd.,
Dabur Industries.
• Joint sector industries which are jointly run
by the state and individuals or a group of
individuals. Oil India Ltd. (OIL) is jointly
owned by public and private sector.
• Cooperative sector industries are owned
and operated by the producers or
suppliers of raw materials, workers or
both.  They pool in the resources and share
the profits or losses proportionately such
as the sugar industry in Maharashtra, the
coir industry in Kerala.
Based on the bulk and weight of raw material
and finished goods:
• Heavy industries such as iron and steel
• Light industries that use light raw
materials and produce light goods such
as electrical industries.
Classify the following into two groups on the
basis of bulk and weight of raw material and
finished goods.
(i) Oil (vi) Sewing Machines
(ii) Knitting needles (vii) Shipbuilding
(iii) Brassware (viii) Electric Bulbs
(iv) Fuse wires (ix) Paint brushes
(v) Watches (x) Automobiles
Agro Based Industries
Cotton, jute, silk, woollen textiles, sugar and
edible oil, etc. industries are  based on
agricultural raw materials.
Textile Industry: The textile industry
occupies unique position in the Indian
economy, because it contributes significantly
to industrial production (14 per cent),
employment generation (35 million persons
directly – the second largest after agriculture)
and foreign exchange earnings (about 24.6
per cent).  It contributes 4 per cent towards
GDP.  It is the only industry in the country,
which is self-reliant and complete in the value
chain i.e., from raw material to the highest
value added products.
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68 CONTEMPORARY INDIA – II
Cotton Textiles: In ancient India, cotton
textiles were produced with hand spinning
and handloom weaving techniques. After the
18
th
 century, power-looms came into use.
Our traditional industries suffered a setback
during the colonial period because they
could not compete with the mill-made cloth
from England.
While spinning continues to be centralised
in Maharashtra, Gujarat and Tamil Nadu,
weaving is highly decentralised to provide
scope for incorporating traditional skills and
designs of weaving in cotton, silk, zari,
embroidery, etc. India has world class
production in spinning, but weaving supplies
low quality of fabric as it cannot use much of
the high quality yarn produced in the country.
Weaving is done by handloom, powerloom and
in mills.
The handspun khadi provides large scale
employment to weavers in their homes as a
cottage industry.
Why did Mahatma Gandhi lay emphasis on
spinning yarn and weaving khadi?
Fig. 6.3:  Value addition in the textile industry
• The first successful textile mill was
established in Mumbai in 1854.
• The two world wars were fought in Europe,
India was a British colony. There was a
demand for cloth in U.K. hence, they gave
a boost to the development of the cotton
textile industry.
As on 30 November 2011, there were 1946
cotton and human-made fibre textile milk in
the country. About 80 per cent of these are
in the private sector and the rest in the public
and cooperative sectors. Apart from these,
there are several thousand small factories
with four to ten looms.
In the early years, the cotton textile
industry was concentrated in the cotton
growing belt of Maharashtra and Gujarat.
Availability of raw cotton, market, transport
including accessible port facilities, labour,
moist climate, etc. contributed towards its
localisation.  This industry has close links
with agriculture and provides a living to
farmers, cotton boll pluckers and workers
engaged in ginning, spinning, weaving,
dyeing, designing, packaging, tailoring and
sewing. The industry by creating demands
supports many other industries, such as,
chemicals and dyes, mill stores, packaging
materials and engineering works.
Study the figures above and note the share
of mills in the production of fabric.
Why is it important for our country to keep
the mill sector loomage lower than power
loom and handloom?
India exports yarn to Japan.  Other
importers of cotton goods from India are
U.S.A., U.K., Russia, France, East European
countries, Nepal, Singapore, Sri Lanka, and
African countries.
Table 4.2: India: Production of Fabrics in India
 Sector 2009-10 2010-11*
(Provisional)
Mill Sector 3.3 3.5
Powerlooms (in Hosiery) 84.1 84.1
Handlooms 11.3 11.1
Others 1.3 1.3
Total 100% 100%
Source: Office of Textile Commissioner, Mumbai,
Economic Survey, 2011-12.
Note: 90 per cent of the weaving, cutting and
processing is in decentralised sector.
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69 MANUFACTURING INDUSTRIES
India:  Distribution of cotton, woollen and silk industries
2015-16