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? 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 69 MANUFACTURING INDUSTRIES India: Distribution of cotton, woollen and silk industries 2015-16Read More
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