The key factor influencing all decisions about setting up a manufacturing industry, including its location, is the cost. The main costs in a manufacturing industry are for procuring raw material, producing goods and distributing finished goods in the market.
The ideal location for a factory will be a place that has easy and low-cost availability of raw material, capital, land, labour, power, transport, and market.
A manufacturing industry promotes the urbanisation of its neighbourhood. Already urbanised areas also attract industries, since they provide ready facilities for transport, banking, labour, consultancy, etc. If an urban centre offers sufficient facilities and advantages, several industries come up there together to form an industrial agglomeration. These industries together form an agglomeration economy.
Before independence, most industries in India were located in port cities to enable easy overseas trade. Manufacturing industries are classified based on their source of raw material, role, capital investment, ownership pattern, and bulk of supplies like raw material and finished products. Based on their source of raw material, manufacturing industries can be classified as agro-based industries and mineral-based industries.
Based on their source of raw material, manufacturing industries are classified as agro-based industries and mineral-based industries. Based on the weight or bulk of the raw material used and the finished products, manufacturing industries can be classified as heavy and light industries. Based on their role, manufacturing industries can be classified as basic or key industries, and consumer industries. Based on the capital investment, manufacturing industries can be classified as small-scale and large scale-industries.
Based on ownership, manufacturing industries can be classified as public sector, private sector, joint sector and cooperative industries.
While public sector industries are owned and run by the government, private sector companies are owned by individuals or business houses. Joint sector companies are jointly owned and managed by the government and the private sector. Cooperative industries are owned by people actually involved in the production, like raw material producers, suppliers and workers.
The total share of industries in India’s GDP is 27% where manufacturing industries contribute only 17% to our GDP.
The National Manufacturing Competitiveness Council or NMCC has been set up to achieve a growth of 12% in the manufacturing industry by adopting appropriate policies and improving productivity