Assignment

On
Classification of industries in India
Subject:Strategic entrepreneurship

Submitted by

Mtech, I&P Engineering

Submitted to

Professor,MED

National Institute of Technology Kurukshetra

Mechanical Engineering Department
Q.1. How do we classify industries in India?
Ans.: Industries can be classified into several groups.
I. On the Basis of Strength of Labour:
1. Large Scale Industry:
Industries which employ a large number of laborers in each unit are called large-scale industries. Cotton or jute
textile industries are large scale industries.
2. Medium Scale Industries:
The industries which employ neither very large nor very small number of labourers are put in the category of
medium scale industries. Cycle industry, radio and television industries are some examples of medium scale
industries.
3. Small Scale Industries:
Industries which are owned and run by individuals and which employ a small number of labourers are called
small scale industries.
II. On the Basis of Raw-Material and Finished Goods:
Industries classified on the basis of raw materials and finished goods are:
1. Heavy Industries:
Industries which use heavy and bulky raw-materials and produce products of the same category are called heavy
industries. Iron and steel industry presents a good example of heavy industries.
2. Light Industries:
The light industries use light raw-materials and produce light finished products. Electric fans, sewing machines
are light industries.
III. On the basis of Ownership:
1. Private Sector Industries:
Industries owned by individuals or firms such as Bajaj Auto or TISCO situated at Jamshedpur are called private
sector industries.
2. Public Sector Industries:
Industries owned by the state and its agencies like Bharat Heavy Electricals Ltd., or Bhilai Steel Plant or
Durgapur Steel Plant are public sector industries.
3. Joint Sector Industries:
Industries owned jointly by the private firms and the state or its agencies such as Gujarat Alkalies Ltd., or Oil
India Ltd. fall in the group of joint sector industries.
4. Co-operative Sector Industries:
Industries owned and run co-operatively by a group of people who are generally producers of raw materials of
the given industry such as a sugar mill owned and run by farmers are called co-operative sector industries.
IV. On the Basis of Source of Raw Material:
1. Agro Based Industries:
 Agro based industries are those industries which obtain raw-material from agriculture. Cotton textile, jute textile,
sugar and vegetable oil are representative industries of agro-based group of industries
2. Mineral Based Industries:
The industries that receive raw materials primarily from minerals such as iron and steel, aluminium and cement
industries fall in this category.
3. Pastoral-Based Industries:
These industries depend upon animals for their raw material. Hides, skins, bones, horns, shoes, dairy, etc. are
some of the pastoral-based industries.
4. Forest Based Industries:
Paper card-board, lac, rayon, resin, tanning of leather, leave- utensils, basket industries are included in this type
of industries.
V. Miscellaneous Industries:
1. Village Industries:
Village industries are located in villages and primarily cater to the needs of the rural people. They usually
employ local machinery such as oil extraction, grain grinding and agricultural implements.

2. Cottage Industries:
Industries which artisans set up in their own houses, work with wood, cane, brass, stone, etc. are called cottage
industries. E.g. Handloom, Khadi and leather work etc.
3. Consumer Goods Industries:
Consumer industries convert raw materials or primary products into commodities directly used by the people.
E.g. Textiles, bakeries, sugar, etc.
4. Ancillary Industries:
The industries which manufacture parts and components to be used by big industries for manufacturing heavy
articles like trucks, buses, railway engines, tractors, etc. are called ancillary industries.
5. Basic Industries:+
Industries on which depend many other industries for their manufacturing processes are called basic industries.
E.g. Iron and steel industry, power generating industry etc.
6. Capital-Intensive Industries:
Industries requiring huge investments are called capital-intensive industries. E.g. Iron and steel, cement and
aluminum industries etc.
7. Labour-Intensive Industries:
 Industries which require huge labour force for running them are called labor-intensive industries. E.g. Shoe-
making and bidi-manufacturing etc.

Q.2. Write advantages of SSIs (Small Scale Industries).

Ans.: There are the following advantages associated with SSIs :
1. Potential for large employment: SSIs bear potential to create employment opportunities on a massive scale.
They can be set up in short time and can provide employment opportunities to more number of people.
2. Requirement of less capital: Small Scale Industries require less capital when compared to large scale
industries. India is a capital scarce country and therefore Small Scale Industries are more suitable in the
Indian context. Contribution to industrial output: Products manufactured by Small Scale Industries form
a significant portion of the industrial output of the country. They produce a number of consumer goods as
well as industrial components in large quantities and satisfy the needs of consumers. The consumer goods
produced by Small Scale Industries are cheaper and satisfy the requirements of the poorer sections.
3. Contribution to exports Small Scale Industries contribute nearly 40 per cent to the industrial exports of
the country. E.g. Gems and jewelries, handicrafts, textiles, sports goods, finished leather, leather products,
woolen garments etc. Further products produced by Small Scale Industries are used in the manufacture of
products manufactured and exported by large scale industries. Therefore they contribute both directly and
indirectly to exports and earn valuable foreign exchange.
4. Earning foreign exchange: Small Scale Industries earn valuable foreign exchange for the country by
exporting products to different countries of the world.
5. Equitable distribution: Large scale industries lead to inequalities in income distribution and concentration
of economic power. But small scale industries distribute resources and wealth more equitably. It is because
income is distributed among more number of workers since it is labor intensive.
6. Use of domestic resources: Small Scale Industries use locally available resources in a productive manner
which would have otherwise gone waste. Small amounts of savings which would have remained idle is
channelized into setting up of small enterprises. This increases capital formation and investment in the
economy.
7. Opportunities for entrepreneurship: Small Scale Industries provide opportunities for entrepreneurs with
limited capital. Setting up of an SSI requires less capital and lower investment in technology and machines
when compared to large scale enterprises.

8. Cost efficiency: Small scale units can adopt lean production method which offer better quality and more
variety at a lower cost. They can be more cost efficient when compared to large scale units because their
expenses are lower.

9. Reducing migration:
Migration happens when people living in rural areas are not able to find employment
and therefore migrate to urban areas seeking employment. Large scale migration puts tremendous pressure
on land, water and other resources in urban areas leading to poor quality of life. Small Scale Industries
use the skills and talents of rural craftsmen, artisans etc. They provide gainful employment to people with
inherited skills resulting in their economic upliftment. This helps in reducing migrations.
10. Suitable for non-standardized products:
Large scale enterprises are suitable for manufacturing
standardized products on a large scale whereas Small Scale Industries are more suitable for manufacturing
non-standardized products.
11. Flexibility in operation:
Small scale enterprises are more flexible. They can adapt themselves to changing
market requirements very fast and benefit from new opportunities.
12. Quick decisions:
Since the enterprise is small and there is not much hierarchy, so quick decisions can be
taken without consuming much time.
13. Adaptability to change:
Small Scale Industries can understand the changing requirements of the
customers and adapt themselves much quickly.
14. Small market size:
In case the market size is small, producing products on a large scale would not be
feasible. In such cases, Small Scale Industries are more suitable since they produce limited quantities.
15. Customization:
When products have to be customized according to individual customer needs large scale
production would not be suitable. Small Scale Industries are better suited in case products have to be
customized.
16. Low social costs:
In the case of large scale enterprises, society has to incur high social costs in terms of air
and water pollution and environmental degradation. But in the case of small enterprises, such social costs
are less.
17. Lesser industrial disputes:
In small scale enterprises, workers are not well organized and thus union
activity is less. So there is very little possibility of industrial disputes to occur.
18. Personal contact with employees:
Businesses engaged in small scale production have less number
of employees. It is easy to maintain personal contact with employees. Grievances and problems would be
known immediately and solved. Therefore there is very little possibility of any industrial dispute.
19. Personal contact with customers:
The number of customers is limited and the small scale entrepreneur
would be directly involved in the business.