Manufacturing Industries
Manufacturing turns raw materials into finished goods; it is the backbone of development, classified in several ways and led by industries like iron and steel and textiles.
The big idea
Think first
Raw cotton is cheap, yet a finished shirt is not. Where does the extra value come from, and why do nations compete so hard to capture it within their own borders?
When raw cotton becomes cloth, iron ore becomes steel, and sugarcane becomes sugar, value is added at every step. Manufacturing is the making of finished goods from raw materials in large quantities. It is regarded as the backbone of development. A country is judged to be strong not by how much it grows or digs, but by how much it makes. Understanding why manufacturing matters, how industries are classified, and the story of India's key industries is essential economic geography.
Manufacturing is classed as a secondary activity. It works on the output of the primary sector: farms, mines and forests supply the raw materials that factories process using power and machinery. Where these activities choose to locate shapes the map of the world's wealth.
Check yourself
Why is manufacturing called a secondary activity?
Importance of manufacturing
Manufacturing matters for several connected reasons:
- Creates jobs outside farming, drawing people from overcrowded fields into factories and services.
- Adds value to raw materials, turning cheap primary goods into costlier finished products and so increasing wealth.
- Supports agriculture by buying its produce (cotton, sugarcane) and supplying it with tools and fertilisers.
- Earns foreign exchange through exports.
For all these reasons, the growth of manufacturing is taken as a measure of a country's economic strength. Agriculture and industry are seen to move forward together.
Check yourself
Which reason best explains why manufacturing growth is taken as a measure of a country's economic strength?
Classification of industries
Industries are grouped in several ways, and the schemes often appear in examinations.
- By source of raw material: agro-based industries (cotton, sugar, tea) use farm produce, while mineral-based industries (iron and steel, cement) use minerals.
- By their main role: basic or key industries supply raw materials to other industries (iron and steel), while consumer industries make goods for direct use (sugar, toothpaste).
- By capital invested and size: household, small-scale (limited investment) and large-scale industries.
- By ownership: public sector (owned by the government), private sector, joint sector and cooperative sector.
- By the weight of materials: heavy industries (iron and steel) and light industries (electronics).
Previous-year questions
Previous-year question
2001UPSCConsider the following factors regarding an industry: I. Capital investments II. Business turnover III. Labour force IV. Power consumption. Which of these determine the nature and size of the industry?
Factors of industrial location
Why do industries set up where they do? An industry seeks the place where it can produce most cheaply. The key factors of industrial location are:
- Raw materials: being near heavy or perishable inputs saves transport cost.
- Power: a reliable, cheap energy supply.
- Labour: an adequate, affordable and suitably skilled workforce.
- Market: being close to where the goods will be sold.
- Transport: good roads, railways and ports to move inputs and products.
- Capital and government policy: money to invest and a supportive environment.
Industries weigh these factors against each other. Heavy industries locate near raw materials, while market-oriented ones locate near consumers.
Check yourself
Suppose a company processes fresh fruit into juice and another assembles fashionable furniture for city buyers. Where would each most likely locate?
Industrial regions
Industries are drawn to similar favourable conditions, so they tend to cluster together in particular areas. These clusters are called industrial regions. Once an area has industry, more industries follow. Newcomers benefit from the labour, transport and services already present.
The world's great industrial belts grew where coal, iron, transport and markets came together: western Europe, north-eastern North America and East Asia. In India, the Chhota Nagpur plateau and the Mumbai–Pune belt are major industrial clusters.
Check yourself
Which reason better explains why new industries keep arriving in an area that already has many factories?
The iron and steel industry
The iron and steel industry is the basic industry. All other industries, heavy and light, depend on it for their machinery and tools. It is also a heavy industry. Its raw materials (iron ore, coal, limestone) and its products are bulky and costly to move.
For this reason, steel plants are located close to their raw materials. Most of India's iron and steel plants are concentrated in the Chhota Nagpur plateau region (Jharkhand, Odisha, West Bengal, Chhattisgarh). This region has iron ore, coal and cheap labour close together. India is among the world's leading producers of steel, though it faces challenges of high costs and limited modern technology.
The plants of the coal belt, such as TISCO at Jamshedpur, Durgapur and Bhilai, enjoy coal supplies from nearby fields. The Visvesvaraya Iron and Steel plant at Bhadravati in Karnataka is the notable exception. It has no coalfield in its neighbourhood and historically ran on charcoal from local forests and on hydroelectric power instead.
Public-sector steel plants
Public-sector steel rests on two companies. The Steel Authority of India Limited (SAIL) runs the integrated steel plants at Rourkela (Odisha), Bhilai (Chhattisgarh), Durgapur (West Bengal), Bokaro (Jharkhand) and Burnpur (West Bengal). Rourkela is SAIL's only integrated plant in Odisha; there is no SAIL integrated plant at Jaipur in that state. Each of the first three plants was built with a different foreign partner:
- Rourkela: the first public-sector integrated steel plant, built with West German collaboration.
- Bhilai: built with Soviet collaboration.
- Durgapur: built with British collaboration.
The Burnpur plant came from the Indian Iron and Steel Company (IISCO), and the merger of IISCO with SAIL has been completed. Maharashtra Electrosmelt Limited is a subsidiary of SAIL. The Salem Steel Plant in Tamil Nadu is a premier producer of stainless steel.
The second company is Rashtriya Ispat Nigam Limited (RINL), which runs the Visakhapatnam (Vizag) Steel Plant in Andhra Pradesh. RINL has been declared a Mini Ratna, a status that gives a profitable public enterprise greater financial autonomy. Two power projects are often paired with these steel plants in matching exercises: the Jamnagar power project in Gujarat belongs to Essar Power, and the Kayamkulam project in Kerala belongs to NTPC.
Previous-year questions
Previous-year question
2015UPSCIn India the steel production industry requires the import of:
Previous-year question
2007UPSCWith reference to the steel industry in India in the recent times, consider the following statements:
- Vizag Steel Plant (RINL) has been declared Mini Ratna.
- Merger of IISO with SAIL has been completed.
Which of the statements given above is/are correct?
Previous-year question
2005UPSCWhich one of the following statements is not correct? a) Rourkela Steel Plant, the first integrated steel plant in the Public sector of India was set up with the Soviet Union collaboration. b) Salem Steel Plant is a premier producer of stainless steel in India. c) Maharashtra Electrosmelt Ltd is a subsidiary of the Steel Authority of India Ltd. d) Visakhapatnam Steel Plant is a unit of the Rashtriya Ispat Nigam Ltd.
Previous-year question
2005UPSCWhich pair is not correctly matched? Project — Company:
Previous-year question
1996UPSCLocal supply of coal is not available to:
The textile industries
The textile industry is unique because it is agro-based. It is the largest industry in India by employment, providing work to millions. It also has a long chain that links farmers, factory workers and traders.
The cotton textile industry has ancient roots in India. It is concentrated in Maharashtra and Gujarat, where black soil grows cotton and the climate and ports help. The jute industry is concentrated along the Hugli river in West Bengal, near the jute-growing delta. Silk, wool and synthetic textiles add to the variety. The industry supports farming by buying raw cotton. It also supports the country by exporting finished cloth and garments.
Check yourself
Why is the jute industry concentrated along the Hugli river in West Bengal?
The aluminium industry
Aluminium smelting is the second most important metallurgical industry in India after iron and steel. Its raw material is bauxite, an ore found in large reserves in Odisha and the Eastern Ghats. Turning bauxite into aluminium consumes enormous quantities of electricity. Cheap and assured power, more than nearness to the ore, therefore decides where smelters are sited.
The major plants and their locations are frequently tested as matched pairs:
- HINDALCO, Renukoot (Uttar Pradesh): owes its site to the abundant power of the nearby Rihand Dam, a large hydroelectric project, rather than to raw materials or markets.
- BALCO, Korba (Chhattisgarh): a public sector plant located close to the Korba coalfields and their thermal power stations.
- NALCO, Koraput (Odisha): the National Aluminium Company, set close to the rich bauxite deposits of the Eastern Ghats.
- Indian Aluminium Company (INDAL), Hirakud (Odisha): draws cheap power from the Hirakud Dam project on the Mahanadi.
Previous-year questions
Previous-year question
2007UPSCMatch List-I (Aluminium Company) with List-II (Location): A. BALCO —
- Hirakud B. HINDALCO —
- Korba C. Indian Aluminium Company —
- Koraput D. NALCO —
- Renukoot
Select the correct answer:
Previous-year question
2002UPSCHINDALCO, an aluminium factory located at Renukut owes its site basically to:
Other major industries
The paper industry uses bamboo, wood pulp, waste paper and bagasse, the crushed residue of sugarcane. Raw material and water supply pull mills towards forested and riverine regions. Three centres are well known for paper manufacturing: Yamunanagar in Haryana, Guwahati in Assam and Ballarpur in Maharashtra, home to one of India's largest paper mills. Shahabad in Karnataka, by contrast, is a cement town and is not a paper centre.
Cement, fertilisers and petrochemicals complete the list of major material industries. Cement plants sit near limestone deposits, while fertiliser and petrochemical plants cluster near refineries and ports that supply their feedstock.
Previous-year questions
Previous-year question
1997UPSCWhich of the following places are known for paper manufacturing industry? I. Yamunanagar II. Guwahati III. Shahabad IV. Ballarpur Choose the correct answer using the codes given below:
Small-scale industries
Small-scale industries (SSIs) are defined by a ceiling on investment in plant and machinery, not by the number of workers alone. The nature and size of an industry are judged by capital investment, business turnover and power consumption. In most cases SSIs are less efficient and less competitive than large-scale units. The government still gives them preferential treatment, cheap credit and, for decades, reservation: a list of products that only small units could make.
Two justifications drive this support. SSIs provide higher employment per unit of capital deployed, and they promote a regional dispersion of industry and economic activity beyond the big cities. Since 1992 the small-scale sector has contributed about 34 per cent of the gross turnover of the manufacturing sector. The Abid Hussain Committee, an expert committee on small enterprises, recommended abolishing the reservation of items for the small-scale sector to make it more competitive. Reservation was later phased out.
Previous-year questions
Previous-year question
2002UPSCWhich one of the following committees recommended the abolition of reservation of items for the small scale sector in industry?
Previous-year question
1999UPSCConsider the following statements: Small-scale industries are, in most cases, not as efficient and competitive as the large-scale ones. Yet the Government provides preferential treatment and reservations in a range of products to the small firms because small scale industries: I. Provide higher employment on a per unit capital deployment basis. II. Promote a regional dispersion of industries and economic activities. III. Have performed better in export of manufactured products than the large scale ones. IV. Provide jobs to low-skill workers, who otherwise may not find employment avenues elsewhere. Which of the above statements are correct?
Previous-year question
1997UPSCThe contribution of India's small-scale sector to the gross turnover in the manufacturing sector since 1992 has been of the order of:
Industrial policy and institutions
The New Industrial Policy of 1991 ended the licence raj. Compulsory industrial licensing was scrapped for most industries, with the list of licensed industries cut to about 15 and later to a handful on security, health and environmental grounds. The white goods industry, consumer durables such as refrigerators, washing machines and air conditioners that are bought for conspicuous consumption, was among the sectors delicensed. With markets taking the central place in allocating resources, central planning for industry lost much of its earlier importance, and industrial investment passed largely to private and multinational firms.
Later policy built on this base:
- SEZ Act, 2005: in force from February 2006, it creates Special Economic Zones to develop infrastructure, attract investment including foreign investment, and promote exports of both goods and services, not services alone.
- National Manufacturing Policy, 2011: proposed National Investment and Manufacturing Zones (NIMZs), single window clearance for approvals, and a Technology Acquisition and Development Fund. India's first NIMZ was proposed in Prakasam district, Andhra Pradesh.
- Corporate Social Responsibility (CSR): the Companies Act, 2013 requires eligible companies to spend at least 2 per cent of average net profits on CSR. The rules exclude any expenditure that benefits the company itself or its employees from counting as CSR.
- Geographical Indication (GI): a tag that ties a product to its place of origin. Banaras Brocades and Sarees and the Tirupathi Laddu hold GI status. A generic dish such as Rajasthani Daal-Bati-Churma does not.
A cluster of institutions and public enterprises also recurs in questions:
- Labour Bureau: under the Ministry of Labour and Employment, it compiles data on industrial disputes, closures, retrenchments and lay-offs in factories.
- National Automotive Board: functions under the Ministry of Heavy Industries.
- Coir Board: functions under the Ministry of Micro, Small and Medium Enterprises.
- National Centre for Trade Information: functions under the Ministry of Commerce and Industry.
- MMTC Limited: India's largest international trading organisation and its largest non-oil importer. With the Government of Odisha it set up Neelachal Ispat Nigam Limited, a steel venture.
- Project and Equipment Corporation of India: functions under the Ministry of Commerce, not the Ministry of Industry.
- ECGC (Export Credit Guarantee Corporation): provides export credit insurance to exporters. Quality control and pre-shipment inspection are the work of the Export Inspection Council, not of ECGC.
- NTPC: the largest power utility in India.
- Indian Ordnance Factories: the largest departmentally run industrial undertaking in the country.
Previous-year questions
Previous-year question
2025UPSCWith reference to India, consider the following pairs: Organization — Union Ministry I. The National Automotive Board — Ministry of Commerce and Industry II. The Coir Board — Ministry of Heavy Industries III. The National Centre for Trade Information — Ministry of Micro, Small and Enterprises How many of the above pairs are correctly matched?
Previous-year question
2024UPSCWith reference to Corporate Social Responsibility (CSR) rules in India, consider the following statements:
- CSR rules specify that expenditures that benefit the company directly or its employees will not be considered as CSR activities
- CSR rules do not specify minimum spending on CSR activities.
Which of the statements given above is/are correct?
Previous-year question
2022UPSCIn India, which one of the following compiles information on industrial disputes, closures, retrenchments and lay-offs in factories employing workers?
Previous-year question
2016UPSCRecently, India's first 'National Investment and Manufacturing Zone' was proposed to be set up in:
Previous-year question
2015UPSCWhich of the following has/have been accorded 'Geographical Indication' status?
- Banaras Brocades and Sarees
- Rajasthani Daal-Bati-Churma
- Tirupathi Laddu
Select the correct answer using the code given below:
Previous-year question
2012UPSCWhat is/are the recent policy initiative(s) of Government of India to promote the growth of manufacturing sector?
- Setting up of National Investment and Manufacturing Zones
- Providing the benefit of 'single window clearance'
- Establishing the Technology Acquisition and Development Fund
Select the correct answer using the codes given below:
Previous-year question
2010UPSCThe SEZ Act, 2005, which came into effect in February 2006 has certain objectives. In this context, consider the following:
- Development of infrastructure facilities.
- Promotion of investment from foreign sources.
- Promotion of exports of services only.
Which of the above are the objectives of this Act?
Previous-year question
2009UPSCConsider the following statements:
- MMTC Limited is India's largest international trading organization.
- Neelachal Ispat Nigam Limited has been set up by MMTC jointly with the Government of Orissa.
Which of the statements given above is/are correct?
Previous-year question
2002UPSCConsider the following statements:
- NTPC is the largest power utility in India.
- ONGC accounts for half of the LPG production in India.
- Indian Oil Corporation operates all the oil refineries in India.
- The Indian Ordinance Factory is the largest departmentally run industrial undertaking in the country.
Which of these statements is/are correct?
Previous-year question
2002UPSCWith reference to the public Sector Undertaking in India, consider the following statements:
- Minerals and Metals Trading Corporation of India Limited is the largest non-oil importer of the country.
- Project and Equipment Corporation of India Limited is under the Ministry of Industry.
- One of the objectives of Export Credit Guarantee Corporation of India Limited is to enforce quality control and compulsory preshipment inspection of various exportable commodities.
Which of these statements is/are correct?
Previous-year question
1999UPSCThe planning process in the industrial sector in India has assumed a relatively less important position in the nineties as compared to that in the earlier period. Which one of the following is true in this regard?
Previous-year question
1998UPSCSome time back, the Government of India, decided to delicense 'white goods' industry. 'White goods' include:
Previous-year question
1997UPSCThe number of industries for which industrial licensing is required has now been reduced to:
Industrial production and growth
Industrial output is tracked by the Index of Industrial Production (IIP). Within it sit the Eight Core Industries: coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity. Textiles is not a core industry. The core industries carry a combined weight of about 37.90 per cent in the overall IIP. In the earlier base-year series electricity generation carried the highest weight among the eight; in the revised 2011-12 series refinery products carry the highest weight, with electricity next.
Growth in industrial production responds to demand, a stable exchange rate and business sentiment. The upturn of 1999-2000 is attributed to exactly these conditions, and in 2000-01 steel recorded the highest growth rate among the major industries. India also ranks high globally in several lines: it has long been the second largest producer of silk and among the top three producers of coal, though it is not the second largest producer of nitrogenous fertilisers.
Industrial development remains constrained by gaps in entrepreneurship and business leadership, by shortfalls in technology, skills and infrastructure, and by the limited purchasing power of the masses, which keeps domestic demand weak. A shortage of savings to invest is not counted among these constraints.
Previous-year questions
Previous-year question
2015UPSCIn the Index of Eight Core Industries, which one of the following is given the highest weight?
Previous-year question
2012UPSCIn India, in the overall Index of Industrial Production, the Indices of Eight Core Industries have a combined weight of 37.90%. Which of the following are among those Eight Core Industries?
- Cement
- Fertilizers
- Natural gas
- Refinery products
- Textiles
Select the correct answer using the codes given below:
Previous-year question
2003UPSCDuring the year 2000-01, which one of the following industries recorded highest growth rate in India?
Previous-year question
2003UPSCWhich one of the following statements is not correct?
Previous-year question
2001UPSCAssertion (A): There was an increase in industrial production during 1999-2000. Reason (R): The period witnessed a stable exchange rate and improved business sentiments.
Previous-year question
1999UPSCConsider the following statements: Industrial development in India, to an extent, is constrained by: I. Lack of adequate entrepreneurship and leadership in business. II. Lack of savings to invest. III. Lack of technology, skills and infrastructure. IV. Limited purchasing power among the larger masses. Which of the above statements are correct?
Industrial pollution and its control
Industries bring prosperity, but they also pollute the environment in four ways. Air pollution comes from smoke and gases. Water pollution comes from chemicals and waste poured into rivers. Land pollution results from dumping solid waste, and noise pollution from machinery. These harm human health and damage soil, water and air.
Industry also strains water supplies directly. Thermal power plants are the largest industrial consumers of water in India. They draw huge volumes for steam generation and cooling, well ahead of the engineering, paper and pulp, and textile industries.
Pollution can be controlled in several ways. Industrial waste should be treated before it is released. Water should be reused and recycled, and rainwater harvested to meet water needs. Industries should adopt cleaner technology that produces less waste. Strict laws and the proper siting of industries away from dense settlements also help reduce the damage.
Previous-year questions
Previous-year question
2013UPSCWhich one among the following industries is the maximum consumer of water in India?
Key takeaways
- Manufacturing = making finished goods from raw materials in bulk. It adds value, creates jobs, supports agriculture and earns foreign exchange, and is taken as a measure of economic strength
- Secondary activity: processes primary-sector output in factories
- Classified by raw material (agro-based/mineral-based), role (basic/consumer), size (household/small/large), ownership (public/private/joint/cooperative) and weight (heavy/light)
- Location factors: raw materials, power, labour, market, transport, capital, policy
- Industries cluster into industrial regions: western Europe, East Asia, Chhota Nagpur, Mumbai–Pune
- Iron and steel is the basic, heavy industry, concentrated in the Chhota Nagpur plateau near ore, coal and limestone
- Textiles are agro-based and India's largest industry by employment, with cotton in Maharashtra/Gujarat and jute along the Hugli
- Industry causes air, water, land and noise pollution, controlled by treating waste, recycling water and cleaner technology
- Aluminium smelting is power-hungry: cheap power decides plant location
- HINDALCO Renukoot (Rihand), BALCO Korba, NALCO Koraput, INDAL Hirakud
- Paper centres: Yamunanagar, Guwahati, Ballarpur
- SSI support: more jobs per capital, regional dispersion; ~34% turnover
- Abid Hussain Committee: abolish small-scale reservation
- 1991 policy: delicensing, licences cut to ~15; white goods freed
- NMP 2011: NIMZs, single window, Technology Fund; first NIMZ Prakasam
- SEZ Act 2005: infrastructure, investment, goods and services exports
- Labour Bureau compiles disputes data; MMTC largest trading organisation
- Eight Core Industries: ~37.90% IIP weight; electricity highest, textiles excluded
- Constraints: entrepreneurship, technology, infrastructure, purchasing power; not savings
- SAIL integrated plants: Rourkela, Bhilai, Durgapur, Bokaro, Burnpur
- Collaborations: Rourkela German (first public-sector), Bhilai Soviet, Durgapur British
- Vizag plant: RINL, a Mini Ratna; IISCO merged into SAIL
- Salem Steel: stainless steel; Maharashtra Electrosmelt is SAIL subsidiary
- Bhadravati plant lacks local coal; used charcoal, hydel power
- Thermal power plants: largest industrial consumers of water
- ECGC insures export credit; Export Inspection Council inspects exports
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