Industrial locations are complex in nature. These are influenced by the availability of many factors. Some of them are raw material, land, water, labor, capital, power, transport, and market.
Industrial System:
An industrial system consists of inputs, processes, and outputs. The inputs are the raw materials, labor, and costs of land, transport, power, and other infrastructure. The processes include a wide range of activities that convert the raw material into finished products. The outputs are the end product and the income earned from it. In the case of the textile industry, the inputs may be cotton, human labor, factory, and transport cost. The processes include ginning, spinning, weaving, dyeing, and printing. The output is the shirt you wear.
But besides such purely geographical factors influencing industrial location, there are factors of historical, human, political, and economic nature which are now tending to surpass the force of geographical advantages. Consequently, the factors influencing the location of the industry can be divided into two broad categories i.e.
> Geographical factors, and
> Non-geographical factors.
Geographical Factors:
=> Raw material:
Raw materials are one of the important factors in an industrial location.
The significance of raw materials in the manufacturing industry is so fundamental that it needs no emphasis. Indeed, the location of industrial enterprises is sometimes determined simply by the location of the raw materials. The modem industry is so complex that a wide range of raw materials is necessary for its growth.
Further, we should bear in mind that the finished products of one industry may well be the raw material of another. For example, pig iron, produced by smelting industry, serves as the raw material for steel making industry. Industries that use heavy and bulky raw materials in their primary stage in large quantities are usually located near the supply of the raw materials. The jute mills in West Bengal, sugar mills in Uttar Pradesh, cotton textile mills in Maharashtra and Gujarat are concentrated close to the sources of raw materials for this very reason. Industries like iron and steel, which use very large quantities of coal and iron ore, losing a lot of weight in the process of manufacture, are generally located near the sources of coal and iron ore.
Most of the large integrated steel plants are located close to the source of raw materials, as they use large quantities of heavy and weight losing raw materials. Eg: Concentration of iron and steel industry in the Chota Nagpur region is due to the presence of iron ore in this region. TISCO at Jamshedpur gets coal from Jharia coalfields, and iron ore, limestone, dolomite, and manganese from Odisha and Chhattisgarh.
Some of the industries, like watch and electronics industries use a very wide range of light raw materials, and the attractive influence of each separate material diminishes. The result is that such industries are often located with no reference to raw materials and are sometimes referred to as ‘footloose industries’ because a wide range of locations is possible within an area of sufficient population density.
=> Power:
A regular supply of power is a pre-requisite for the localization of industries. Coal, mineral oil, and hydro-electricity are the three important conventional sources of power. Most industries tend to concentrate on the source of power.
The iron and steel industry which mainly depends on large quantities of coking coal as a source of power is frequently tied to coal fields. Others like the electro-metallurgical and electrochemical industries, which are great users of cheap hydro-electric power, are generally found in the areas of hydropower production, for instance, the aluminum industry.
As petroleum can be easily piped and electricity can be transmitted over long distances by wires, it is possible to disperse the industry over a larger area. Industries moved to southern states only when hydro-power could be developed in these coal-deficient areas.
Tata Iron and Steel Plant at Jamshedpur, the new aluminum producing units at Korba (Chhattisgarh) and Renukoot (Uttar Pradesh), the copper smelting plant at Khetri (Rajasthan) and the fertilizer factory at Nangal (Punjab) are near the sources of power and raw material deposits, although other factors have also played their role.
=> Labour:
Human resource in the area who can function as labor to run the processes. The availability of labor or skilled workforce is the success mantra for the growth of all industries.
No one can deny that the prior existence of a labor force is attractive to industry unless there are strong reasons to the contrary. Labour supply is important in two respects (1) workers in large numbers are often required; (2) people with a skill or technical expertise are needed.
In our country, the modem industry still requires a large number of workers in spite of increasing mechanization. There is no problem in securing unskilled labor by locating such industries in large urban centers. Although, the location of any industrial unit is determined after a careful balancing of all relevant factors, yet the light consumer goods and agro-based industries generally require a plentiful labor supply.
=> Transport:
The availability of easy transportation always influences the location of the industry. So the junction points of waterways, roadways, and railways become humming centers of industrial activity.
Transport by land or water is necessary for the assembly of raw materials and for the marketing of the finished products. The development of railways in India, connecting the port towns with hinterland determined the location of many industries around Kolkata, Mumbai, and Chennai. As industrial development also furthers the improvement of transport facilities, it is difficult to estimate how much a particular industry owes to original transport facilities available in a particular area.
=> Marketing feasibility:
The entire process of manufacturing is useless until the finished goods reach the market. Nearness to market is essential for the quick disposal of manufactured goods. It helps in reducing the transport cost and enables the consumer to get things at cheaper rates.
It is becoming more and more true that industries are seeking locations as near as possible to their markets; it has been remarked that market attractions are now so great that a market location is being increasingly regarded as the normal one and that a location elsewhere needs very strong justification.
Since the products in iron & steel industries are heavy & bulky, transportation cost is high. Therefore nearness to market is important, especially for mini steel plants access to nearby markets is most important in order to minimize transportation cost. TISCO in Jamshedpur is nearer to Kolkata which provided a large market. The Visakhapatnam steel plant located near the coast has an excellent import-export facility.
=> Site:
The site that is selected for the establishment of an industry must be flat and well served by adequate transport facilities. Site requirements for industrial development are of considerable significance. Sites, generally, should be flat and well served by adequate transport facilities. Large areas are required to build factories. Now, there is a tendency to set up industries in rural areas because the cost of land has shot up in urban centers.
=> Climate:
Climate plays an important role in the establishment of industries at a place. The harsh climate is not much suitable for the establishment of industries. There can be no industrial development in an extremely hot, humid, dry, or cold climate.
The extreme type of climate of north-west India hinders the development of industries. In contrast to this, the moderate climate of the west coastal area is quite congenial to the development of industries. Because of this reason, about 24 percent of India’s modem industries and 30 percent of India’s industrial labor are concentrated in the Maharashtra-Gujarat region alone.
The cotton textile industry requires a humid climate because of thread breaks in a dry climate. Consequently, the majority of cotton textile mills are concentrated in Maharashtra and Gujarat. Artificial humidifiers are used in dry areas these days, but it increases the cost of production.
=> Water resources:
The availability of water is another factor that influences the industrial location. Many industries are established near rivers, canals, and lakes, because of this reason. Iron and steel industry, textile industries and chemical industries require large quantities of water, for their proper functioning.
Non-geographical Factors:
Nowadays alternative raw materials are also being used because of modern scientific and technological developments. The availability of electric power supply over wider areas and the increasing mobility of labor have reduced the influence of geographical factors on the location of industries.
The non-geographical factors are those including economic, political, historical, and social factors. These factors influence our modern industries to a great extent. The following are some of the important non- geographical factors influencing the location of industries.
=> Capital:
Capital or huge investment is needed for the establishment of industries.
Modem industries are capital-intensive and require huge investments. Capitalists are available in urban centers. Big cities like Mumbai, Kolkata, Delhi, and Chennai are big industrial centers because the big capitalists live in these cities.
=> Availability of Banking Services:
The location that has better banking facilities and Insurance is best suited for the establishment of industries. The establishment of industries involves the daily exchange of crores of rupees which is possible through banking facilities only. So the areas with better banking facilities are better suited to the establishment of industries. There is a constant fear of damage to machines and men in industries for which insurance facilities are badly needed.
=> Government policies/regulations:
Government policies are another factor that influences the industrial location. The government sets certain restrictions in the allocation of land for industries in order to reduce regional disparities, to control excessive pollution, and to avoid the excessive clustering of industries in big cities.
Governments incentivize industries set up in backward regions. It provides subsidies, tax rebates, and capital to influence the location of industries. Bhilai Steel Plant in Chhattisgarh was set up to remove the backwardness of the region.
There is an increasing trend to set up all types of industries in an area, where they derive common advantage of water and power and supply to each other the products they turn out. The latest example in our country is the establishment of a large number of industrial estates all over India even in the small-scale industrial sector.
It is of relevance to examine the influence of India’s Five Year plans on industrial location in the country. The emergence of suitable industries in south India around new nuclei of public sector plants and their dispersal to backward potential areas has taken place due to Government policies.
The state policy of industrial location has a greater hand in the establishment of a number of fertilizer factories, iron and steel plants, engineering works, and machine tool factories including railway, shipping, aircraft and defense installations, and oil refineries in various parts in the new planning era in free India.
=> Efficient Organisation:
Efficient and enterprising organization and management are essential for running the modem industry successfully. Bad management sometimes squanders away the capital and puts the industry in financial trouble leading to industrial ruin.
Bad management does not handle the labor force efficiently and tactfully, resulting in labor unrest. It is detrimental to the interest of the industry. Strikes and lock-outs lead to the closure of industries. Hence, there is an imperative need for effective management and organization to run the industries.
=> Influence of pressure groups:
Industries tend to develop at the place of their original establishment, though the original cause may have disappeared. This phenomenon is referred to as inertia, sometimes as geographical inertia and sometimes industrial inertia. The lock industry at Aligarh is such an example.
Industrial inertia is the predisposition of industries or companies to avoid relocating facilities even in the face of changing economic circumstances that would otherwise induce them to leave. Often the costs associated with relocating fixed capital assets and labor far outweigh the costs of adapting to the changing conditions of an existing location.
The connection between Industrialization and Urbanization:
After an industrial activity starts, urbanization follows. Sometimes, industries are located in or near the cities. Thus, industrialization and urbanization go hand in hand. In India, the iron, and steel industry has developed taking advantage of raw materials, cheap labor, transport, and market. All the important steel-producing centers such as Bhilai, Durgapur, Burnpur, Jamshedpur, Rourkela, Bokaro are situated in a region that spreads over four states - West Bengal, Jharkhand, Odisha, and Chhattisgarh. Bhadravati and Vijay Nagar in Karnataka, Visakhapatnam in Andhra Pradesh, Salem in Tamil Nadu are other important steel centers utilizing local resources.
Cities provide markets and also provide services such as banking, insurance, transport, labor, consultants and financial advice, etc. to the industry.
Industries in the pre-Independence period:
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 centers surrounded by a huge agricultural rural hinterland.
Conclusion:
It is rarely possible to find all these factors available in 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 a lower cost. In general, it should also be noted that both lower production costs and lower distribution costs are the two major factors while considering the location of an industry. Sometimes, the government provides incentives like subsidized power, lower transport cost, and other infrastructure so that industries may be located in backward areas.
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