Manufacturing Industry – UPSC GS1


What factors decide the location of a manufacturing industry? Explain with a suitable example. (200 Words)
For setting up of industries various factors are to be considered:
  1. Raw material- for an industry the cheap & nearest availability of raw material is best, for ex:-for sugar industry as it is a weight loosing industry and also perishable and loses its sugar content rapidly, so sugar mill should be near to the fields so that easy & cheap transport cost will be there, like U.P mills.
  2. Power– source of power like coal, hydroelectricity, mineral oil are the important source of power for ex:- TISCO gets coal from Jharia fields. Canada and Norway have Aluminum refineries despite having no bauxite resources because of cheap electricity from hydro power.
  3. Geography – The topography, climate of the area is another determinant. Canada has numerous paper mills because of the economies of scale of lumbering in its coniferous forests coupled by cheap transport through the rivers.
  4. Industrial inertia – High capital industries are reluctant to shift their bases despite change in market condition due to the well-established supply chain and government policies. Detroit still boasts automobile companies despite slowing market and labour availability.
  5. Government policy – labour laws, “ease of doing business” are key factors for location
  6. Transport network – Adequate and cheap transport is essential for transport of inputs and finished goods. The Rhine valley in Germany has emerged as a manufacturing hub because of the extensively developed waterway.
  7. Labour – Cheap labour and adequate availability is a key issue. China has seen remarkable growth in manufacturing because of availability of surplus labour and low wages.
  8. Market – Closeness to market, demand in the market, paying capacity of the market are key determinants in location factors. There is a proliferation of spare part industries around Chennai, to cater to the market of automobile companies.
  9. Finance: The availability of capital at cheap rates of interests and in adequate amount is a dominating factor influencing industrial location. Kolkata has large urban center which provides banking and insurance facilities



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