Information of Industry Area

Industry Area 

 The second sector of the economy is also commonly referred to as the industry sector.  These include i) factories, ii) construction, and iii) air, water and other power supply sectors.

 Numerous items are manufactured in the industry.  The development of the economy is based on the creation of a viable industry sector.

Ever wonder where your smartphone came from? A shop right? But the shopkeeper purchased it from his distributor, who purchased it from the manufacturer. Thus, the manufacturer is the origin of your smartphone. An industry is nothing but a group of organizations involved in producing the same type of product.

Importance of Industries in Economy:

 Industries play an important role in the economy.  This will be illustrated by the following issues.

 Products are created for consumption by the industry.  E.g. Thousands of household items such as clothing, soap, bicycles, television, fridge.

 Capital goods are created for production units by industry.  E.g. Machinery, tractors, etc.

 By industry, goods are created to provide services for service organizations.  E.g. Trucks, buses or trains for transportation services, telephones for communication services, books for education services, plaques, pallets, medicines for health care, injections, testing machines, etc.

 The industry provides various products for export.

 Classification of Industries:

 The industries are classified on various grounds: a) ownership, b) level of production, and c) consumption

 A) On the basis of ownership -

 Ownership activities are classified into the following three types: Public sector enterprises: - They are wholly owned by the Government of India.

 Private sector enterprises: - They are wholly owned by private individuals or individuals.

 Joint sector enterprises: - They are owned by the government and partly by the private sector.  Such enterprises can be jointly owned by the Government and Indian private companies or by the Government and foreign private companies. In India, more than 51% of the government's participation is referred to as 'Public Sector Undertakings: PSUs'.

 B) On the basis of scale of production -

 The level of production represents the size of the venture, it is calculated on the basis of capital investment or number of workers.  Depending on the level of production, the activities are classified as Small Industries and Large Industries.

 In India, currently under the 'Micro, Small and Medium Enterprises Development Act, 2006', the concept of 'undertaking' has been adopted in place of 'industry', and the commodity producers and service providers are classified into micro, small and medium enterprises on the basis of capital investment.  General Chat Chat Lounge

 C) Use based classification -

 Depending on what the manufactured goods are used for, the industry is classified into two main types: consumables and capital goods industries.

 To calculate the Index of Industrial Production (IIP) in India, industries are classified into four groups: Basic commodity industries

 Capital goods industries

 Intermediate goods industries

 Consumer goods industries There are two sub-types of consumables (durables) and non-durables.

 Index of Industrial Production: IIP:

 In India, the Index of Industrial Production (IIP) is mainly used for measuring industrial growth.

 Statistics for these indices are published every month by the Central Statistical Organization (CSO).  From June 2011, 2004-05 has been accepted as the base year for this index instead of the previous 1993-94.

 To calculate these indices, the industry is classified into three major sub-sectors: mining, manufacturing and electricity.  They were given 141.57,755.27 and 103.16 of 1000 respectively.

 The index is currently calculated from 682 items.  Of these, 61 are related to mining, 620 to the manufacturing sector and one to electricity.

 Industrial Policy:

 Main features -

 The key features of the Government's industrial policy are: - To maintain sustainable growth in productivity.

 Increase in creative employment.

 Ensuring adequate use of human resources.

 Achieving international competitiveness.

 To transform India as one of India's leading partners and competitors globally.

 Policy Focus -

 The strategic emphasis for this is on the following matters: Deregulation of the Indian industry.

 Agreeing on industrial independence and flexibility in response to market forces.

 To create a policy system that promotes the growth of the Indian industry.

 Policy measures:

 The following are the strategic measures announced and the simple steps taken to achieve the above objectives.

 Industrial Licensing Policy Liberalization of Industrial Licensing Policy:

 The list of industries that are licensed under the 'Industries (Development and Regulation) Act, 1951' is examined from time to time.  Currently the license is mandatory for only 5 industry sectors. This imperative is maintained by environmental, safety and strategic needs.  These five areas are: Production of alcoholic beverages,

 Production of cigars, cigarettes and other tobacco products,

 Electric, aerospace and all kinds of defense equipment,

 Industrial explosives, including fireballs, and

 Some hazardous chemicals. Industries that do not fall within the scope of the compulsory license have to file only with the 'Directorate of Industrial Assistance'.

 Also in 1991, the eight public sector reserves were reserved for the public sector.  Currently, only two industry sectors are reserved to the public sector.

 Production, separation or conservation of nuclear energy-specific fractures, and operation of related facilities.

 i Train transport (excluding MRTS)

 Policy for Small Scale Industries:

 Currently, small businesses are defined under the 'Micro, Small and Medium Enterprises Act, 2006'.  Reservation of certain commodities for small scale industries (SSI reservation) was one of the important features of the Small Business Policy.

 However, the government has periodically monitored this policy in order to promote competitiveness of these commodities in domestic and foreign markets.  Thereby many items have been unreserved.

 Over 600 items have been unreserved in the last 5 years and at present only 20 items have been reserved for the small business sector.

 If the small business wants to produce reserves, then it has to get an industrial license, and it has to comply with the export of 50% of the annual production.  However, the licensing condition does not apply to 100% export oriented industries, export processing departments (EPZs) and special financial departments (SEZs).

 Also, the previous obligation of a maximum of 24 per cent of the non-minority stakeholder participation in the Small Enterprises was removed in 1997.