Structure of industries
It is important to understand industrial structure to know various aspects of industrial sector. In India, classification of industries can be made on different ways: (1) on the basis volume of investment, (2) on the basis of the use of produced goods, (3) on the basis of ownership and (4) on the basis of industrial laws.
Classification of industries:
(1) On the basis of volume of investment:
Classification of industries based on volume of investment in industries in India is made as follows: (i) Cottage industries (ii) Small Scale industries, (iii) Medium sized industries and (iv) Large-sized industries.
(i) Cottage Industries : Industries mainly run by family members and with simple equipments and with negligible use of electricity, machines and investment is known as cottage industry. E.g., Khadi, Papad, Khakhra, incense stick industries, etc.
(ii) Small scale industries:
In an industries unit, if the capital investment is more than Rs.25 lakhs and less than Rs. 5 crores, it is called small-scale industry. The limitation of capital investment continues to change. Small-scale industries are two types:
- Tiny industry: the industry in which less than 25 lakh rupees are invested, it is called tiny industry.
- Ancillary industry: Industry, which produces certain parts of big industrial units or provides some other types of services, is called ancillary industry. The limit of investment or such ancillary industrial unit has been fixed at Rs. 5 crore rupees
(iii) Medium industries:
Industries which have investment limit of more than ` 5 crores and less than ` 10 crores, utilise labour intensive or capital intensive production techniques are known as medium scale industries. E.g., Industries of machinery, chemicals, electronic equipments, etc.
(iv) Large Scale Industries: Industries which have investment of more than ` 10 crores and utilise capital intensive production technique known as large scale industries. E.g., Industries related to equipments of railway, big vehicles, iron, etc.
(2) Classification on the basis of produced goods:
On the basis of produced goods by industrial units, classification of industries is as follows:
(a) Basic industries:
Industries, which produce inputs for other industries, are called basic industry. For example, chemical fertilizers, cement, coal, iron & steel are basic industries.
(b) Capital goods industries:
The industries, which produce man-made material tools and equipment like machines, railway engine, aeroplanes etc., are called capital goods industries.
(c) Intermediate industries:
The production of industries passes through mechanical process before being used as inputs are called intermediate industries. For example, chemicals, medicine, jute etc.
(d) Consumer Goods industry:
Consumer industries are such industries whose products are used as final consumption. These industries are divided into two divisions:
(i) Durable consumer goods industry: T.V. sets, motorcar, scooter, furniture, refrigerator etc can be used for a long period. Industries producing such types of goods are called durable consumer goods industries.
(ii) Non-durable consumer industry: Bread, butter and other ready-made food products cannot use for long time. Industries producing such goods are called non-durable consumer goods industries.
(3) Classification on the basis of ownership:
Classification of industries is made on the basis of ownership also:
(a) Public sector industry: The industry, which is owned by the government, is called public sector industry. For example, railway in India is a public sector industry.
Public sector units are classified in three categories :
Departmental Industries : When government runs industrial units under its direct observation as its department and includes its income and expenditure provisions in budget is known as departmental industries. E.g., Railways, Post, etc.
Public Corporations : Industries which are owned by central or state government but administration is under independent control of corporation. And the administration process, the decision process is under strong influence of government is known as public corporations. E.g., Life Insurance Corporation, State Transport Corporation, Air India and fertilizer producing and selling units are known as public corporations.
Joint Stock Companies : Industries which are managed by government like private companies within framework of prevailing company laws, for which government raises capital by issuing and selling shares to the people or institutes are known as joint stock companies. These units are not working under direct controls of government. These types of industries are different from departmental industries and public corporations. E.g., Bharat Heavy Electricals Limited (BHEL), Oil and Natural Gas Corporation Limited (ONGC), Indian Oil Corporation (IOC), etc.
(b) Private sector industry: Private sector industry includes units of individual ownership, partnership. i.e, Industrial units which are owned and managed by private sector are known as private sector industries. E.g., Car, TV, Shoe making units.
(c) Joint sector industry: the industrial units, which are owned by the government as well as private individuals jointly, are called joint sector industries. But in this type of units, government has given up ownership rights of industry to people and institutes 51% or more. For example, Hindustan Petrol Chemicals Ltd. (HPCL) is a joint sector industrial unit also.
(d) Co-operative sector industries: Industries run on co-operative activities like to stop exploitation of small owners, to stop exploitation of laboures or to stop exploitation of consumers and to provide benefit to all are known as industries of co-operative sector. Shops of daily used commodities, dairies, several banks have administration on co-operative bases. E.g., IFFCO, KRIBHCO.
(4) Classification on the basis of laws:
Industries can be classified on the basis of industrial laws as follow:
- The industries, which are governed by industrial law. They are also called manufacturing industries. Their process of production is done in factories or industries.
- The industries, which are not governed by industrial laws. They can be called cottage industries in which production is done in residential houses or somewhere near the house.