Chapter 6 — Manufacturing Industries

What manufacturing is

Production of goods in large quantities after processing from raw materials to more valuable products is called manufacturing. Paper is manufactured from wood, sugar from sugarcane, iron and steel from iron ore and aluminium from bauxite.

People employed in the secondary activities manufacture the primary materials into finished goods. The workers employed in steel factories, car, breweries, textile industries, bakeries etc. fall into this category.

Why it is the backbone of development

Manufacturing sector is considered the backbone of development in general and economic development in particular, mainly because:

• Manufacturing industries help in modernising agriculture, which forms the backbone of our economy.
• Industries reduce the heavy dependence of people on agricultural income by providing them jobs in secondary and tertiary sectors.
• Industrial development is a precondition for eradication of unemployment and poverty from our country. This was the main philosophy behind public sector industries and joint sector ventures in India. It was also aimed at bringing down regional disparities by establishing industries in tribal and backward areas.
• Export of manufactured goods expands trade and commerce, and brings in much needed foreign exchange.
• Countries that transform their raw materials into a wide variety of finished goods of higher value are prosperous.

Agriculture and industry move together

Agriculture and industry are not exclusive of each other. They move hand in hand. For instance, the agro-industries in India have given a major boost to agriculture by raising its productivity. They depend on the latter for raw materials and sell their products such as irrigation pumps, fertilisers, insecticides, pesticides, plastic and PVC pipes, machines and tools, etc. to the farmers.

The National Manufacturing Competitiveness Council (NMCC) has been set up with the objective of improving productivity, since it is the manufacturing industry that not only sustains growth but also drives it.

What decides where an industry goes

Industrial locations are complex in nature. These are influenced by availability of raw material, labour, capital, power and market, etc. It is rarely possible to find all these factors available at 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 lower cost.

After an industrial activity starts, urbanisation follows. Sometimes, industries are located in or near the cities. Thus, industrialisation and urbanisation go hand in hand. Cities provide markets and also provide services such as banking, insurance, transport, labour, consultants and financial advice, etc. to the industry.

Agglomeration economies

Many industries tend to come together to make use of the advantages offered by the urban centres known as agglomeration economies. Gradually, a large industrial agglomeration takes place.

The five classifications

1. On the basis of source of raw materials used: Agro based - cotton, woollen, jute, silk textile, rubber and sugar, tea, coffee, edible oil. Mineral based - iron and steel, cement, aluminium, machine tools, petrochemicals.
2. According to their main role: Basic or key industries which supply their products or raw materials to manufacture other goods e.g. iron and steel and copper smelting, aluminium smelting. Consumer industries that produce goods for direct use by consumers - sugar, toothpaste, paper, sewing machines, fans etc.
3. On the basis of capital investment: A small scale industry is defined with reference to the maximum investment allowed on the assets of a unit. Investment more than the specified limit makes it a large scale industry.
4. On the basis of ownership: Public sector, owned and operated by government agencies - BHEL, SAIL etc. Private sector industries owned and operated by individuals or a group of individuals - TISCO, Bajaj Auto Ltd., Dabur Industries. Joint sector industries which are jointly run by the state and individuals or a group of individuals - Oil India Ltd. (OIL). Cooperative sector industries are owned and operated by the producers or suppliers of raw materials, workers or both - the sugar industry in Maharashtra, the coir industry in Kerala.
5. Based on the bulk and weight of raw material and finished goods: Heavy industries such as iron and steel and light industries that use light raw materials and produce light goods such as electrical industries.

Why textiles matter

Textile industry occupies unique position in the Indian economy, because it contributes significantly to industrial production, employment generation and foreign exchange earnings. It is the only industry in the country, which is self-reliant and complete in the value chain i.e., from raw material to the highest value added products.

Cotton textiles

In ancient India, cotton textiles were produced with hand spinning and handloom weaving techniques. After the 18th century, power-looms came into use. Our traditional industries suffered a setback during the colonial period because they could not compete with the mill-made cloth from England.

In the early years, the cotton textile industry was concentrated in the cotton growing belt of Maharashtra and Gujarat. Availability of raw cotton, market, transport including accessible port facilities, labour, moist climate, etc. contributed towards its localisation.

The first successful textile mill was established in Mumbai in 1854. The two world wars were fought in Europe, India was a British colony. There was a demand for cloth in U.K. hence, they gave a boost to the development of the cotton textile industry.

The spinning-weaving imbalance

While spinning continues to be centralised in Maharashtra, Gujarat and Tamil Nadu, weaving is highly decentralised to provide scope for incorporating traditional skills and designs of weaving in cotton, silk, zari, embroidery, etc.

India has world class production in spinning, but weaving supplies low quality of fabric as it cannot use much of the high quality yarn produced in the country. There are some large and modern factories in these segments, but most of the production is in fragmented small units, which cater to the local market. This mismatch is a major drawback for the industry. As a result, India exports yarn in large quantities.

Problems of the industry

The other problems are erratic power supply, obsolete machinery, low output of labour and stiff competition with the synthetic fibre industry.

Jute textiles

India is the largest producer of raw jute and jute goods. The first jute mill was set up near Kolkata in 1855 at Rishra. After partition in 1947, the jute mills remained in India but three-fourth of the jute producing area went to Bangladesh.

Most of the mills are located in West Bengal, mainly along the banks of the Hugli river, in a narrow belt. Factors responsible for their location in the Hugli basin are: proximity of the jute producing areas, inexpensive water transport, supported by a good network of railways, roadways and waterways, abundant water for processing raw jute, cheap labour from West Bengal and adjoining states, and Kolkata as a large urban centre providing banking, insurance and port facilities.

Sugar industry

India stands second as a world producer of sugar but occupies the first place in the production of gur and khandsari. The raw material used in this industry is bulky, and in haulage its sucrose content reduces.

Sixty per cent mills are in Uttar Pradesh and Bihar. This industry is seasonal in nature so it is ideally suited to the cooperative sector. In recent years, there is a tendency for the mills to shift and concentrate in the southern and western states, especially in Maharashtra. This is because the cane produced here has a higher sucrose content. The cooler climate also ensures a longer crushing season.

Why iron and steel is the basic industry

The iron and steel industry is the basic industry since all the other industries - heavy, medium and light, depend on it for their machinery. Steel is needed to manufacture a variety of engineering goods, construction material, defence, medical, telephonic, scientific equipment and a variety of consumer goods.

Production and consumption of steel is often regarded as the index of a country's development.

The inputs

It is a heavy industry because all the raw materials as well as finished goods are heavy and bulky entailing heavy transportation costs. Iron ore, coking coal and limestone are required in the ratio of approximately 4 : 2 : 1. Some quantities of manganese, are also required to harden the steel.

Where it is located

In 2019 India ranked 2nd among the world crude steel producers. It is the largest producer of sponge iron.

Most of the public sector undertakings market their steel through the Steel Authority of India Ltd. (SAIL). In the Chhota Nagpur plateau region there is the maximum concentration of iron and steel industries. It is largely, because of the relative advantages this region has for the development of this industry: low cost of iron ore, high grade raw materials in proximity, cheap labour, and vast growth potential in the home market.

Problems

• High costs and limited availability of coking coal.
• Lower productivity of labour.
• Irregular supply of energy.
• Poor infrastructure.

There is a need for modernisation of the industry and technology, along with improved efficiency. Liberalisation and Foreign Direct Investment have given a boost to the industry with the efforts of private entrepreneurs.

Aluminium smelting

Aluminium smelting is the second most important metallurgical industry in India. It is light, resistant to corrosion, a good conductor of heat, malleable and becomes strong when it is mixed with other metals. It is used to manufacture aircraft, utensils and wires. It has gained popularity as a substitute of steel, copper, zinc and lead in a number of industries.

Bauxite, the raw material used in the smelters is a very bulky, dark reddish coloured rock. Regular supply of electricity and an assured source of raw material at minimum cost are the two prime factors for location of the industry.

Chemical, fertiliser and cement

• Chemical industries: The chemical industry in India is fast growing and diversifying. It contributes approximately 3 per cent of the GDP. It is the third largest in Asia and occupies the twelfth place in the world in term of its size. It comprises both large and small scale manufacturing units. Inorganic chemicals include sulphuric acid, nitric acid, alkalies, soda ash and caustic soda. Organic chemicals include petrochemicals, which are used for manufacturing of synthetic fibers, synthetic rubber, plastics, dye-stuffs, drugs and pharmaceuticals. The chemical industry is its own largest consumer.
• Fertiliser industry: The fertiliser industry is centred around the production of nitrogenous fertilisers (mainly urea), phosphatic fertilisers and ammonium phosphate (DAP) and complex fertilisers which have a combination of nitrogen (N), phosphate (P), and potash (K). The third, i.e. potash is entirely imported as the country does not have any reserves of commercially usable potash or potassium compounds in any form.
• Cement industry: Cement is essential for construction activity such as building houses, factories, bridges, roads, airports, dams and for other commercial establishments. This industry requires bulky and heavy raw materials like limestone, silica and gypsum. Coal and electric power are needed apart from rail transportation.

Automobile and IT

Automobiles provide vehicle for quick transport of goods, services and passengers. After the liberalisation, the coming in of new and contemporary models stimulated the demand for vehicles in the market, which led to the healthy growth of the industry including passenger cars, two and three-wheelers.

The electronic industry covers a wide range of products from transistor sets to television, telephones, cellular telecom, pagers, telephone exchange, radars, computers and many other equipments required by the telecommunication industry. Bangalore has emerged as the electronic capital of India. A major impact of this industry has been on employment generation. Up to 31 March 2005, the IT industry employed over one million persons. It is encouraging to know that 30 per cent of the people employed in this sector are women. This industry has been a major foreign exchange earner in the last two or three years because of its fast growing Business Processes Outsourcing (BPO) sector.

The four kinds of pollution

Industries have four types of pollution: air, water, land and noise. The polluting industries also include thermal power plants.

Air pollution

Air pollution is caused by the presence of high proportion of undesirable gases, such as sulphur dioxide and carbon monoxide. Airborne particulate materials contain both solid and liquid particles like dust, sprays mist and smoke.

Smoke is emitted by chemical and paper factories, brick kilns, refineries and smelting plants, and burning of fossil fuels in big and small factories that ignore pollution norms. Toxic gas leaks can be extremely hazardous with long-term effects. Air pollution adversely affects human health, animals, plants, buildings and the atmosphere as a whole.

Water pollution

Water pollution is caused by organic and inorganic industrial wastes and affluents discharged into rivers. The main culprits in this regard are paper, pulp, chemical, textile and dyeing, petroleum refineries, tanneries and electroplating industries that let out dyes, detergents, acids, salts and heavy metals like lead and mercury, pesticides, fertilisers, synthetic chemicals with carbon, plastics and rubber, etc. into the water bodies.

Fly ash, phospo-gypsum and iron and steel slags are the major solid wastes in India.

Thermal and noise pollution

Thermal pollution of water occurs when hot water from factories and thermal plants is drained into rivers and ponds before cooling. Wastes from nuclear power plants, nuclear and weapon production facilities cause cancers, birth defects and miscarriages. Soil and water pollution are closely related.

Noise pollution not only results in irritation and anger, it can also cause hearing impairment, increased heart rate and blood pressure among other physiological effects. Unwanted sound is an irritant and a source of stress. Industrial and construction activities, machinery, factory equipment, generators, saws and pneumatic and electric drills also make a lot of noise.

Control measures

• Minimising use of water for processing by reusing and recycling it in two or more successive stages.
• Harvesting of rainwater to meet water requirements.
• Treating hot water and effluents before releasing them in rivers and ponds.
• Treatment of industrial effluents can be done in three phases: primary treatment by mechanical means, involving screening, grinding, flocculation and sedimentation; secondary treatment by biological process; and tertiary treatment by biological, chemical and physical processes, involving recycling of wastewater.
• Overdrawing of ground water reserves by industry where ground water table is falling rapidly must be regulated legally.
• Particulate matter in the air can be reduced by fitting smoke stacks to factories with electrostatic precipitators, fabric filters, scrubbers and inertial separators.
• Smoke can be reduced by using oil or gas instead of coal in factories.
• Machinery and equipment can be used and generators should be fitted with silencers. Almost all machinery can be redesigned to increase energy efficiency and reduce noise. Noise absorbing material may be used apart from personal use of earplugs and earphones.