Industry

It refers to production of handy craft to aircraft. It is a group of organizations involved

in producing/manufacturing or handling the same type of product or service. It is a part of the
secondary activity. In a nutshell, industry can be defined as:

1. production of goods

2. extraction of minerals

3. provision of services

Classification of Industries:

1. On the basis of raw material

a. Agro-based Industries

It uses plants and animals based products as their raw materials.

b. Mineral based industries

It is based on mining and use mineral ore as raw materials and are used for heavy machinery and building materials.

c. Marine based industries

It uses raw material from the forest like wood.

2. On the basis of Size

a. Small-scale industries

It has less capital and technology invested in them with less labor. It is also known as cottage industry.

b. Large scale industry

It is the exact opposite of small scale industries with the large amount of capital invested and advanced technology used.

Cottage Industry	Large Scale Industry
It is based on leisure time.	It is based on operation of 24 hours.
The production occurs in small scale.	The production occurs in large scale.
There is use of local raw materials.	There is use of excessive raw materials imported from every place.
There is participation of family members.	There is large number of participation.
There is use of traditional tools.	There is use of modern machines and tools.
There is low amount of investment.	There is high amount of investment.
There is supply on local level.	There is supply on global level

3. On the basis of Ownership:

a. Private sector

It is owned and operated by an individual or group of individuals.

b. Public Sector

It is owned and managed by the government.

c. Joint Sector Industries

It is jointly operated by the state and the government.

d. Cooperative Sector Industries

It is operated by the suppliers, producers or workers.

Factors influencing the location of industries:

1. Physical factors

a. Raw materials

Modern industry is so complex that a wide range of raw materials is necessary for its growth and production of goods. Sometimes the industry of location is simply determined by the location of raw materials. Industries which use heavy and bulky raw materials in their primary stage in larger qualities are usually located near the supply of the raw materials.

b. Power

Regular source of power is the requirement for the most of the industries. Most of the industries tend to be located at the source of power. The main source of power is coal, mineral oil and hydroelectricity.

c. Accessibility

The site of new factory needs to be accessible so that importing of raw materials and exporting of finished product is easy, safe and at low cost.

d. Water

Many industries are established near rivers, canals and lakes because of water.

e. Climate

Harsh climate is not much suitable for the establishment of industries. There can be no industrial development in extremely hot, humid or dry or cold climate that is why there is no industries in mountainous region of Nepal.

f. Site

Generally, site should be flat, well adequate transport facilities and cheap. 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 risen in urban centers.

2. Socio-Economic Factors

a. Capital

Modern industries are capital intensive and require huge investment. Companies cannot set up their chosen industry without investment of money. Capitalist are available in urban centers and this is why big industries are located in urban centers.

b. Government Policies

Government can greatly influence the location of industry by giving tax incentives, cheap rent and other benefits, reducing regional disparities and eliminating air and water pollution in certain areas of the country.

c. Labor Supply

It is important in two aspects:

a. Workers in large numbers are often required.

b. People with skill or technical expertise are needed.

Labor intensive industries are located inside the cities because there is a huge pool of potential workers.

d. Market

The entire process of manufacturing is useless until the finished goods reach the market. Nearness to market is essential for quick selling of manufacture goods because it helps in reducing the transport cost and enables the consumer to get things at cheaper cost.

e. Banking facilities

Establishment of industries involves daily exchange of crores of rupees which is possible through banking facilities. So the areas with better banking facilities are better suited to the establishment of industries.