Establishment of industries can be done only in those places where necessary geographical conditions are available for their development. 

The factors affecting the location and development of industries are given below:

1. Raw materials: The availability of raw-materials is the base of the development of every industry. Therefore, most of the industries are located or established where enough raw – materials are found easily. The industries in which heavy, cheaper and such raw – materials are used that lose weight during manufacturing have similar tendency. Most of iron – steel industries are set up near the coal mines and iron mines. Industries based on fast spoiling raw materials such as fruits vegetables, milk, fish are established near the spots where enough raw – materials are available. 

2. Means of power: Production of any kind of goods requires major sources of power including coal, petroleum, hydro-electricity, gas and nuclear energy Heavy industries like iron-steel are located and centralised near the coal mines. Aluminium industry needs clean and fresh water, so it is established near water resources and reservoirs. 

3. Transport and communication: The cost of transportation has an important place in every type of industry. Transport is essential to bring raw – materials to factories and to send products to the market. Means of communication is also important for any kind of production. 

4. Market: The most important factor in establishing an industry is the availability of market for the sale of its produce(s). A large purchasing power and densely populated area provides a good market to any kind of production. 

5. Skilled workers: There is no possibility of any kind of industry without availability of skilled workers. In spite of rapid machanisation of industries, demand of skilled labourers is still very important. Skilled and technocrates are always in demand. 

6. Capital: Capital is the most important for all types of trades and economic activities. Without enough capital, no factory can be established, no raw material can be purchased, no worker can be hired and no machine can be installed and used. Hence, there can be no production in absence of capital. 

7. Water supply: There are many industries which need enough supply of clean and fresh water. A lot of water is used in iron and steel industry, textile industry, paper industry, leather industry, atomic power houses, etc. 

8. Climate: Pleasant and healthy climate increases the working efficiency of the workers. Different industries require different types of climate. The cotton textile industry demands wet/humid climate, but film industry prefers cloudless sky. 

9. High – technology: It is high technology which makes it possible to maintain the quality of manufacturing, to control the disposal of waste and pollution. 

10. Government Policy: Policies of government also affect the development of industries. Taxation, licensing policy, etc. affect the industry. 

11. Other factors: Affordable land, political stability, law and order and banking and insurance are other factors that affect the establishment of industry.