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Export income:

• As agriculture sector increased it also led to the development of industrial sector. When the volume of industrial production increased, the surplus started getting exported. This earned us export income. Foreign exchange also helps to import products that are scarce.
• In 2013-2014, about 2/3rd of export income was earned through industries.

Special Economic Zone (SEZ):

• A Special Economic zone (SEZ) is an area in which business and trade laws are different from the rest of the country. It is created to increase trade, increase investment, job creation, provide tax benefits and for effective administration.
• In India, Special Economic Zone (SEZ) was implemented from 1st April 2000.
• The main objective of setting up SEZ in India was to attract foreign investment and to develop free environment for exports.
• SEZ is implemented to make Indian industrial sectors compete with world economy and hence to increase our exports.
• To attract foreign investors the government provide various tax benefits for people who set-up their industries in special economic zones.
• There are also some special economic zones which were developed from the model of special economic zones of China. These SEZs helped a lot to develop export oriented producing sector with foreign direct investment (FDI).
• Countries like China, India, Jordan, Poland, Philippines, Russia and North Korea have made good use of special economic zones.

Government drafts laws like Industries Act, Company Act, Competition Act, etc. to prevent unfair competition.

Government provides basic facilities like road, water, electricity, banks, insurance, sewage and many more to develop industries. By availing these basic facilities industries can save their money, time and efforts and produce and sell products faster and more efficiently.

Technical skills and training:

• Government provides various types of technical and professional training to domestic industries. This helps them to upgrade their products and services at par with international products which in turn helps the local industries to compete against the foreign products.
• These trainings were given largely during the period of liberalization and globalization.
• By such trainings the government makes the local industries aware about new global technologies, goods, selling techniques, management, etc.
• Technical skills also help to create values in the domestic industries.

Small scale industries (SSI):

• Industries that run on labour intensive production technique and with an investment of ₹ 25 lakhs to ₹ 5 crores are called small scale industries (SSI).
• These industries work as ancillary industries for bigger industries.

Example:
Industries producing tools and simple consumer goods like bread and biscuits, furniture, garments, etc.

Change in social structure:

• Industrialization also brings certain important changes in the social set-up.
• Industrialization develops feeling of discipline, hard work, competition, team work, self-dependency, co-operation, understanding and innovation among people.
• With development of such positive traits, negative traits like blind beliefs, fatalism, narrow psychology, orthodox behaviour, etc.
• These types of social changes inspire people to attain economic development

Basic facilities provided by the government are roads, water, electricity, banks, insurance, sewage, etc.

• Small scale industries have noticeable role in exports of India.
• Small scale industries of India had exported goods and services worth Rs. 29,068 crores in 1994-95. It reached to ₹ 71,244 crores in the years 2001-02 and it rose to ₹ 1,77,600 in the year 2006-07.
• The numbers tell that small scale industries helps India earn a huge foreign exchange. This is extremely beneficial for India to manage import-export balance.

Saves foreign exchange:

• Small scale industries, on one hand, generate export incomes and on the other hand reduce India’s import expenditure by producing many necessary goods locally.
• This helps to improve balance of payment and save spending foreign exchange unnecessarily.

High rate of development:

• Large scale industries are few. Also they invest very huge capital and so they need high profits to run their expenses.
• These industries develop the economy at an irregular rate because they cannot change their products and production methods as per the changes of market.
• Contrast to this, small scale industries are set up with small amount of capital. So, several producers are producing a given product. This increases the volume of production and income in the economy.
• Additionally, small scale industries are more capable to bring change in products and production techniques as per market changes because they do not need very huge capital or long term investment.
• Owing to these benefits small scale industries give very high rate of development highly needed to develop nation.

India has set up 8 Special Economic Zones (SEZs). They are:

1. Santa Cruz (Maharashtra)
2. Kochin (Kerala),
3. Kandla (Gujarat)
4. Surat (Gujarat)
5. Chennai (Tamil Nadu)
6. Visakhapattanam (Andhra Pradesh)
7. Falta (West Bengal)
8. (Noida (Uttar Pradesh)

Economic help:

• Government provides various types of economic helps to industries to reduce their production cost.
• This helps the domestic industries to reduce their production costs and sell their products in international market at competitive prices with products of other countries.
• The various forms in which the government provides economic help could be providing concession on land rates, water, electricity, telephone, transport charges, etc. It may also provide finance at a subsidized rate and various other subsidies.

Correct option is (C) Saudi Arabia

Types of industries on the basis of investment:

On the basis of investment, industries are classified into five types. They are discussed below.

1. Cottage industry:

An industry run only by the family members using simple tools and with very less use of electricity, machine and investment is called cottage industry.

Example:
Industries producing khadi cloth, papad, khakhra, incense sticks, etc.

2. Tiny industries:

Industries which run on labour intensive production technique along with the investment limit up to ? 25 lakhs are known as tiny industries.

Example:
Industries producing artistic products made from metal, leather and clay.

3. Small scale industries (SSI):

• Industries that run on labour intensive production technique and with an investment of ₹ 25 lakhs to ₹ 5 crores are called small scale industries (SSI).
• These industries work as ancillary industries for bigger industries.

Example:
Industries producing tools and simple consumer goods like bread and biscuits, furniture, garments, etc.

4. Medium scale industries:

Industries that run on either labour intensive production technique or capital intensive production technique and with an investment of ₹ 5 crores to ₹ 10 crores are known as medium scale industries.

Example:
Industries producing machinery, chemicals, electronic equipment, etc.

5. Large scale industries:

Industries that run on capital intensive production technique and with an investment of more than ₹ 10 crores are known as large scale industries.

Example:
Industries producing railway coaches and engines, big vehicles, iron and steel, petroleum, etc.

Industries on the basis of ownership can be divided as follows:

1. Public Sector Units (industries):

Industries which are owned and managed by the government or say the industries that have ownership and administration of government are known as Public Sector Units (PSUs).

Example:
Railways, Telecommunication, Post, Insurance, etc.

Public sector units are further classified in three categories.

They are:

(A) Departmental industries:

• The industries run, financed and managed by government departments are called departmental industries.
• The minister of the specific department is the ultimate in-charge of such an enterprise. Civil servants look after the operations.
• Government decides the management of expenditure and income of such industries through its budget.

Example:
Railways, post and telegraph, radio and television broadcasting, etc.

(B) Public corporations:

• An industrial unit owned by either central or state government but established for administering certain public programs or for a specific purpose is called a public corporation.
• Government plays the supreme role in administratipn and decision of such industries.

Example:
Life Insurance Corporation (LIC), state transport corporation, Air India and fertilizer producing and selling units are examples of public corporations.

(C) Government company:

• A company owned by central and/or state government is called a government company. It operates as per the Company Law, 2013.
• Either whole of the capital or majority of the shares are owned by the government. In some cases, private investment is also encouraged but at least 51% shares are held by the government.
• These units do not work under direct control of government.

Example:
Hindustan Machine Tools, Oil and Natural Gas Limited, Indian Oil Corporation, etc.

2. Private sector industries:

• Industrial units owned and run by private sector or say private owners are known as private sector industries.
• Such industries might be owned by private individuals or partners.

Example:
Units manufacturing car, TV, shoes, etc.

3. Joint sector industries:

• Industries owned jointly by the government and the private individuals who have contributed in the capital and managed by private individuals are called joint sector industries.
• Government gives ownership rights of such industries to people and institutes but holds 51% or more shares of that company. So, even when the industry is a joint sector one, the government has the control over it.

Example:
Gujarat State Petroleum Corporation (GSPC).

4. Co-operative Sector Industries:

Industries that run on co-operative basis with an aim to stop exploitation of small (marginal) owners, to stop exploitation of laborers or to stop exploitation of consumers and to provide benefit to all are known as industries of co-operative sector.

Example:
Amul, IFFCO, KRIBHCO, etc.

Types of industries on the basis of products:

1. Consumers goods industries:

Industries that produce goods used directly by the consumers are called consumer goods industries.

Example:
Industries producing ghee, oil, cosmetics such as soaps and shampoo, etc.

2. Intermediate goods industries:

Industries producing semi-finished goods that are not consumed directly by the consumers but are sent to other industries for further processing are called intermediate goods industries.

Example:
Industries producing yarn, steel sheets, machines, etc.

Increase in production units (industries):

• Rise in production is only possible with rise in production units i.e. rise in number of industries.
• India had 79.60 lakh small industrial units in 1994-95. It increased to 105.21 lakhs in 2001-02. It then rose to 447.73 lakhs units in 2011-12.
• The number clearly shows that development of small scale industries has led India towards industrialization.

China, India, Jordan, Poland, Philippines, Russia and North Korea.

A Special Economic Zone (SEZ) is an area in which business and trade laws are different from the rest of the country. It is created to increase trade, increase investment, job creation, provide tax benefits and for effective administration.

Industrialization is extremely important in order to develop agriculture sector, to increase employment opportunities, to attain optimum utilization of internal resources, to have quick increase in income and to improve living standard of people.

Following points discuss in detail the importance of industrialization in various areas:

1. Contribution in national income:

• At the time of independence, agriculture sector dominated in India because India was an agriculture oriented country from the very beginning.
• After the development of industries, the agriculture economy was reduced and the contribution of industries increased in comparison with agriculture.
• Government has put various systematically planned efforts to boost the economy which in turn has increased share of industries in national income.
• In the year 1951, industrial sector had contributed 16.6% in national income. This rose to 27% (at constant prices) in the year 2013-14.

2. Employment:

• India is a highly populated nation. The country is not able to provide employment to its entire labour force. However, India has increased employment opportunities with the planned efforts in the development of industrial sectors.
• Through the planned effort in industrial sector, India has increased employment opportunities.
• In the year 1951, 10.6% labourers were employed in industries. It rose to 24.3% in 2011-12.
• There was a rapid increase in small scale industries which mainly work on labour intensive methods. With increase in small scale industries employment problem has been solved to a great extent. This can be further increased by proper planning.

3. Export income:

• As agriculture sector increased it also led to the development of industrial sector. When the volume of industrial production increased, the surplus started getting exported. This earned us export income. Foreign exchange also helps to import products that are scarce.
• In 2013-2014, about 2/3rd of export income was earned through industries.

4. Balanced economic development:

• Industries pay a very important role to attain speedy and balanced economic growth.
• Government establishes several public sector enterprises in less developed or backward areas to increase employment opportunities and to raise iiie standard of living of that area.
• When the basic needs of people are satisfied, they move towards savings and buying luxurious products. This gives rise to industries involved in such services and products.
• Thus, along with the industries for primary commodities the demand of industries related to luxury and entertainment increases.

5. Modernization of agriculture:

• It becomes extremely important to modernize agriculture in order to increase development of agriculture sector and to increase land and labor productivity.
• Industries can provide technology to help in the development of agriculture sector. Some of the commonly used modern machines in agriculture are tractor, thresher, submersible pumps, equipment to spray pesticides, etc.
• Chemical based fertilizer, pesticides, etc. are also produced by industries.
• Hence, it can be said that by the use of modern technology, development of agriculture sector become possible.

6. Strengthens the structure of economy:

• Industries produce products like iron and steel, cement, etc. which are useful to build infrastructure such as dams, roads, bridges, etc.
• These industries also produce vehicles such as buses, trucks, railway, plane, car, two wheelers, etc. used for transportation.
• Instruments of safety-protection i.e. arms and ammunition such as rifles, bullets, tanks, etc. are also produced by industries. This reduces dependency on other nations and makes our nation much stronger.
• So, industries form a base for strengthening the structure of our economy.

7. Change in social structure:

• Industrialization also brings certain important changes in the social set-up.
• Industrialization develops feeling of discipline, hard work, competition, team work, self-dependency, co-operation, understanding and innovation among people.
• With development of such positive traits, negative traits like blind beliefs, fatalism, narrow psychology, orthodox behaviour, etc.
• These types of social changes inspire people to attain economic development.

Correct option is (B) To attract foreign investors

Correct option is (C) Mulund (Mumbai)

Short period of time:

• Small scale industries can be started within very short time.
• A very big advantage is that these industries can start producing goods within a very short time of investment. This helps to quickly overcome scarcity of goods.
• Shorter set-up and production time are the key factors to achieve production targets of the nation.

Decentralization:

• Large scale industries need very large amount of capital. So, they can be started only by very few people who are extremely rich. This results in centralization of capital and wealth.
• In case of small scale industries very less amount of capital is needed and so it can be started by small producers.
• Moreover, small scale industries can also make use of such resources and equipment which are otherwise dormant, unutilized and scattered. As a result, resources of every nook and corner are put into use and hence overall production volume increases.
• When such resources are used for production, they generate employment and income for people who were otherwise deprived.
• In all these senses we can say that small scale truly does the task of decentralization.

The main objective of setting up SEZ in India was to attract foreign investment and to develop free environment for exports.

Special Economic Zone (SEZ):

• A Special Economic zone (SEZ) is an area in which business and trade laws are different from the rest of the country. It is created to increase trade, increase investment, job creation, provide tax benefits and for effective administration.
• In India, Special Economic Zone (SEZ) was implemented from 1st April 2000.
• The main objective of setting up SEZ in India was to attract foreign investment and to develop free environment for exports.
• SEZ is implemented to make Indian industrial sectors compete with world economy and hence to increase our exports.
• To attract foreign investors the government provide various tax benefits for people who set-up their industries in special economic zones.
• There are also some special economic zones which were developed from the model of special economic zones of China. These SEZs helped a lot to develop export oriented producing sector with foreign direct investment (FDI).
• Countries like China, India, Jordan, Poland, Philippines, Russia and North Korea have made good use of special economic zones.

India has set up 8 Special Economic Zones.
They are:

1. Santa Cruz (Maharashtra),
2. Kochin (Kerala),
3. Kandla (Gujarat)
4. Surat (Gujarat),
5. Chennai (Tamil Nadu),
6. Visakhapattanam (Andhra Pradesh),
7. Falta (West Bengal) and
8. (Noida (Uttar Pradesh)

Any individual, government, private and public sector jointly, state government or their representative body may start special economic zone. Even foreign institution can start special economic zone.
All special economic zones are ultimately controlled by government.

Correct option is (C) 8

Balanced regional development:

In contrast to large scale industries, small scale industries can be started with less capital, less material and less resources at any part of nation. This is a unique advantage since the development does not remains concentrated to large cities and can be spread to any region the nation wishes. This results in balanced regional development.
This unique advantage also helps to reduce imbalance between rich and poor and developed and developing regions.

Correct option is (A) 1st April, 2000

Establishing various institutions and policies:

• Government makes industrial policies and also makes necessary changes time to time to help industries grow properly.
• Government frames several favourable policies like import policy, export policy, monetary policy, fiscal policy, tax policy, etc.
• Government drafts laws like Industries Act, Company Act, Competition Act, etc. to prevent unfair competition.
• Government has also created institutions such as IDBI, SIDBI, ICICI, IFCI, GIC, etc. to provide financial help to various industries.
• It also makes efforts and policies to attract roreign investment in India.

Balanced economic development:

• Industries pay a very important role to attain speedy and balanced economic growth.
• Government establishes several public sector enterprises in less developed or backward areas to increase employment opportunities and to raise life standard of living of that area.
• When the basic needs of people are satisfied, they move towards savings and buying luxurious products. This gives rise to industries involved in such services and products.
• Thus, along with the industries for primary commodities the demand of industries related to luxury and entertainment increases.

Import tariff:

• The rate of import duty (tax) charged for importing the goods is called the import tariff.
• To save the local companies from foreign companies, the government charges high import duty on foreign goods. This makes imported items costlier than the local made. As a result, the local industries can survive properly.

Correct option is (A) Due to import tariff

Departmental industries are a type of public sector units. These industries are run, financed and managed by government departments i.e. the expenditure and income budget is decided by the government. E.g. Railways, post and telegraph, radio and television broadcasting, etc

Economic help provided by the government helps the domestic companies to reduce their production cost and sell their products in international market at competitive prices. This benefits domestic products to increase the demand/market share in the international market.

Technical skills and trainings are important for survival of the domestic companies in India especially after liberalization and globalization. These skills and trainings help to improve the local products so that they can compete with foreign products in the market which in turn benefits our economic growth.

Correct option is (D) All of these

joint sector industries:

• Industries owned jointly by the government and the private individuals who have contributed in the capital and managed by private individuals are called joint sector industries.
• Government gives ownership rights of such industries to people and institutes but holds 51% or more shares of that company. So, even when the industry is a joint sector one, the government has the control over it.

Example: Gujarat State Petroleum Corporation (GSPC).

Correct option is (B) Reduce their production cost

A company owned by central and/or state government is called a government company. It operates as per the Company Law, 2013. Either whole of the capital or majority of the shares are owned by the government. E.g. Hindustan Machine Tools, Oil and Natural Gas Limited, Indian Oil Corporation, etc

Correct option is (C) Cooperative sector industries

Industries owned jointly by the government and the private individuals who have contributed in the capital and managed by private individuals are called joint sector industries. E.g. Gujarat State Petroleum Corporation (GSPC).

Correct option is (B) Intermediate goods industry

The rate of import duty (tax) charged for importing the goods is called the import tariff.

Industrial units owned and run by private sector or say private owners are known as private sector industries. E.g. Units manufacturing car, TV, shoes, etc.

Encouragement to private sector industries:

• To encourage private sectors, government provide various type of assistance to private individuals like purchasing land at concessional rate, electricity, water, tax benefits and finance at lower rates.
• This way government encourages competition and creates a favourable market environment.
• Government has also given entry to private sector in several areas which initially were restricted to public sector only.

Industries that run on co-operative basis with an aim to stop exploitation of small (marginal) owners, to stop exploitation of labourers or to stop exploitation of consumers and to provide benefit to all are known as industries of co-operative sector. E.g. Amul, IFFCO, KRIBHCO, etc.

Industries that produce goods used directly by the consumers are called consumer goods industries. E.g. Industries producing ghee, oil, cosmetics such as soaps and shampoo, etc

1. Contribution in national income:

• At the time of independence, agriculture sector dominated in India because India was an agriculture oriented country from the very beginning.
• After the development of industries, the agriculture economy was reduced and the contribution of industries increased in comparison with agriculture.
• Government has put various systematically planned efforts to boost the economy which in turn has increased share of industries in national income.
• In the year 1951, industrial sector had contributed 16.6% in national income. This rose to 27% (at constant prices) in the year 2013-14.

2. Employment:

• India is a highly populated nation. The country is not able to provide employment to its entire labour force. However, India has increased employment opportunities with the planned efforts in the development of industrial sectors.
• Through the planned effort in industrial sector, India has increased employment opportunities.
• In the year 1951, 10.6% labourers were employed in industries. It rose to 24.3% in 2011-12.
• There was a rapid increase in small scale industries which mainly work on labour intensive methods. With increase in small scale industries employment problem has been solved to a great extent. This can be further increased by proper planning.

3. Export income:

• As the agriculture sector increased it also led to the development of industrial sector. When the volume of industrial production increased, the surplus started getting exported. This earned us export income. Foreign exchange also helps to import products that are scarce.
• In 2013-2014, about 2/3rd of export income was earned through industries.

Government promotes private sector industries by providing land at concessional rate, providing electricity, water, tax benefits and finance at lower rates.

Types of industries on the basis of investment:

On the basis of investment, industries are classified into five types.

They are discussed below.

1. Cottage industry:

An industry run only by the family members using simple tools and with very less use of electricity, machine and investment is called cottage industry.

Example:
Industries producing khadi cloth, papad, khakhra, incense sticks, etc.

2. Tiny industries:
Industries which run on labour intensive production technique along with the investment limit up to ₹ 25 lakhs are known as tiny industries.

Example:
Industries producing artistic products made from metal, leather and clay

3. Small scale industries (SSI):

• Industries that run on labour intensive production technique and with an investment of ₹ 25 lakhs to ₹ 5 crores are called small scale industries (SSI).
• These industries work as ancillary industries for bigger industries.

Example:
Industries producing tools and simple consumer goods like bread and biscuits, furniture, garments, etc.

4. Medium scale industries:

Industries that run on either labour intensive production technique or capital intensive production technique and with an investment of ₹ 5 crores to ₹ 10 crores are known as medium scale industries.

Example:
Industries producing machinery, chemicals, electronic equipment, etc.

5. Large scale industries:

Industries that run on capital intensive production technique and with an investment of more than ₹ 10 crores are known as large-scale industries.

Example:
Industries producing railway coaches and engines, big vehicles, iron and steel, petroleum, etc.