In what different ways are the industries classified?

Classifying industries enable better-targeted policies from the Government of the land. Hence, industries are classified on a variety of criterion, major among them are:

On the basis of source of raw material-

I. Agro-based: cotton, woollen, jute, silk textile, rubber and sugar, tea, coffee, edible oil.

II. Mineral based: iron and steel, cement, aluminium, machine tools, pharmaceuticals.

According to their main role

I. Basic or key industries are those who supply their products as raw materials to manufacture other goods. E.g. iron and steel and copper smelting, aluminium smelting.

II. Consumer industries are those who produce goods for direct use by consumers – sugar, toothpaste, paper, sewing machines, fans etc.

On the basis of capital investment

I. A small scale industry is defined with reference to the maximum investment allowed on the assets of a unit. This limit has changed over a period of time. At present the maximum investment allowed is rupees one crore.

On the basis of ownership

I. Public sector, owned and operated by Government agencies – BHEL, SAIL, etc.

II. Private sector industries owned and operated by individuals or a group of individuals – TISCO, Bajaj Auto Ltd., Dabur Industries.

III. Joint sector industries which are jointly run by the state and individuals or a group of individuals. Oil India Ltd. (OIL) is jointly owned by public and private sectors.

IV. Corporate sector industries are owned and operated by the producers or suppliers of raw materials, workers or both. They pool in the resources and share the profits or losses proportionately. E.g. sugar industry in Maharashtra, coir industry in Kerala.

Based on the bulk and weight of raw material and finished goods

I. Heavy industries such as iron and steel

II. Light industries that use light raw materials and produce light goods such as electrical goods industries

Such varied forms of classification enable targeted developmental strategies for each type of industry. Without such differentiation of industries, the potential of each would not have been successfully realised.