Types of Industries

Types of Industries

Industries can be classified on the basis of

(a) Users: If the output is consumed by the final consumer, it is called a consumer goods sector. If the output is consumed by another producer, it is called a capital goods sector. There are industries that produce raw materials for other industries such as cement and steel. Such industries are called basic goods industries.

(b) Type of Inputs Used: Industries are also classified based on the kind of raw material used such as agro-processing, textiles sector, rubber products, leather goods, etc.

(c) Ownership: Firms may be privately owned, publicly owned (by the government, central or state), jointly owned by the private and public sector, joint sector or cooperatively owned (cooperatives).

(d) Size: Firms may be large, small or medium based on their volume of output, sales or employment or on the basis of the amount of investments made. There are also micro or tiny enterprises that are smaller than even small firms.

The small sector is seen as important for two reasons. One, it is believed to generate more employment than the large-scale sector, which is likely to use more advanced and automated technologies and therefore may not generate enough employment. Second, the small scale sector allows for a larger number of entrepreneurs to emerge from less privileged backgrounds.

Based on experiences of industrialisation in different parts of the world, it is believed that when small firms specialising in one sector are geographically concentrated in specific locations, and linked to one another through production and learning, they tend to be equally if not more efficient than large scale enterprises. Such agglomerations of small firms are called industrial clusters.