Classification of Industries

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A leading, industrially advanced developing country, India has large, medium and small industrial units of production in almost all branches of the industry. Since the time of the independence in 1947, a significant feature of the Indian economy has been the rapid growth of the small industry sector. The small industry sector is considered to have a major role in the Indian economy due to its 40 percent share in the national industrial output along with an 80 percent share in industrial employment and nearly 35 percent share in exports. The small scale industries sector has been assigned an important role in the industrialization of the country by the previous and current governments of India.

There are no clear official definitions of small scale industry. Small scale industries are usually distinguished from the large-scale and medium-scale industries on the basis of size, capital resources and labor force in the units. At one time the government of India had grouped small-scale industrial undertakings into two categories - those using power but employing less than 50 persons and those not using power and employing less than 100 persons. However, capital investment on plant and machinery by units is considered as main criteria for distinguishing between the large and small industries. An industrial unit can be classified as a small-scale unit only if it meets the capital investment limits set by the government of India (GoI)


➢ USE based

➢ Process on product

➢ Capital investment

➢ Input

➢ Ownership

➢ Pollution control board of India

• Use Based Classification

• Basic industries
• Capital Goods industries
• Intermediate Goods industries
• Consumer Goods industries


Basic industries are those industries which provide essential inputs for the development of other industries and the economy. In other words, these are industries which provide bases for development of other industries. For example, the iron and steel industry forms a basis for the development of the engineering industry. Fertilizer is regarded as basic input for the agriculture. Coal, oil and electricity are also regarded as basic industries because growth of modern industry depends on the supply of these vital inputs.


Capital goods industries are those industries which produce machinery, equipment or tools. A capital good is one which is instrumental in producing other goods or services. The capital goods do not directly serve any consumption requirement. They are used to produce consumer goods (and other goods) and services. The capital goods industries are capital intensive in nature, i.e., they require heavy capital investment

E.g. Hand tools and machine tools, specialized equipments, Electric Motors, Heavy Vehicles etc.


Intermediate goods are goods which have already undergone manufacturing process but which form inputs for other industries as material for further processing, part or component.

E.g. Cotton Spinning, Tyers & Tubes, Manmade fibers, Bolts, nuts, screws, spring Metal etc


The consumer goods industries are those industries the output of which serve the final consumption requirements. The consumer goods may be broadly classified into Consumer Durables and Consumer Non-durables. Consumer non-durables are those goods which are used up at once or within a relatively short period, like food stuffs, cigarette, soap, electric bulb, elc. Consumer durables, on the other hand, serve the consumers over a relatively long period, like car, bicycle, electric fan, television, refrigerator, etc. A distinguishing characteristic of the consumer...
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