Classification of Industries

Industries can be classified into several groups.

The following figure gives an understanding
about them.
Large Scale Industry:
• Industries which employ a large number of labourers in each unit are
called large-scale industries. Cotton or jute textile industries are large
scale industries.

Medium Scale Industries:

• The industries which employ neither very large nor very small number
of labourers are put in the category of medium scale industries. Cycle
industry, radio and television industries are some examples of medium
scale industries.

Small Scale Industries:

• Industries which are owned and run by individuals and which employ a
small number of labourers are called small scale industries.
Heavy Industries:
• Industries which use heavy and bulky raw-materials and produce products of the same
category are called heavy industries. Iron and steel industry presents a good example of
heavy industries.
Light Industries:
• The light industries use light raw-materials and produce light finished products. Electric
fans, sewing machines are light industries.

Private Sector Industries:

• Industries owned by individuals or firms such as Bajaj Auto or TISCO are called private
sector industries.
Public Sector Industries:
• Industries owned by the state and its agencies like Bharat Heavy Electricals Ltd., or Bhilai
Steel Plant or Durgapur Steel Plant are public sector industries.
Joint Sector Industries:
• Industries owned jointly by the private firms and the state or its agencies such as Gujarat
Alkalies Ltd., or Oil India Ltd. fall in the group of joint sector industries.
Co-operative Sector Industries:
• Industries owned and run co-operatively by a group of people who are generally
producers of raw materials of the given industry such as a sugar mill owned and run by
farmers are called co-operative sector industries.
On the basis of source of raw materials, industries are classified as under:

1. Agro Based Industries:

Agro based industries are those industries which obtain raw-material from
agriculture. Cotton textile, jute textile, sugar and vegetable oil are
representative industries of agro-based group of industries
2. Mineral Based Industries:
The industries that receive raw materials primarily from minerals such as
iron and steel, aluminium and cement industries fall in this category.
3. Pastoral-Based Industries:
These industries depend upon animals for their raw material. Hides, skins,
bones, horns, shoes, dairy, etc. are some of the pastoral-based industries.
4. Forest Based Industries:
Paper card-board, lac, rayon, resin, tanning of leather, leave- utensils,
basket industries are included in this type of industries.
Village Industries:
• Village industries are located in villages and primarily cater to the needs of
the rural people. They usually employ local machinery such as oil extraction,
grain grinding and agricultural implements.
Cottage Industries:
• Industries which artisans set up in their own houses, work with wood, cane,
brass, stone, etc. are called cottage industries. Handloom, khadi and leather
work at the artisans house fall in this category.
Consumer Goods Industries:
• Consumer industries convert raw materials or primary products into
commodities directly used by the people. Textiles, bakeries, sugar, etc. are
some of the consumer goods industries.
Ancillary Industries:
• The industries which manufacture parts and components to be used by big
industries for manufacturing heavy articles like trucks, buses, railway
engines, tractors, etc. are called ancillary industries.
 Basic Industries:
• Industries on which depend many other industries for their
manufacturing processes are called basic industries. Iron and steel
industry and power generating industry are included in this category.

Capital-Intensive Industries:
• Industries requiring huge investments are called capital-intensive
industries. Iron and steel, cement and aluminium are outstanding
examples of capital-intensive industries.

Labour-Intensive Industries:
• Industries which require huge labour force for running them are called
labour-intensive industries. In these industries, labour is more important
than capital. Shoe- making and bidi-manufacturing, etc. are included in
these industries.
• In India significant changes in the organisation and structure of the
industries necessitated the revision of earlier classification.

• The revised classification called National Industrial Classification

(NIC) was completed in 1970 taking into account the principles
enunciated in the International Standard Industrial Classification
1968 Rev.2.

• The CSO finalized in 1987 the revision of the NIC 1970.

• At the one digit level there had not been any major changes in the
NIC 1987 as compared to the NIC 1970 and the economy remained
divided into 9 sections and the special section X “Activities not
Adequately Defined”.

• At the two digit level there had been an expansion of 8 divisions

bringing it to 72 divisions as against 64 in NIC 1970.
• National Industrial Classification 2008 (NIC-2008) is a revised
version of NIC-2004.
• Repair and installation of machinery and equipment has been
classified as a separate division (Division-33) in NIC-2008.
• Repair of Personal & Household goods (5260 of NIC-2004) has
been removed from section-G (wholesale and retail trade;
repair of motor vehicles and motor cycles) and now included in
section-S (other service activities).
• Publishing activity which was included in division-22 of
manufacturing section in NIC2004 is now included in division-58
(publishing activities) of NIC-2008 under section-J (information
and communication).
• Activity ‘water supply’ under division-41 (Electricity, Gas and
Water Supply) of NIC2004 is now included in Section-E (water
supply; sewerage, waste management and remediation
activities).
• The Annual Survey of Industries (ASI) has been the principal source for most
of the basic statistics of the Industrial Sector.

• The frame of factories, which the ASI uses for conducting the survey, is
based on the list of factories maintained by the Chief Inspectors of Factories
(CIF).

• A large number of units, which are qualified for inclusion in the CIF’s list,
have not been included and at the same time many defunct units have not
been removed.

• Estimates of the growth rates of industrial production based upon the Index
of Industrial Production (IIP) are extensively used for policy-making at
various levels in the Government and also for decision-making in the banking
and Corporate Sectors.

• The importance of IIP is further increased due to the fact that it is the only
indicator generated every month and disseminated on a wide scale.
 Minin Manufacturi Electricit Genera
2 Digit 20-21 22 23 24 25 26 27 28 29 30 31 32 33 34 35-36 37 38
g ng y l
1000.0
Weight 90.83 23.82 55.18 22.58 5.90 25.37 27.01 26.52 11.39 140.02 57.28 43.97 74.53 28.10 95.65 39.84 25.59 104.73 793.58 101.69
0

- - - - - - - - - - - - - - - - - - - - - -

Apr'94
106.6 103.2 98.0 113.7 95.7 93.5 98.9 102.7 86.9 100.2 98.3 111.2 105.8 114.9 89.3 93.3 95.1 92.7 100.5 102.5 99.9
May'94
100.3 107.2 97.4 110.5 77.0 93.0 103.9 102.8 85.5 98.3 104.6 103.5 110.1 100.6 97.7 101.7 104.6 97.9 101.1 107.1 101.4
Jun'94
98.6 106.9 95.7 109.1 75.5 91.2 94.5 105.9 88.9 107.8 108.4 103.5 105.7 88.2 103.9 104.7 101.5 97.3 102.4 100.2 101.6
Jul'94
107.2 103.8 100.3 119.8 85.2 101.4 88.0 106.0 84.0 102.1 113.1 104.0 107.1 85.2 104.6 109.2 102.6 102.2 103.8 102.0 103.4
Aug'94
85.2 110.8 97.6 117.5 87.9 98.5 93.2 104.0 82.1 105.1 114.6 104.1 111.7 93.5 106.9 109.1 118.5 104.9 103.4 105.5 103.8
Sep'94
100.5 98.3 97.8 107.1 89.8 98.7 92.1 103.3 82.2 102.3 111.2 97.7 109.6 118.9 107.5 107.5 97.4 104.5 103.4 104.7 103.6
Oct'94
90.6 87.8 98.3 104.0 96.6 99.9 95.7 104.5 85.0 108.7 110.1 103.3 113.3 87.0 111.3 108.3 99.8 112.6 103.3 109.8 104.9
Nov'94
127.7 102.9 96.2 107.5 106.2 97.6 90.9 113.3 91.9 109.4 102.2 102.1 114.8 100.3 120.0 104.4 108.2 113.5 109.4 107.1 109.6
Dec'94
161.4 98.5 105.4 121.5 110.7 107.7 103.4 106.7 94.0 102.5 109.5 110.4 118.9 124.8 126.9 120.2 116.3 121.9 117.7 117.8 118.2
Jan'95
159.2 107.7 100.1 125.2 106.9 99.5 132.0 119.9 92.3 112.2 107.3 111.9 123.6 112.6 132.0 122.4 120.2 122.2 121.0 115.6 120.6
Feb'95
156.4 103.4 98.5 114.2 101.8 97.8 100.9 111.4 95.7 105.0 106.6 115.6 114.0 100.3 132.4 115.6 114.3 115.8 115.8 109.9 115.2
Mar'95
165.2 105.0 103.5 123.9 108.2 103.2 98.3 122.2 70.1 110.0 106.4 132.2 123.0 140.6 157.5 158.7 123.9 132.6 127.2 119.6 127.0
 INDEX OF INDUSTRIAL PRODUCTION
(Base : 2004-05=100)

Use-based indices

Period Basic Capital Intermediate Consumer goods General

Month goods goods goods Total Durables Non-durables Index
Weight 456.82 88.25 156.86 298.08 84.60 213.47 1000
Apr'05 100.3 85.3 97.9 101.9 107.2 99.8 99.1
May'05 103.5 99.6 102.5 103.8 119.4 97.7 103.1
Jun'05 101.5 105.8 102.6 108.0 115.0 105.2 104.0
Jul'05 100.6 106.6 106.8 101.7 111.7 97.8 102.4
Aug'05 101.8 113.2 105.8 104.0 117.7 98.6 104.1
Sep'05 99.9 125.1 105.0 104.9 122.0 98.1 104.4
Oct'05 106.8 118.4 104.7 106.2 122.9 99.6 107.3
Nov'05 105.5 111.3 99.6 103.9 105.7 103.2 104.6
Dec'05 112.1 127.7 114.7 122.0 102.7 129.7 116.8
Jan'06 114.2 125.9 113.3 125.6 118.3 128.5 118.5
Feb'06 107.0 128.2 106.9 119.0 117.5 119.6 112.4
Mar'06 120.3 169.6 119.8 127.5 133.8 125.1 126.7
• The Purchasing Managers' Index (PMI) is an index of the prevailing
direction of economic trends in the manufacturing and service sectors.

• It consists of a diffusion index that summarizes whether market

conditions, as viewed by purchasing managers, are expanding, staying the
same, or contracting.

• The purpose of the PMI is to provide information about current and future
business conditions to company decision makers, analysts, and investors.
• Investors can also use the PMI to their advantage because it is a leading
indicator of economic conditions.
• The direction of the trend in the PMI tends to precede changes in the
trend in major estimates of economic activity and output, such as the GDP,
Industrial Production, and Employment.

• Paying attention to the value and movements in the PMI can yield
profitable foresight into developing trends in the overall economy.