Recent trends in location of industries


The traditional factors like nearness of sources of raw materials, motive power, nearness of markets, labor supply etc have no longer remained the effective pulling forces in the location of industries. The location trends have changed substantially due to the development of substitute raw materials, network of electrification and transportation by roads and railway, mobility of the labor and persuasive and compulsive policies of the government for balanced regional development.

The recent trends in the selection of industrial location can be described as under:

Priority for the suburban areas

The industrialists show their preference for the suburban area as the site for establishment of a new unit or relocation of the existing one. The industrial policy of the government does not permit the establishment of a new unit or expansion of an existing one in city areas. At the same time infrastructure facilities are developed in the suburban areas.

Industrial development in the notified backward areas

In order to have balanced regional development, the Central Government as well as the State Government has notified certain backward areas Different types of incentives like cash subsidy, tax relief, financial assistance with low interest rates, cheaper land and power supply etc are provided. So, many such areas have been developed substantially in the recent times.

Establishment of Industrial estate

Industrial estate is a piece of vast land sub-divided into different industrial plots wherein factory sheds are constructed. The Government of India has planned a national policy for the development of industrial estates. It assigned the responsibility of the development of industrial estates to State Governments. In each state, the State Development Corporation (SDC) has developed many industrial estates practically in all the districts of the state. Industrial estates have also been developed by private entrepreneurs and Chambers of Commerce. The plots of land along with factory sheds and infrastructure facilities are developed in the industrial estates and are sold to the prospective promoters. The establishment of industrial estates has greatly affected the location of industries.

Decentralization of industries

Under the conscious industrial policy of the Government, concentration of industrial units is prevented through licensing policy. New units are not permitted to be started in certain industrially congested areas. Similarly, existing units either establish their additional plants in a less developed area or sometimes relocate the whole unit in such areas.

Increased role of the Government in the decision of location of industries

Government through its persuasive and compulsive methods greatly influences the location decision in recent times. It provides certain attractive incentives to the promoters to establish their units in less developed areas, at the same time it does not permit excessive industrialization in certain developed areas.

Competition between Government and institutions

As industry provides job opportunities to the local population, many local organizations attempt to tempt the prospective promoters to establish the units in their areas. They provide different types of incentives like cheap land, relief in local taxes etc. Sometimes the objective of local organizations and the government comes in conflict on the issues of location of industries. Thus, the whole pattern of decision about the location of industries has undergone substantial changes in recent times.