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Industry


Many developed countries and many developing/semi-developed countries (People's Republic of China, India etc.) depend significantly on industry.

Industry is divided into four sectors. They are:

Sector
Definition
Primary

This involves the extraction of resources directly from the Earth, this includes farming, mining and logging. They do not process the products at all. They send it off to factories to make a profit.

Secondary

This group is involved in the processing products from primary industries. This includes all factories—those that refine metals, produce furniture, or pack farm products such as meat.

Tertiary

This group is involved in the provision of services. They include teachers, managers and other service providers.

Quaternary

This group is involved in the research of science and technology. They include scientists.


The productivity of the major Indian industries incorporates aircraft, vessels, automobiles, steam engines, heavy electrical equipment, construction machinery, chemicals, precision equipments, communication instrument, power generation and transmission tools and computers.


Important Points


First Industrial Policy
- Announced on 6th April, 1948.
- Declared India is a Mixed Economy.
- Divided Indian Industries into 4 types

Second Industrial Policy - 1956
- Socialistic pattern society.
- To check centralization of economic power.

1977 Industrial Policy
- Introduced by Janata Govt.
- gave importance to small scale industries.

Industrial policy - 1980
- to increase economic efficiency of Government industries.

Industrial policy - 1991
- gave importance to private industries


Classification of industries based on Management


Single Management
- One person starts and manages

Partnership Management
- 2 to 10 persons manages

Private Limited
- more than 10 persons and less than 50 persons manages.

Public Limited
- More than 100 or 1000 persons manages.
- Eg: Railways, Telephone

Government Industry
- Government manages with more than 50% equity
- Eg: ONGC, NTPC

Private Industries
- Private Management + Share Holders manages
- Eg: Reliance, Tata

Mixed Industries 
- Both government and private industries manages
- Eg: Cochin Refinary, Praga Tools.

Co-operative Industries
- Works for group of people to achieve all their goals.
- Eg: Sugar Industries, Textile Industries


Classification of Industries based on Investment


Mega Industries
- More than 100 crore investment.

Large Industries
- 10 to 100 crore investment

Medium Industries
- 5 to 10 crore investment
- produces products for consumer goods

Consumer Industries
- produces consumer goods.
- Eg : TV, Radio, etc.

Small Industries
- 25 lac to 5 crore investment

Micro Industries
- Less than 25 lac investment.


PSU ( Public Sector Undertakings ) companies


PSU companies are divided into three categories:
  • Maharatna
  • Navratna
  • Miniratna CPSEs
    • Category I
    • Category II
1) Maharatna status:

In 2009, the government established the Maharatna status, which raises a company's investment ceiling from Rs. 1,000 crore to Rs. 5,000 crore.

The Maharatna firms would now be free to decide on investments up to 15 per cent of their net worth in a project.

Earlier, the Navaratna companies could invest up to Rs 1,000 crore without government approvals.

The 6 point criteria for eligibility as Maharatna are: 

a) Having Navratna status;
b) Listed on Indian stock exchange with minimum prescribed public shareholding under SEBI regulations;
c) An average annual turnover of more than Rs.25,000 crore during the last 3 years;
d) An average annual net worth of more than Rs.15,000 crore during the last 3 years
e) An average annual net profit after tax of more than Rs.5,000 crore during the last 3 years
f) Should have significant global presence/international operations

List of Maharatna are:
  1. Coal India Limited
  2. Indian Oil Corporation Limited
  3. NTPC Limited
  4. Oil and Natural Gas Corporation Limited
  5. Steel Authority of India limited
2) Navratna status:

The Navratna status is offered to PSEs, which gives a company enhanced financial and operational autonomy and empowers it to invest up to Rs. 1000 crore or 15% of their net worth on a single project without seeking government approval.

In a year, these companies can spend up to 30% of their net worth not exceeding Rs. 1000 cr. They will also have the freedom to enter joint ventures, form alliances and float subsidiaries abroad.

To be qualified as a Navratna, the company must obtain a score of 60 (out of 100). The score is based on six parameters which include
  • net profit to net worth,
  • total manpower cost to total cost of production or cost of services,
  • PBDIT (Profit Before Depreciation, Interest and Taxes) to capital employed,
  • PBDIT to turnover, EPS (Earning Per Share) and inter-sectoral performance.
  • Additionally, a company must first be a Miniratna and have four independent directors on its board before it can be made a Navratna.
The original list of 1997 included ECIL, BHEL, BPCL, HPCL, IOC, IPCL, NTPC, ONGC, SAIL and VSNL, of which Indian Petrochemicals Corporation Limited (IPCL) and Videsh Sanchar Nigam Ltd (VSNL) were later privatised.

GAIL and MTNL joined the list in November 1997.[6] In June 2007 the government awarded the coveted status to three more PSEs: BEL, HAL and Power Finance Corporation (PFC).

The incumbents of this group as of 16.11.2010 are:
1. Bharat Electronics Limited
2. Bharat Heavy Electricals Limited
3. Bharat Petroleum Corporation Limited
4. Coal India Limited
5. GAIL (India) Limited
6. Hindustan Aeronautics Limited
7. Hindustan Petroleum Corporation Limited
8. Mahanagar Telephone Nigam Limited
9. National Aluminium Company Limited
10. NMDC Limited
11. Oil India Limited
12. Power Finance Corporation Limited
13. Power Grid Corporation of India Limited
14. Rural Electrification Corporation Limited
15. Shipping Corporation of India Limited
16. Vishakapatnam Steel Plant

Miniratnas status:
The government created another category called Miniratna. Miniratnas can also enter into joint ventures, set subsidiary companies and overseas offices but with certain conditions.

In 2002, there were 61 government enterprises that were awarded Miniratna status.However, at Present, there are 62 government enterprises that were awarded Miniratna status.

Category I

This designation applies to PSEs that have made profits continuously for the last three years or earned a net profit of Rs. 30 crore or more in one of the three years.

These miniratnas granted certain autonomy like incurring capital expenditure without government approval up to Rs. 500 crore or equal to their net worth, whichever is lower.

  • Airport Authority of India
  • Balmer Lawrie & Co. Limited
  • Bharat Dynamics Limited
  • BEML Limited
  • Bharat Sanchar Nigam Limited
  • Bridge & Roof Company (India) Limited
  • Central Warehousing Corporation
  • Central Coalfields Limited
  • Chennai Petroleum Corporation Limited
  • Cochin Shipyard Limited
  • Container Corporation of India Limited
  • Dredging Corporation of India Limited
  • Engineers India Limited
  • Ennore Ports Limited
  • Garden Reach Shipbuilders & Engineers Limited
  • Goa Shipyard Limited
  • Hindustan Copper Limited
  • HLL Lifecare Limited
  • Hindustan Newsprint Limited
  • Hindustan Paper Corporation Limited
  • Housing and Urban Development Corporation
  • India Tourism Development Corporation
  • Indian Railway Catering and Tourism Corporation
  • IRCON International
  • Kudremukh Iron Ore Company Ltd.
  • Mazagon Dock Limited
  • Mahanadi Coalfields Limited
  • MOIL Limited
  • Mangalore Refinery and Petrochemicals Limited
  • Mishra Dhatu Nigam
  • Minerals and Metals Trading Corporation of India
  • MSTC Limited
  • National Fertilizers Limited
  • National Seeds Corporation
  • Neyveli Lignite Corporation
  • NHPC Limited
  • Northern Coalfields Limited
  • Numaligarh Refinery Limited
  • Rashtriya Chemicals & Fertilizers Limited
  • Satluj Jal Vidyut Nigam
  • Security Printing and Minting Corporation of India Limited
  • South Eastern Coalfields Limited
  • State Trading Corporation of India Limited
  • Tehri Hydro Development Corporation Limited
  • Telecommunications Consultants (India) Limited
  • Western Coalfields Limited
  • Water & Power Consultancy (India) Limited

Category II

This category include those PSEs which have made profits for the last three years continuously and should have a positive net worth.

Category II miniratnas have autonomy to incurring the capital expenditure without government approval up to Rs. 300 crore or up to 50% of their net worth whichever is lower.

50. Bharat Pumps & Compressors Limited
51. Broadcast Engineering Consultants (I) Limited
52. Central Mine Planning & Design Institute Limited
53. Educational Consultants (I) Limited
54. Engineering Projects (I) Limited
55. Ferro Scrap Nigam Limited
56. HMT (International) Limited
57. HSCC (India) Limited
58. India Trade Promotion Organization
59. Indian Medicines Pharmaceuticals Corporation Limited
60. M E C O N Limited
61. National Film Development Corporation Limited
62. P E C Limited
63. Rajasthan Electronics & Instruments Limited


List of major industries in India


Textile Industry:
This industry covers a wide range of activities ranging from generation of raw materials such as jute, wool, silk and cotton to greater value added goods such as ready made garments prepared from different types of man made or natural fibres. Textile industry provides job opportunity to over 35 million individuals thus playing a major role in the nation's economy. It has 4 per cent share in GDP and shares 35% of the gross export income besides adding 14% of value addition in merchandizing sector.

Food Processing Industry:
In terms of global food business, India accounts less than 1.5% inspite of being one of the key food producing nations worldwide. But this on the other hand also indicates the enormous possibilities for the growth of this industry. Supported by the GDP estimates, the approximate expansion of this sector is between 9-12% and during the tenth plan period the growth rate was around 6-8%. Food Processing Industry provides job opportunities to 1.6 mn people and it is estimated to expand by 37 mn by 2025.

Chemical Industry:
Indian Chemical industry generates around 70,000 commercial goods ranging from plastic to toiletries and pesticides to beauty products. It is regarded as the oldest domestic sector in India and in terms of volume it gives a sense of pride to India by featuring as the 12 largest producer of chemicals. With an approximate cost of $28 billion, it amounts to 12.5% of the entire industrial output of India and 16.2% of its entire exports. Under Chemical industries some of the other rapidly emerging sectors are petrochemical, agrochemical, and pharmaceutical industries.

Cement Industry:
India has 10 large cement plants governed by the different State governments. Besides this India have 115 cement plants and around 300 small cement plants. The big cement plans have installed competence of 148.28 million tones per annum whereas the mini cement plants have the total capacity of 11.10 million tonnes per annum. This totals the capacity of Indian cement industry at 159.38 million tonnes. Ambuja cement, J K Cement, Aditya Cement and L & T Cement are some of the major steel companies in India.

Steel Industry:
Indian Steel Industry is a 400 years old sector which has a past record of registering 4% growth in 2005-06. The production during this period reached at 28.3 million tones. India steel industry is the 10th largest in the world which is evident from its Rs 9,000 crore of capital contribution and employment opportunities to more than 0.5 million people. The key players in Steel Industry are Steel Authority of India (SAIL), Bokaro Steel Plant, Rourkela Steel Plant, Durgapur Steel Plant and Bbilai Steel Plant.

Software Industry:
Software Industry registered a massive expansion in the last 10 years. This industry signifies India's position as the knowledge based economy with a Compounded Annual Growth Rate (CAGR) of 42.3%. In the year 2008, the industry grew by 7% as compared to 0.59% in 1994-95.

Mining Industry:
The GDP contribution of the mining industry varies from 2.2% to 2/5% only but going by the GDP of the total industrial sector it contributes around 10% to 11%. Even mining done on small scale contributes 6% to the entire cost of mineral production. Indian Mining Industry provides job opportunities to around 0.7 million individuals.

Petroleum Industry:
Petroleum industry started its operations in the year 1867 and is considered as the oldest Indian industry. India is one of the most flourishing oil markets in the world and in the last few decades has witnessed the expansion of top national companies like ONGC, HPCL, BPCL and IOC.


Industrialization in India

Since independence to 1980: During this period there was restrictive growth of private sector and government's permission was required to set up any private enterprise in India. Despite this the GDP grew at a rate of 1.4% per annum from 1940 – 1970.

Other factors such as poverty and famine lowered India's economic growth rate during this period and with the presence of very few top producers of major industrial goods the absorption of domestic productivity was greater, which lead to monopolistic pricing.

1980 to mid-1990s:
Post 1980s India saw liberalization and achieved further impetus in Mid-1991. The nation witnessed historical upsurge in per capita GNP. In 1994-95 the industrial output-growth registered 8.4% growth and the exports rose by 27%. This resulted in a 10% drop in inflation in the mid-1990s

1990s to 2000s:
Since its liberalization policy, India has opened several public sector enterprises. The exports saw a 17% rise in 1994 and 28% in 1995-96. Over 90% of India's imports are backed by export revenues. At present the current account arrears is less than 1% of GDP and foreign-exchange profits are soaring at $20 billion. The food stocks have witnessed an all-time increase of 37m tonnes.

The private sector, which was neglected by previous governments, contributes to two-thirds of India's GDP. The shift of the state's responsibility from a chief investor to a catalyst of private enterprise has paved way to a new accord on liberalization. Industries in India.

Experts believe that the contribution of India in the world GDP is estimated to increase from 6% to 11% by the year 2025, while on the flip side the contribution of US in world GDP is presumed to decline from 21% to 18%. This indicates towards the emergence of India as the third biggest global economy after US and China. The evaluation is supported by the overall development in all the sectors in India, in which the key sector is the industry sector.

Going by the past records the Industry sector in India registered a growth rate of 6.2% in October 2003 which further increased by 4% in the corresponding month of the next fiscal year.


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