Classification of Industry: Type, Raw Material, Ownership & Size

The classification of industry is a systematic way to group businesses based on their activities, raw materials, ownership, or size. This classification helps us understand the different industries and their operating mechanism in contributing to the economy. Categorization of industries can be used in studying specific roles, strengths, and challenges of particular sectors. Each classification has an individual perspective on how to operate industries and influence growth. Whether it is agriculture, manufacturing, or services, all these industries are important to forming the economic landscape of this world.

What is Industry?

An industry refers to a group of businesses or organizations that produce goods, provide services, or extract natural resources. Industries are essential for meeting human needs, creating jobs, and driving economic growth. 

They range from traditional farming to advanced technology services. For example, agriculture provides food, while industries like IT develop digital tools that connect people worldwide. Industries act as the building blocks of a nation’s economy, influencing its development and global competitiveness.

Classification of Industry Based on Types

Industries can be classified based on the type of work they do. This classification helps us understand the scope and nature of their activities.

Primary Industry

Primary industries focus on extracting natural resources directly from the earth. These industries form the base of economic activities.

• Examples of Primary Industries: Primary industries include agriculture, where crops like wheat or rice are grown, and mining, where minerals like coal or gold are extracted. Fishing and forestry are also part of this group.
• Key Features of Primary Industries: These industries depend heavily on natural resources. They provide raw materials for secondary industries, such as cotton for textile manufacturing.

Secondary Industry

Secondary industries take raw materials from primary industries and turn them into finished goods. They add value by processing or assembling the materials.

• Examples of Secondary Industries: Factories that produce furniture from wood or cars from metal are examples of secondary industries. Construction companies that build homes and bridges also belong to this category.
• Key Features of Secondary Industries: They require skilled labor and machinery. These industries are major contributors to employment and urban development.

Tertiary Industry

Tertiary industries focus on providing services instead of producing goods. They connect consumers with goods and services through retail, logistics, or hospitality.

• Examples of Tertiary Industries: Grocery stores, hotels, and transportation companies are part of this sector. Healthcare and education also fall under tertiary industries.
• Key Features of Tertiary Industries: They aim to improve customer satisfaction. Tertiary industries support both primary and secondary industries by offering essential services.

Classification of Industry Based on Raw Material

Industries can also be classified based on the type of raw materials they use. This helps us understand the resources required for their production processes.

Agro-Based Industries

Agro-based industries rely on agricultural products like crops, fruits, and livestock.

• Examples of Agro-Based Industries: Textile industries that use cotton and sugar factories processing sugarcane are agro-based.
• Key Features of Agro-Based Industries: These industries are located near agricultural areas to reduce transportation costs. They are sensitive to weather and environmental conditions.

Mineral-Based Industries

Mineral-based industries use metals and minerals as their main raw materials.

• Examples of Mineral-Based Industries: Steel mills using iron ore and cement factories relying on limestone are common examples.
• Key Features of Mineral-Based Industries: These industries are usually set up near mining regions. They require heavy machinery and advanced technologies.

Forest-Based Industries

Forest-based industries use resources obtained from forests, like timber, resin, and bamboo.

• Examples of Forest-Based Industries: Paper manufacturing units and furniture production companies fall into this category.
• Key Features of Forest-Based Industries: These industries support rural economies. They promote sustainable forestry practices to conserve resources.

Marine-Based Industries

Marine-based industries depend on ocean and sea resources like fish and oil.

• Examples of Marine-Based Industries: Companies involved in seafood processing or offshore oil drilling are part of this group.
• Key Features of Marine-Based Industries: These industries require specialized equipment for operations in aquatic environments. They face challenges like environmental regulations and resource depletion.

Classification of Industry Based on Ownership

Industries can also be classified based on who owns and operates them. Ownership impacts their objectives, profits, and funding.

Public Sector Industries

Public sector industries are owned and managed by the government. They aim to provide essential goods and services to the public.

• Examples of Public Sector Industries: Indian Railways and BSNL are public sector enterprises in India.
• Key Features of Public Sector Industries: They prioritize public welfare over profit. They are funded through taxes and government revenues.

Private Sector Industries

Private sector industries are owned by individuals or private companies. They aim to earn profits and grow their businesses.

• Examples of Private Sector Industries: Companies like Reliance and Tata are well-known examples in India.
• Key Features of Private Sector Industries: They promote innovation and competition. They drive economic growth by creating jobs.

Joint Sector Industries

Joint-sector industries are owned and operated by both the government and private entities.

• Examples of Joint Sector Industries: Maruti Suzuki, a collaboration between the Indian government and Suzuki Motors, is an example.
• Key Features of Joint Sector Industries: They share risks and profits between public and private stakeholders. These industries balance efficiency with public welfare.

Classification of Industry Based on Size

The size of an industry depends on its scale of operations, investment, and workforce.

Large-Scale Industries

Large-scale industries operate on a massive scale, involving significant investments and workforce.

• Examples of Large-Scale Industries: Steel plants and automobile manufacturers are examples.
• Key Features of Large-Scale Industries: They produce goods for domestic and international markets. They require advanced technologies and extensive infrastructure.

Small-Scale Industries

Small-scale industries operate on a limited scale, often catering to local markets.

• Examples of Small-Scale Industries: Handicrafts and small garment units fall into this category.
• Key Features of Small-Scale Industries: They encourage entrepreneurship. They require less capital and are easier to set up.

Cottage Industries

Cottage industries are home-based businesses that use traditional methods to produce goods.

• Examples of Cottage Industries: Weaving, pottery, and embroidery businesses are examples.
• Key Features of Cottage Industries: They preserve cultural heritage. They rely on family labor and minimal resources.

Classification of Industry FAQs

What is the classification of industry?

The classification of industry refers to grouping industries based on activities, raw materials, ownership, and size.

How are industries categorized based on ownership?

Industries are classified into public, private, joint, and cooperative sectors depending on who owns and manages them.

What are examples of raw material-based industries?

Agro-based industries (like textiles), mineral-based industries (like steel), and forest-based industries (like furniture manufacturing) are examples.

Why is classification of industry important?

It helps in understanding the role of industries in the economy, their resource needs, and their contributions to growth and employment.

What are small-scale industries?

Small-scale industries produce goods with limited resources, focusing on local markets and encouraging entrepreneurship.