These are a tendency for industries to concentrate at certain places. Over a period of time- certain regions or districts of a country become specialised in the production of some particular commodities.
Gradually skilled labour required for the particular industry starts concentrating in these regions. This further intensified the localisation of industries. The main causes for localisation of industries are as follows:
1. Availability of raw materials:
Some materials like coal, iron ore, timber, etc. are found only at select places. These materials are called localised materials.
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When the final product contains a substantial weight of the raw material, the industry tends to be located near the source of raw materials. For example, Jute industry is concentrated in West Bengal due to availability of jute in this state.
Similarly, sugar industry is located mainly in Uttar Pradesh (U.P.) because sugarcane is grown in and around (U.P). However, with the rapid expansion of transport and communication facilities, industries are also being located away from the source of raw materials because the raw materials can be easily transported to far-flung areas.
2. Access to markets:
In some industries product is more costly to carry due to its bulk (bricks, stone, etc.) or perishable nature (fruits, eggs, etc.). Such industries tend to concentrate near the source of raw materials.
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3. Availability of power:
In underdeveloped countries like India, few states have assured and regular supply of electricity. Therefore, industries tend to localise in these states.
4. Historical reasons:
Sometimes, a particular industry gets located at a place as a historical event. Once the industry is established there certain advantages such as availability of skilled labour develop at that place. New factories in that industry are attracted to this place.
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Localisation of industries provides the following advantages:
1. Costs of production are reduced due to easy availability of required services like banking, warehousing, insurance, transport, communications, tool rooms, repairs, etc.
2. Several subsidiary trades grow up in the vicinity of big industries. Localisation also serves as a source of new ideas.
3. A ready and continuous job market is available for special skills.
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4. Optimum utilisation of local resources and talent becomes possible. Localisation of industries, however, suffers from the following disadvantages:
(i) Concentration of industries at one place increases demand for land and buildings. Housing becomes an acute problem and slums grow up.
(ii) Cost of living goes up and pressure on local facilities such as education, health, sanitation, public transport increases.
(iii) During war the enemy may easily destroy industries concentrated at a few places.