Industrialization takes many forms and develops at different stages through time. However, with the mention of industry, people tend to conjure up classic images such as textile mills, shipbuilding or heavy engineering. These were definitely the first areas to be industrialized. With time, the word industry in general, now encompasses many newer areas.

Broadly, industries can be of the following types depending on the raw material used and products made. They are:

1. Manufacturing Industries: Industries which produce goods by utilizing or processing raw materials, semi-processed materials, byproducts or waste products or any other goods.

2. Energy-Based Industries: Industries generating energy from water resources, wind, solar, coal, natural oil, gas, bio-gas or any other sources.

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3. Agro and Forest-Based Industries: Business mainly based on agriculture or forest products such as integrated sericulture and silk production, horticulture and fruit processing, animal husbandry, dairy industry, poultry farming, fishery, tea gardening and processing, coffee farming and processing, horticulture and herb processing, vegetable seed farming, mushroom, vegetable farming or vegetable processing, tissue culture, green house, beekeeping, honey production, rubber farming, floriculture and production, and forestry related businesses such as leasehold forests, agro-forestry, etc.

4. Mineral Industries: Industries that excavate or process minerals.

5. Tourism Industries: Tourist lodging, motel, hotel, restaurant, resort, travel agency, skiing, gliding, water rafting, cable car complex, pony-trekking, trekking, hot air ballooning, para-sailing, golf-course, polo, horse-riding, etc.

6. Service Industries: Workshop, printing press, consultancy service, ginning and baling business, cinematography, construction business, public transportation business, photography, hospital, nursing home, educational and training institution, laboratory, air services, cold storage, etc.

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7. Construction Industries: Road, bridge, ropeway, railway, trolley bus, tunnel, flying bridge and industrial, commercial and residential complex construction and operation.

While establishing an industry, its optimum size is of utmost importance to reap the maximum benefits. One of the main advantages of an industry is employment generation. Depending on the size of the industry, capital input, employment generated, technology source, sophistication of technology involved, skill involvement etc. industries are classified.

The classification of an industry into types is decided for a country by its government. Different set of rules, permit rules, policies, tax structure, etc. prevail for each category.

One criteria of setting up an industry is the ratio of capital investment and persons employed; for an investment of every Rs 50,000 one person has to be employed.

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On the basis of the capital investment, industry is classified into:

  • Cottage Industries
  • Small Scale Industries
  • Large Scale Industries

A cottage industry is one which has investment of up to Rs. 200 lakhs, small scale industries up to Rs. 10 crore and industries with investments above 1 crore fall under large scale industries.