Factors responsible for the Location of Industries

Factors responsible for the Location of Industries

This article deals with the Factors responsible for the Location of Industries.’ This is part of our series on ‘Geography’, which is an important pillar of the GS-1 syllabus. For more articles, you can click here.


The industrial sector refers to the part of the economy involved in producing goods through machinery, technology, and mass production methods. 

Classification of Industries

Classification of Industries

Primary Industry

  • They use natural raw material
  • E.g., Agriculture, fishing, forestry etc.

 Secondary Industry

  • Use material obtained from primary industries to produce complex products 
  • E.g. Fibre to readymade garments 

 Tertiary Industry

  • It provides services (not related to manufacturing) 
  • E.g. transport, consultancy, tourism, health services etc. 

Factors responsible for the Location of Industries

Where Industry can set up

Factors responsible for the Location of Industries

1. Nature of Raw Material

Industries using raw materials that lose weight are concentrated in the regions where raw materials are found.

  1. Sugar Industry: Conversion of sugarcane to raw sugar involves a lot of weight loss. Hence, the sugar industry is set up near raw materials.
  2. Steel Industry: Both Iron ore and coal are weight-losing. Therefore, a suitable location for the iron & steel industry is near raw material sources.

2. Market

  • Markets serve as outlets for manufactured goods.
  • Heavy machines, machine tools, and heavy chemicals are located near the high-demand areas as these are market-oriented. 
  • Similarly, Petroleum refineries are also located near the markets as crude oil can be transported easily compared to several products derived from it. Koyali, Barauni and Mathura refineries are typical examples. 

3. Historical Factors

  • Mumbai, Calcutta & Madras are industrially developed due to various historical factors such as the presence of capital and its proximity to power during British times as they were Presidency towns. 
  • The availability of coal in the region and the presence of navigable waterways provided the necessary resources and transportation routes for the growth of the textile industry in cities like Manchester and Liverpool.
  • The automobile industry developed in Detroit, Michigan, due to its proximity to raw materials like iron and coal and the Great Lakes waterway, which facilitated transportation. The establishment of the Ford Motor Company in Detroit in 1903 further solidified the city’s position as a hub for automobile manufacturing.
  • Once a particular industry develops in a certain area, the forward & backward linkages of the Industry in these areas become well-developed. It attracts new Industries to these cities. 

4. Government policies

Government policies become a major factor in deciding where the industry will be set up. For example, 

  •  If a government offers tax breaks or other financial incentives to companies that locate in certain regions, those companies may be more likely to choose those locations. In India, tax breaks were provided to industries located in hilly areas like Himachal, and as a result, large industries from the Punjab-Himachal border shifted to Himachal.
  • Similarly, companies may be less likely to locate if a government imposes strict environmental regulations in certain areas.

5. Transport

The industry is set up in an area where infrastructure is developed & area is easily accessible.

  • Switzerland makes wristwatches & not bulldozers because of transport reasons.
  • The Great Lakes area (in North America) is highly industrialised because it is well connected via rail, road and ships. 

6. Labour

Highly skilled labour is required to run Industry. Due to this reason

  1. African countries export rough diamonds because they don’t have skilled labour to finish them 
  2. Australia supplies raw wool & not woollen garments because there aren’t enough people. 

7. Availability of Capital

The term “capital” refers to the funds or financial resources needed to start and operate an industry. It is an important factor in deciding the location of an industry, illustrated by the following examples.

  1. The industry is located in Mumbai and Chennai because the capital is easily available there. 
  2.  Software companies, including Apple, Google, Facebook etc., are concentrated in California as many venture capital firms are present to fund startups.

8. Climate

Climate can be an essential factor in deciding the location of industries, as certain industries require specific environmental conditions to operate effectively,

  1. Tech companies are located in San Francisco (Silicon Valley), and Bangalore (Silicon Valley of India) because of the mild climate in the region, which provides a comfortable environment for workers, and the lack of extreme heat or cold can prevent equipment malfunctions.
  2. The Winter Sports equipment industry is located in Helsinki (Finland) because cold weather provides a natural testing environment for products, and snow and ice create demand for such products.

9. Electricity

  • Electricity is a major determinant as it powers the industry and is needed in many industrial processes.
  • E.g., in Aluminium Industry, massive electricity is required for Bauxite refining. Hence, Aluminium Industry will be set up where electricity is cheap. 

With the increase in science and technology, geographical factors are becoming less relevant in deciding the industrial location.

  • Climate control is made possible for industrial purposes. For example, artificial humidifiers are used for climate control in dry areas. 
  • Electricity as a source of energy is easily transmitted over a long distance; similarly, pipelines and improved transportation have increased the availability of petroleum fuel as a source of energy even at distant locations. 
  • Rails and roads can now reach anywhere, breaching even the Himalayas and other mountains. E.g., China is building Industry in Xinjiang province, which was impossible earlier. 

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