Industries:

Pre-independence history:
Before the rise of modern industries, India was well known for its traditional handicrafts, muslin, silk goods and
cotton textiles. With the arrival of the British, the cottage industries decayed and mechanisation took place with
the Industrial Revolution.
The modern industry began in India with establishment of cotton textile industry at Bombay in 1854. The first
jute mill was set up in 1855 in the Hugli Basin. Other industries were of woollen textiles, paper and breweries.
The main industrial cities were port cities, Bombay, Calcutta and Madras.
During WWI, Indian industries made strides due to high demand for industrial goods. The Indian Fiscal
Commission gave protection to iron and steel, textile industries etc. The cotton textile industry dispersed away
from Bombay during the Inter-War period.
During WWII, Indian industries were adversely affected by Indias military involvement. The heavy chemical
industry was started in 1941, along with the Hindustan Aircraft Industry. In all, steel, chemical, cement and paper
industries recorded impressive gains. Cotton textiles showed improvement but jute and sugar industries declined.
Post War period saw an overall decline in industrial products due to fall in demand, labour trouble etc. Cotton,
sugar, steel industries suffered the worst. Partition caused a severe blow to jute and cotton industries due to loss
of markets and skilled labour.
However, the situation improved in 1948 with the Industrial Policy Resolution, which introduced the concept of
a mixed economy in India. The industries were now divided into public and private sectors.
Location of Industries:
Factors influencing the location of industries are as follows:
I. Geographical Factors:
1. Raw Materials Industries using bulky or weight-losing raw materials are located close to their supply.
2. Power Most industries tend to concentrate at source of power (coal, mineral oil, hydro-power etc)
3. Labour Light consumer goods, agro-based industries require labour supply. Large urban centres can
provide supply of unskilled labour.
4. Market Industries, especially with perishable commodities, seek locations near the market.
5. Water Iron and Steel, chemical, textiles etc require large water quantities, hence are located near rivers,
canals etc.
6. Climate Extreme climate of NW India hinders industrial development, unlike the west coastal climate
of Maharashtra and Gujarat.
II. Non-Geographical factors:
1. Capital Industrial centres such as Mumbai, Delhi etc can provide investment for the industrial capital
requirements.
2. Government Policies They aim for reduction of regional disparities, pollution, heavy clustering of
cities.
3. Industrial Inertia Industries tend to develop at place of their original establishment. Eg. Aligarh lock
industry.
4. Banking Areas with better banking facilities are better suited for industry establishment.

Classification of Industries:
Industries may be classifies on the basis of:
Strength of Labour
Large Scale
Medium Scale
Small Scale

Raw Materials
Heavy
Light

Ownership
Public
Private
Joint
Co-operative

Source of raw material

Agro based
Mineral based
Pastoral based
Forest based

Other
Village
Cottage
Consumer goods
Ancillary
Basic

Textile Industries:
It includes cotton, jute, wool, silk and synthetic fibre textiles. Textile industries contribute 4% to the GDP and
provide employment to 35 million. Its contribution to the gross export earnings is over 30%. It is the only
industry which is self-reliant from raw material to the highest value-added product.
Cotton Textile Industry:
This industry, though it thrived in the middle ages, could not survive the modern mill industry of the British as a
result of the Industrial Revolution. The first modern cotton textile mill was setup in 1854 in Bombay. The real
expansion of this industry took place in the 1870s. It continued to progress during the WWI and was favoured by
the Swadeshi Movement and grant of fiscal protection. It later on dispersed beyond Bombay into the countrys
heartland. It suffered a serious setback during Partition as most long staple cotton growing areas went to
Pakistan, thus necessitating large scale imports of the raw material. Today, it is the largest organised modern
industry of India, engaging over 20% of the countrys industrial labour.
Availability of raw cotton, market, transport plays a key role in the localisation of this industry. 90% of the
industry is co-terminus with the cotton growing tracts of the country. As cotton is not a weight-losing material,
industry tends to be located at centres with have transport facilities to the market. Thus, it is a market-oriented
industry. With tropical/sub-tropical climate, all parts of India have market potential for this industry. Although it
was concentrated in Bombay earlier, it gradually dispersed and achieved spatial spread all across the country due
to development of railways and hydroelectricity. This industry, even within a state, is localised within particular
areas and regions, to the complete exclusion of others. Important centres are Ahmedabad, Solapur, Nagpur, and
Coimbatore. The industry is found mainly in Gujarat, Maharashtra, Tamil Nadu and Punjab.
Problems:
1. Scarcity of raw cotton
2. Obsolete machinery
3. Low productivity of labour
4. Strikes
5. Sick mills
Jute Textile Industry:
It is the second most important textile industry after cotton. The large-scale industry started in 1855 at Rishra and
in 1859, powerlooms were started and spinning and weaving were undertaken. It was an export-oriented industry
which made rapid progress in British India. However due to partition, 81% of the jute output went to Bangladesh
resulting in acute shortage of raw jute causing closure of sick mills. A campaign to increase the production of
raw jute was taken up by increasing the area of jute cultivation and increasing yield per hectare which eased the
situation.

Hugli Basin has a high concentration of jute mills due to: Ganga-Brahmaputa delta, where 90% of Indias jute is
grown; Coal, available from Raniganj fields; cheap water transportation; humid climate, suitable for weaving and
spinning; port city of Calcutta etc.
Problems:
1. Acute shortage of raw jute.
2. Shrinking market for jute products.
3. Competition from synthetic materials.
4. High input costs.
5. Obsolete machinery.
Iron and steel industry:
The first modern iron and steel unit was established in 1830 at Porto Nova, however it later closed down. Pigiron was first produced in 1874 at Bengal Steel Works. However, in 1907, a new beginning was made when
TISCO was setup at Jamshedpur and IISCO at Burnpur, in 1919. Later on, Mysore Steel Works was setup at
Bhadravati. The industry witnessed rapid growth after Independence. During the 2nd FYP, three integrated steel
projects were setup at Bhilai, Rourkela and Durgapur. SAIL was setup in1973 for the management of steel
plants. In the 5th FYP, it was resolved to setup new iron and steel plants at Vijaynagar, Vishakhapatnam etc. The
1991 IPR removed iron and steel from reserved list and exempted it from compulsory licensing, thus
incentivising the private sector. Today, India is the eight largest producer of steel in the world. It both imports as
well as exports iron and steel; however its imports are much higher.
The industry uses large quantities of heavy and weight-losing materials, the two most important being coal and
iron-ore. Thus, the industrys localisation is primarily controlled by availability of raw material. Most steel plants
are located at three distinct places; i) near coal fields, ii) near iron-ore mining centres, iii)between areas of coal
and iron-ore production. Most of the countrys major iron and steel plants, such as Jamshedpur, Durgapur,
Rourkela, Bhilai, are spread across the states of Jharkhand, Chhattisgarh, Bengal and Orissa which are rich in
coal and iron-ore deposits. As steel products are bulky, nearness of market also influences localisation. The
market has another significance, as it provides scrap iron which is half the raw material used in iron furnaces
today. When steel products are to be exported, sea ports are preferred. Ex Vishakapatnam Steel Plant.
Classification of Steel Plants:
I. Large Integrated Iron and Steel Plants:
1. TISCO
2. IISCO
3. Visweswaraya Iron and Steel Ltd.
4. Bhilai Iron and Steel Plant
5. Rourkela Iron and Steel Plant
6. Durgapur Iron and Steel Plant
7. Bokaro
8. Salem Steel Plant
9. Vijaynagar Steel Plant
10. Vishakapatnam Steel Plant
II. Mini-Steel Plants:
A large number of decentralised secondary units produce steel by using scrap iron and electric furnaces, known
as mini-steel plants. Their construction is easy and gestation periods are short. These produce mild steel, alloy
steel and stainless steel, and are located in faraway areas to meet local demands. They grew rapidly in 1970s but
became stagnant in 1980s. However, the 1991 IPR boosted this segment.

III. Foundries:
They manufacture different items of steel using pig iron and ingot steel. There are about 10k foundries, with the
majority found in Gujarat, Maharashtra and Tamilnadu.
Problems:
1. Lack of technology
2. Low productivity
3. Inefficiency of PSUs
4. Low potential utilisation
5. Heavy demand
6. Shortage of metallurgical coal
Automobile Industry:
Earlier only assembly work of imported parts was done in India. General Motors Ltd. started their assembly
factory in 1928 at Bombay and Ford Motor Ltd. in 1930 at Chennai. The real development of the industry began
after independence with the establishment of Premier Automobiles Ltd. at Mumbai and Hindustan motors Ltd. at
Kolkata. With the liberalization post 1991, more manufacturing facilities have set up making it a vibrant sector.
The industry has an investment of Rs. 50k Crore and contributes 4.7% to the GDP. It also provides employment
to 4.5L people. The industry manufactures around 11 million vehicles per year, and India is posed to top the
world in car numbers in2050.
The industry has been boosted by reduced car prices due to governments reduction in excise duty on passenger
cars in 2004. Its Auto policy of making India an Asian hub for manufacturing and the fact that passenger car
penetration is low at six per thousand, all promise of its potential. The two-wheeler industry has special focus as
it has registered immense growth due to popularity with younger generation and availability of easy finance.
It tends to be located near iron and steel producing centres, as steel is the basic raw material. Port cities are also
favoured for import-export reasons. The industry is market oriented and prefers locations which offer a ready
market. As a result of governments decentralization drive, locations in industrially backward areas are also
given consideration. Major automobile producing centres are Mumbai, Chennai, Jamshedpur, Jabalpur and
Calcutta. Motorcyles are also manufactured at Faridabad and Mysore. Scooters are also manufactures at
Lucknow and Satara. Maruti Udyog manufactures passenger cars at its Gurgaon centre.
Pharmaceutical Industry:
Before independence, only processing of imported drugs took place. The industry began in 1954 with setting up
of Hindustan Antibiotics Limited (HAL) which produces a wide range of pharmaceutical formulations and agrovet products. Indian Drugs and Pharmaceutical Limited (IDPL) began in 1961 for manufacturing of synthetic
drugs, surgical instruments, formulations, drugs etc. The Bengal Chemical and Pharmaceuticals Ltd. (BCPL) was
setup in 1981. The leading private sector companies are Cipla, Glaxo, Sarabhai etc. Major pharmaceutical units
are located in Mumbai, Chennai, Kolkata, Delhi, Vadodara, Kanpur and Hyderabad.
The industry has grown at an annual rate of 10% for previous two decades. Today, India meets 95% of its drugs
and formulations requirements, as present production includes antibiotics, vitamins, steroids, hormones etc.
Nonetheless, India imports expensive life-saving drugs from Australia, France, Germany etc. Drug prices, in
India, are amongst the lowest in the world besides having largest inventory of skilled pharmaceutical
professionals. As modern drugs reach only 40% of Indian population, the potential for growth in domestic
market is high.

Drug Policy (1986):

1. Abolition of industrial licensing for almost all bulk drugs.
2. Foreign investment upto 51%.
3. Ceiling price for common market-standard formulations.
Pharmaceutical Policy (2002):
1. Drug pricing by independent Pharmaceutical Pricing Authority.
2. FDI upto 100% permitted.
MNCs and Liberalization:
Liberalization began in India from 1991 onwards. The factors which lead to embracing the policy of
liberalization were:
Domestic economic situation: BoP crisis, soaring inflation, foreign debt etc.
Success of Export-Promotion strategy (IS): Along with deterioration of Import-Substitution (IS)
industrialization.
Increasing globalization: MNCs were the link to connecting with the global economy.
Thus post-1991, India went from being a regulated, inward-looking economy to a market-friendly, outwardlooking one. It also embraced FDI and IS industrialization. However, concerns were raised that:
i) FDI is not effective: MNCs in India produce for domestic consumption not exports, thus the goal of integrating
India to global economy remains unaccomplished.
ii) FDI has limited growth: Due to amount of competition India has for FDI and lower incentives which India
offers to MNCs as compared with other countries.
iii) FDI inflow: Its increased volume is due to mergers and acquisitions rather than green-field projects.
iv) FDI in manufacturing: It is low as India has not yet emerged as a global manufacturing hub.
v) FDI and geographical disparity: State governments of some mineral-rich states (Bengal, Jharkand etc) have
failed to attract FDI.
vi) FDI source: Mauritius provides 44% of total FDI to India. It is suspect to unethical financial practices.
vii) FDI focus required: It is less than 1% in education and needs encouragement. Similarly, there is plenty of
scope in food processing industries, agricultural services etc.
Features of Liberalisation policy of India:
The 1991 policy removes State control and promotes free market competition.
Requirements of industrial licensing done away with for most sectors.
Opening the economy for FDI with 51% equity.
Abolition of restriction on export/import items.
Reduction in import tariffs.
Disinvestment in PSUs for raising capital and incentivising private players.
Arguments in favour of MNCs:
1. Positive perception of MNCs due to successful Asian examples.
2. UNs Code of Conduct for MNCs.
3. Need for foreign investment as domestic savings were inadequate.
4. MNCs bring new technology and skills to Indian shores.
5. Close connection between FDI and exports.
6. FDI is better capital option than borrowing.
Indias 1991 economic policy was characterized by i) opening of economy to global markets, ii) reducing import
tariffs and state regulation and iii) structural reforms to stabilize the economy. FDI inflows increased from
$70million (1990) to over $2.5 billion (1997).

Benefits of MNCs
Increased income for Indians and higher remittances
flow into the country.
Indian consumption can expand with increased choice
in brands.
States directly invite FDI in self-identified sectors.
India provides inputs to production and skill talent to
MNCs.
MNCs help supply Indias ever-increasing demand for
infrastructure.

Criticism of MNCs
They cause increase in regional disparities causing
uneven industrial and socio-economic development.
Their non-price competition methods crowd out
domestic industries and can cause monopolisation.
They employ child labour for work in factories etc.
Round tripping and transfer pricing to evade tax.
Damage to cottage/small-scale industries.

Existing problems:
1. Difficult approval process from FIPB.
2. Red-tapism and bureaucratic delays.
3. Lack of clear policy on FDI due to political reasons.
4. Indian labour laws cause exit problem for MNCs.
5. Government regulations, license raj etc.
Industrial Regions:
Industries tend to concentrate in certain pockets of the country due to favourable conditions, which are known as
industrial regions. These regions may be demarcated on various indicators such as number of factories, industrial
workers, gross industrial output, production in terms of money etc. Major industrial regions have developed in
hinterlands of port cities ex: Mumbai, Chennai, Calcutta etc as they provide raw material, power, market etc.
Industrial regions are classified into 3 categories:
Major Industrial Region: 1.5L workers.
Minor Industrial Region: 25k workers.
Manufacturing District: <25k workers.
Major Industrial Regions:
1. Mumbai-Pune Region:
It is the most important region, which owes its origin to British Rule who developed Mumbai seaport. First
railway track between Mumbai-Thane and opening of Suez Canal added to Mumbais development. Other
industrial centres are Pune, Kurla, Andheri, Trombay etc.
Cotton textile industry began here due to humid climate, black soil and available hydel power. This region has
cheap labour force and export-import facilities as well. Bombay High petroleum field developed as well as
chemical industry, engineering goods, automobiles, film industry etc.
Partition affected this region as long stable cotton growing areas went to Pakistan. This region has reached
saturation level. Other problems are high cost of commercial land, increasing regionalism, environmental
pollution etc.
2. Hugli Industrial Region:
It extends as a narrow belt along Hugli river for 100 kms in West Bengal. The main industrial centres are
Kolkata, Howra, Budge-Budge, Haldia, Seerampur etc. Main factors for its fast growth were availability of agroraw material (jute, indigo, and tea), nearness of coal mines (Raniganj, Jharia), abundance of water, export
facilities (port city), cheap labour etc. Kolkata was also the British capital from 1773 to 1911, thus attracting
many industrialists. It is also well-connected with the hinterland of Ganga-Brahmaputa by navigable rivers apart
from roads and railways. Important industries are jute, cotton, textiles, paper, pharmaceuticals etc.

The main problems faced are high rate of silting of Hugli river, decline in jute industry, Naxal movement,
paucity of space etc. A shortage of raw jute was even experienced after Partition as most jute producing areas
had gone to East Pakistan.
3. Bangalore-Coimbatore Industrial Region:
Spread in Karnataka and Tamil Nadu, this region has witnessed the fastest growth in post-independence India.
Although dominated by the cotton textile industry, it also has industries of silk manufacture, sugar mills, leather,
chemicals etc. Source of power is hydroelectricity as coal isnt available. Other factors for its growth are the vast
local market, cheap skilled labour and good climate.
Coimbatore is known as Manchester of Tamil Nadu because of its large scale cotton textile industry. PSU at
Bangalore include HAL, Bharat Electronics, Hindustan Machine Tools etc. Steel Plants are located at Bhadravati
and Salem, while Chennai has a petroleum refinery. Important industrial centres are Tiruchirapalli, Mysore,
Kochi, Mangalore, Chennai etc.
4. Ahmedabad-Vadodra Industrial Region:
This region corresponds to the cotton growing tracts of the Gujarat Plains. It became an important textile region
with decline of Mumbais cotton textile region. Ahmedabad is nearer sources of raw material and marketing
centres of Ganga-Sutlej Plains which help this region develop.
Discovery and production of oil in the Gulf of Khambat led to establishment of the petrochemical industries,
which are provided for by the oil refineries at Koyali and Jamnagar. The Kandla port helps in exports and
imports. Besides textiles and petrochemical industries, other industries are heavy and basic chemicals, dyes,
pesticides etc. Main industrial centres are Ahmedabad, Vadodra, Surat, Koyali, Jamnagar, Rajkot etc.
5. Chotanagpur Industrial Region:
It extends across Jharkahdn, Northern Orissa and Western part of West Bengal. Its growth is linked with
discovery of coal in Damodar Valley and iron-ore in Jharkhand-Orissa mineral belt. Power is available from dam
sites and coal based thermal power stations. This region is known as Ruhr of India.
The region is surrounded by densely populated states which provide cheap labour and Kolkata provides a market
and port facilities. Important steel plants are TISCO at Jamshedpur, IISCO at Burnpur, Hindustan Steel Limited
etc. Important industries are iron and steel, cement, , fertiliser, locomotives etc.
6. Gurgaon-Delhi-Meerut Industrial Region:
It is one of the fastest growing regions, which developed after Independence. It consists of two industrial belts; i)
Agra-Meerut-Saharanpur and ii) Faridabad-Gurgaon-Ambala. Its development has been helped by hydro-power
from Bhakra-Nangal Dam and thermal power from Faridabad and Badarpur.
Industries are light and market oriented; electronics, sugar, agro-products, glass chemicals etc. Software industry
has also developed recently. Mathura has an oil refinery, while Gurgaon has a Maruti car factory. Important
industrial centres are Agra (glass), Ghaziabad (agro-industries), Saharanpur (paper), Gurgaon (automobiles),
Noida (electronics), Meerut (sugar) etc. The main problems are of high land price, traffic congestion and high
crime rates.
Agro-Industries:
Agro-Industries are those industries engaged in the business of processing of agricultural produce for
consumption or for industry use. They include cotton, jute textiles, silk industry, sugarcane industry etc. In India
which is a primarily agricultural country, agro-industries have a crucial importance in economic development as
they are labour intensive and require less capital investments. They also act as a safety valve to absorb the
surplus labour.

Up until late 1940s, village agro-based industries were encouraged by Gandhian ideology to involve rural people
in development. From 1950-1980, the agro industry policy was Nehruvian dominated which relied on large
industries for capital goods sector and on small-scale rural agro industries for consumer goods sector, which
failed to meet the changing market demands due to population rise and increasing incomes. The Third Plan
onwards, however, the state has continued to provide support to traditional rural industries especially the Khadi
and village industries. Agro-industries received impetus at two distinctively different phases. One, during the
1970s when, as a consequence of the Green Revolution, State Agro-Industries Corporations were established to
provide modern agricultural inputs: and, two, during the 80s, when the role of foreign direct investment and
technology in the food processing sector was emphasised.
Constraints:
1. Inadequate supply of raw materials from agricultural sector.
2. Poor quality and short period of availability of raw materials.
3. Obsolete technology used in processing leading to poor quality output.
4. Govt regulations and licensing requirements for specific agro industries.
5. Lack of working capital by financial institutions.
Agro-industry models:
Co-operative Organization Model: AMUL
It benefits from committed suppliers as they are members and helps provide employment and incomes
from primary production. However, their governing boards tend to be politicised leading to compromise
of good business practices.
Government Organization Model: HPMC
In this, a government corporation sets up a network of infrastructure facilities for collecting produce,
processing, storage etc. The produce is purchased from farmers at announced prices and then processed
and marketed nationally by the corporation.
MNC-Farmer Partnership Model: PepsiCo
It involves a backward integration by a private company which made production/procurement contracts
with farmers, provided extension services, farm technology and used its marketing capabilities for selling
quality products. However, it requires a long-term commitment as well as the capacity to absorb initial
losses.
MNC-Local firm Partnership Model: DelMonte
In this, corporate farming will be undertaken by the joint venture to obtain 25-30% of the raw material
requirement, and the rest will be obtained through contract farming. Major drawbacks are land
availability, ownership and management conflicts etc.
Value Addition Center Model:
It is a proposed model in which a VAC serves as a hub of activities for pre- and post-harvest
management of agricultural produce , providing technology inputs, market access and become a
partnership node for a private-public joint venture. Thus this model would reduce intermediaries and offer
an integrated package of services for farmers.
Special Economic Zones:
The main objectives of the SEZ Act 2005 are:
(a) generation of additional economic activity
(b) promotion of exports of goods and services;
(c) promotion of investment from domestic and
foreign sources;
(d) creation of employment opportunities;
(e) development of infrastructure facilities;
It also envisages key role for the State Governments
in Export Promotion.

Incentives for units in SEZ Act 2005

Duty free import/domestic procurement of goods
100% Income Tax exemption for 5 years.
Exemption from MAT, Central Sales Tax, Service Tax
Unrestricted ECB upto $500 million/year.
Exemption from Sate Sales Tax
Single window clearance for Central/State approvals.
SEZ developers exempted from Dividend Distb. Tax

However, now MAT and DDT have been levied at a rate of 20%, leading to a SEZ an unattractive proposition.
Other factors affecting SEZs are i) Developers putting only a fraction of the land for SEZ use and the rest is sold
off for remunerative land prices or put to private industrial use ii) Only 35% of SEZs are actually operational
iii) Unpredictability of tax regimes iv) Lack of infrastructure, power, roads, ports etc v) absence of external
infrastructure for export-import vi) Problems in acquiring land for SEZ development vii) Strict labour laws.
A SEZ is an industrial cluster, which functions as a self-sustaining Industrial Township, meant largely for
exports. It is governed by a special set of rules aimed at attracting investment for export-oriented production.
Manufacturing activities are allowed, as is sub-contracting. 100% FDI is allowed in SEZs via automatic route.
However, SEZ units have to become net foreign exchange earners within 3 years and their domestic sales are
subject to customs duty.

For multi product SEZ, minimum land requirement is 500 hectares while for sector-specific SEZ, it is 50
hectares. Here is no such requirement for setting up IT SEZ.
Industrial Policy:
The 1948 IP classified the Indian industries as:
1. Exclusive State Monopoly: Arms and ammunitions, railways and nuclear energy sectors.
2. State Monopoly for new units: It included coal, iron and steel, aircrafts, ship-building, telephone etc.
3. State Regulation: It included machine tools, chemicals, fertilisers, automobiles, cement, paper etc.
4. Unregulated private enterprise: Industries were left open to individuals, co-operative societies and private
sector.
The 1991 Industrial Policy aimed at liberalisation, macroeconomic stabilisation, doing away with loss-incurring
PSUs, encouraging foreign investment etc. The main features were:
1. De-reservation of Industries: Today, only nuclear energy, nuclear research and railways are 100% under
public sector.
2. De-licensing of Industries: Compulsory licensing only for aerospace, tobacco, drugs etc.
3. Abolition of MRTP Limit: Competition Commission has been established.
4. Promotion of foreign investment: FDI and FII were allowed.
5. FERA replaced by FEMA: It was a liberalised form of FERA.
6. Location of Industries: Determined based on whether industry was polluting or non-polluting.
7. Compulsion to convert loans into shares abolished: It had been an indirect route to nationalise private
firms.
8. Public Sector: Thrust on MoU systems, referring sick unit to BIFR etc.
9. Foreign technology Agreements: Automatic approval for technological agreements related to high
priority industries; eased procedures for hiring foreign technical expertise.

Tourism:
Tourism essentially began in India with pilgrimage. Earlier, pilgrimage tourism was only of domestic nature, but
during recent years a large number of foreign pilgrims have also poured in. The character of Indian tourism has
changed with time from pilgrimage to leisure tourism.
Organised tourism began in India in 1950s and has grown considerably, indicated by arrival of foreign tourists.
The tourist arrivals increased from 16k (1951) to 2.6M (2000). However a marginal decline was observed from
2000-02. With the launch of penetrative ad campaign Incredible India, Atithi Devo Bhavah campaign, the
open sky policy and good private-public partnership, tourism has been revived. Foreign tourists come mostly
from West Europe, South Asia and North America.
Although tourism is a State subject, the Centre lends financial assistance for improving tourism infrastructural
facilities. The India Tourism Development Corporation (ITDC) was established in 1966 which provides the
tourists with essential services and renders consultancy services. The Dept of Tourism has streamlined the rules
regarding the grant of approval to travel agents, tour operators etc.
In 1982, the Indian Government approved the National Tourism Policy which gave a six point plan for Tourism
development of Swagat , Suchana, Suvidha, Suraksha, Sahyog and Samrachana. The policy aimed to promote
socio-economic development and preserve the rich heritage and culture of India. National Committee on Tourism
set up in 1988, setting up of the Tourism Finance Corporation in 1989 to finance tourism projects, the National
Action Plan in 1992, the 1996 National Strategy for Promotion of Tourism and a new Tourism Policy in 1997
have all aimed to promote the fast growth of Indian Tourism sector.
The 8th FYP has given thrust on i) development of selected tourist places ii) diversification from culture to leisure
tourism iii) development of trekking, winter sports etc and iv) providing inexpensive accommodation. Today,
tourism is the 2nd largest foreign exchange earner

Problems:
1. Slow growth: Indias share in foreign tourist arrival has increased only marginally from 0.23% (1975) to
0.64% (2013).
2. Shortage on infrastructure: Foreign tourists often fail to get suitable accommodation.
3. Outflow: Due to relatively lower aviation cost domestically, Indian tourists prefer going for international
trips rather than domestic travel. The foreign exchange earnings from tourism thus get neutralised.

4. Environmental effect: Unrestricted growth, high tourist pressure and environmental damage have
tarnished popular tourist hill stations.
Future prospects:
Large parts of India, particularly eastern and southern, see very low tourist traffic. Thus a great potential
for development of tourism lies therein.
Railway has an important role in tourist development. Thus, luxury tourist trains, Orient Express,
Palace On Wheels were introduced. More such trains connecting major tourist centres, on a PPP model
must be developed.
Future policies must emphasise on environment friendly development of tourism industry, keeping in
mind the carrying capacity of a given environment.
Eco-Tourism:
It is defined as responsible travel to natural areas that conserves the environment and sustains the well-being of
local people. Countries such as Ecuador, Madagascar and Costa Rica have developed it into a thriving industry.
UN declared 2002 as Intl year of Eco-Tourism.
Features of eco-tourism:
1. Minimal negative impact on environment.
2. Promotion of sustainable use of biodiversity.
3. Conserving biological and cultural diversity.
4. Socio-economic benefit for local community.
5. Affordability and reduced waste.
Eco-tourism became prevalent in India since 1980s and is the fastest growing sub-sector of tourism. As India is
poised to rapidly grow its tourism sector and host more foreign tourists, eco-tourism is needed to integrate
conservation and rural development into the picture.
Initiatives in India:
Home stay programmes by villagers for tourists in Ladakh.
Involvement of local adivasis in Periyar Tiger reserve.
Green Village Project of Khonoma village, wherein locals are responsible for visitor management.
Criticism of Eco-Tourism:
1. Definition: There is a lack of a clear definition. Environmentalists focus on the nature aspect, while the
industry focuses on the product aspect. It leads to green washing - commercialization of tourism
schemes disguised as environmentally friendly ecotourism.
2. Negative Impact: It has become a source of conflict over control of land, resources, and tourism profits.
A lot of money is put into it despite unsuccessful outcomes.
3. Environmental Damage: The eco-tourists disturb the flora and fauna and leave behind garbage and
pollutants.
4. Local Communities: Profits are not re-invested into the local economy; locals are offered meagre wages;
they are often displaced due to land acquisition by the govt.
5. Indigenous culture: Traditional use of land and resources is deprived to local communities, which also
lose homes without compensation. Freedom of cultural expression is lost.
6. Wildlife: Feeding and nesting sites are also disturbed. Invasive species can get introduced and wildlife
souvenirs promote poaching.
7. Management: Govt agencies tend to spend on politically beneficial but environmentally unproductive
projects. Administration usually lacks capability to effectively manage eco-tourism sites.
Steps to make eco-tourism sustainable:
1. Environment Protection Strategy: Step must be taken to raise awareness level of eco-tourists, their impact
on local environment etc.
2. Qualified eco-tourist guides: Intimate knowledge of environment can help guides become the medium of
environment awareness.

3. Small scale eco-tourism: It will help local communities better exercise control, limit environment loss and
preserve culture and traditions.
4. Local participation: It will create economic benefits for locals; address poverty and unemployment issues
along with promoting eco-tourism sustainable.
5. Training Centres: They must be established for training of guides.
Fertilizer Industry:
With Indian soils being nutrient deficient, chemical fertilizers are vital for increasing growth of agricultural
productivity. Though, in 1906, a phosphate factory was setup Ranipet, the industry developed post Independence
when the Fertilizer Corporation of India (FCI) developed its Sindri plant. It is one of the fastest growing basic
industries. India is the worlds 3rd largest fertilizer producer. Though both have progressed immensely,
nitrogenous fertilizers have out beaten phosphate fertilizers in production. PSUs, under Dept. of Fertilizers, play
a dominant role ex: Fertilizer Corporation of India, National Fertilizers Limited etc. In the co-operative sector,
IFFCO and KRIBHCO are active. Due to a difference between indigenous production and fertilizer requirement,
India also imports fertilizers from USA, Russia, Canada etc.
`The localisation of fertilizer industry is closely related to petrochemicals as neptha is a basic raw material used.
Phosphate fertilizer plants are primarily dependant on mineral phosphate which is found in UP, MP etc. Sulphur,
found in Tamil Nadu, is also used in manufacturing. Due to transportation by gas pipelines, fertilizer plants have
achieved widespread distribution. Main fertilizer producing states are Gujarat, Tamil Nadu, UP, Maharashtra,
Andhra Pradesh etc.
Paper Industry:
Traditional handmade paper industry existed in India since the 10th century as a cottage industry. However, it
declined with the introduction of machine made paper. Although paper mills were established in Madras and
Serampore, the industry began in 1870 when Royal Bengal Paper Mill was setup at Ballyganj followed by
similar initiatives in Lucknow, Raniganj, Pune etc. The industry benefited from tariff protection in the initial
years. However, it rapidly progressed in the Plan period. Today, the paper and paperboard capacity is 8 million
tonnes. The industry is amongst the global best 15 and has a turnover of Rs.16k crores. The per capita
consumption of paper is 5.5 kg, which is far below the global average.
Paper manufacturing uses coarse, cheap and weight-losing raw materials. Paper mills tend to be located near the
forest tracts along W. Ghats, E. Ghats and the Terai-Bhabar area of Himalayan foothills. The Himalayan
temperate forests can provide the required cellulosic material but due to transportation and access problems,
mills havent been setup in Himalayan regions. Efforts to bring more land under plantation of eucalyptus and
other softwood trees are being made to meet demand for cellulosic raw material. Major paper producing states
are Maharashtra, Andhra Pradesh, Gujarat and UP.
Future Prospects:
As forested land decrease and exploitation of forest raw materials saturate, the industry is experiencing a severe
shortage of raw material. To expand further, it will have to look for unconventional raw materials. There is vast
scope if waste paper is recycled; bagasse is used in paper industry etc. Paper mills must also employ technology
to prevent its effluents from entering drains and causing ecological damage.
With increasing literacy, demand from the paper industry is bound to increase, which calls for strengthening
indigenous paper production or resorting to large scale importation. The small size of paper mills makes them
uneconomic and low on competitive strength. A DIPP study has revealed lack of good quality cellulosic material
and obsolete technology as major constraints. The industry must make use of vast available skilled labour and
adopt modern technology for manufacturing paper.
Aluminium Industry:
Manufacturing in aluminium metal started in 1886 and utensil fabrication began in 1929. The Indian Aluminium
Company (INDAL) began its production in 1938. During WWII, production of virgin aluminium made good
progress. The industry grew with the establishment of the Aluminium Corporation of India Ltd. and its West
Bengal plant in 1937. INDAL started sheet fabrication from imported alumina in 1943 and setup its plant in
Kerala. During the 2nd FYP, more alumina plants were setup by HINDALCO and INDAL.

The public sector was an important factor in this industrys growth. Bharat Aluminium Company Ltd (BALCO)
and Madras Aluminium Company Ltd (MALCO) were setup in 1965. NALCO, established in 1981, has the
largest aluminium plant at Damanjodi. As commercial production of aluminium started in 1988, the capacity and
power of the plants was increased. Today, this industry is the second most important metallurgical industry.
India also imports aluminium to meet its increasing demand.
Avaialbility of bauxite ore and hydroelectricity are two most important factors influencing the location of this
industry. Major producers of bauxite are Orissa, Gujarat, and Chhattisgarh etc.
Indias per capita consumption of aluminium is 0.5 kg which is well below the global average. The industry has
grown due to abundant resources of bauxite and experienced manpower. Its major problems are international
competition, high cost of power and labour unrests.
Industrial Complexes:
Industrial complexes are geographically localised set of specific industries which production and marketing interrelationships between them and thus act as growth centres. The industries do purchases from one another; using
ones output as anothers input, saving transportation costs etc. In India examples of Industrial complexes are
EPZs, SEZ, Software Parks, Biotechnology parks etc.
Problems:
1. Frequent industry sickness breaks the chain of inter-linkages and overall growth.
2. Lack of entrepreneurial acumen, timely finance, developed markets etc.
3. Difficulty in selecting a suitable industry around which a complex could grow.
4. Lack of external support, labour laws etc.