Localization of Industries | Meaning | Causes | Advantages | Disadvantages

What are Localization of Industries?

The tendency of industries to congregate at one particular place is known as localization of industries or territorial division of labour. There are certain regions which posses special advantages beneficial to the development of a particular industry or industries. Attracted by these favorable factors, industries tend to congregate in such regions till their names become associated with these industries.

The classical example of localization or concentration of an industry is the Lancashire cotton industry. Similarly in India cotton textiles of Bombay and Ahmedabad; jute industry of Calcutta, sugar industry of U.P. and Bihar; Iron and Steel industry in Tatanagar are instances of localization.

According to Dr.P.S. Lokanathan:

By localizhtton is meant the concentration of different industries in different localities which in its international aspect is usually termed territorial division of labour.

Localisation of Industries
Localisation of Industries – Meaning, Causes, Advantages and Disadvantages

Causes for Localization

The concentration of any industry in a particular locality arises due to many favorable factors.

1. Availability of raw material

Availability of raw material is the foremost cause for the localization of an industry. Regions where raw materials are available sometimes become the centres of industry. The jute industry, iron and steel Industry in India have concentrated in regions that could supply the required raw materials. This factor is more predominant in cases where the raw materials are extremely bulky and they cannot be transported cheaply. Mining must be carried on where mines exist and lumbering must be localized where forests are to be found.

2. Availability of Power

Availability of cheap power is another cause for localization. Coal is one of the most important sources of power. It is not economical to carry coal over a long distance. Hence industries tend to be located near coalfields. In modern days, electric power is used widely and industries develop in the neighborhood of Hydroelectric projects. Transmission of electric power through the grid over long distances, though possible, is very costly. Supply of electrical energy at a cheaper rate is possible only near the source of supply.

3. Climate

Climatic conditions accelerate the growth of industries in a particular region. For instance, cotton textiles require moist climate so that fine thread could be spun out of cotton; Though the role of climate is getting minimized in modern days due to technological development which could over-rule the hindrances and handicaps, the climate factor has got its part, as it would help without increasing the cost of production.

4. Availability of skilled labour

This factor is losing ground in large scale industries. Only in small-scale, specialized craftsmanship is required. The glass bangles manufacturing industry of India is localized at Firozabad, not because it is near the source of raw material supply, but simply because skilled labour is available. The localization of printing and dyeing industry at Farukhabad and brass and bell-metal works in Thanjavur District of Tamil Nadu are to be explained by the availability of skilled labour.

5. Nearness to market

Nearness to market saves lot of transport costs and industries tend to concentrate in areas nearer to markets. The cotton textile and sugar mills have, for instance, been started in many places in the interior of South India near the places of actual demand.

6. Other factors

The momentum of an early start is another important factor in localization. Once an industry is localized in a place, a tendency is created for further concentration as localization creates suitable types of labour, skill, etc. The newcomers can easily enter the field on the experience of the old producers. Availability of means of transport, accessibility of market are some of the causes enabling concentration of industry. The patronage of the state may be responsible for localization of an industry. Historically, many industries got concentrated due to patronage extended by native rulers.

Advantages of localization

1. When the industry gets localized in a particular place, the labourers of that place acquire skill in that industry. The skill once acquired becomes hereditary and passed on to posterity.

2. Localization gives rise to local markets for a particular kind of skilled labour. A new entrepreneur intending to start a factory can find skilled labour in that market, while the labourers skilled in that line can hope to find employment here.

3. By localization, abundant goodwill is created for the goods. Coming from that place where it has created a reputation, whoever produces the commodity, the place associated with the goods will be sufficient to have a market. Lancashire cotton fabrics and Swiss watches have acquired a reputation which has created a market for goods produced in these places. Similarly, in India, Banaras silk, Firozabad bangles, Kanpur leather products have a reputation no matter who produces these goods in the respective places.

4. Concentration of a number of producers belonging to the same industry leads to keen competition between them. This results in an improvement in quality and reduction in the cost of production. This is to the advantage of producers and consumers. Concentration in one place will enable the producers to form associations and combinations, and come to mutual agreements concerning production and sales.

5. Growth of subsidiary and supplementary industries is possible in and around areas of industrial clusters. The iron and steel industry generally leads to the establishment of cement industry because the slag, which is the waste product of the iron and steel factory happens to be the raw material of cement industry.

6. Localization leads to the development of machinery of commerce in due course. The industrial clusters will become the beehive of commerce. The centres will have efficient means of transport and communications, banking organization and capital market, which are valuable assets to the nation.

Disadvantages of Localization

Localization has its disadvantages too:

1. It leads to narrow development of human skill. Localization creates demand only for a particular type of skill. The labourers are expected to develop only that type of skill without making use of their general intelligence in a comprehensive manner. It also imposes a limit to the mobility of labour. The labourers in the cotton textile region cannot emigrate to any other region because the people cannot do any other work.

2. Localization makes the centre entirely dependent on one industry. In times of depression, the closure of factories will have disastrous consequences leading to widespread unemployment and distress. People may not find any alternatives to earn a living.

3. If localization exceeds beyond a limit, it leads to over-crowding, congestion and insanitary surroundings and unhealthy atmosphere. Unlimited and unchecked expansion in the localized area will have its own economic, social, physical, and environmental problems.

4. Industrial clusters become vulnerable spots in times of political bickering. Destruction by aerial attack in times of war, sabotage in times of labour unrest would lead to serious consequences. If the industry is diversified or scattered over a large part of the country, the consequence of such contingencies may be minimized.