Relation of Economy and Industry
An economy consists of various industries that help make it a whole and it is important to understand that all these industries no matter how small still contribute a lot not just in terms of the GDP but also other facts like employment. The different compositions of an economy include industries like service, manufacturing, engineering, agriculture, etc. These industries have benefited the economy in so many ways by providing production of goods and services, employment generation, and equal distribution of income in the entire economy. The service sector itself contributes the most to the economy around 60 percent to the Indian GDP whereas the Agriculture sector only provides 14%.
Major Industries of India
Generally, India has six major industries which contribute to the growth of the country in various ways. They are,
Iron and Steel
Textiles
Jute
Sugar
Cement
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New Addition of Major Industries
Apart from this, there are four new industries that have joined this list, They are,
Petrochemical
Automobile
Information Technology (IT)
Banking & Insurance.
All these industries play a major role in the Indian economy. Therefore, to understand the growth of these industries one should have a good knowledge of the relationship between growth and government policies.
Role of Major Industries in the Development of India
Iron and Steel Industry
One of the most important industries in India is the iron and Steel industry which has a large capital investment. It offers employment opportunities to around 2.5 lakh workers across the country. According to the World Steel Association, India is considered one of the top 10 manufacturers of steel around the world. Despite the industrial importance of steel, it also imports large quantities of steel from foreign countries every year.
Textile Industry (Cotton and Synthetic)
This industry is a bit complicated. These industries have two extreme ends. One is the well-sophisticated and mechanized mills, whereas the other is based on hand-looming, weaving, and spinning. In between both ends, there is the decentralized loom sector. Considering all these three as a whole, It has become the largest industry in India. It contributes around 20% of the industrial output, 33% of the total export earnings, and provides employment opportunities for around 20 million people.
Jute Industry
In India, Jute Industry contributes around 30% of the jute output around the world. It has the capacity to earn foreign exchange as most of them are exported to various parts of the world. It also provides employment opportunities for around 2.5 lakh individuals. In India, around 40 lakh families depend on jute cultivation.
Sugar Industry
India is considered one of the largest sugar-producing countries around the world. It is the second largest agro-based industry in India. It provides direct employment opportunities to approximately 3.25 lakh people and also gives indirect employment opportunities to 45 million people such as farmers, traders, etc.
Information Technology (IT) Industry
The IT industry is one of the newest entrants to this list. The growth of IT in India is increasing rapidly day by day. Many foreign clients from the US and EU have a strong bond with India for IT software development and outsourcing services.
Automobile Industry
The liberalization of the Indian economy results in the tremendous growth of the automobile industry. New manufacturers from foreign countries with emerging technologies had replaced the traditional manufacturers. There is a big competition in this market followed by certain regulations from the Indian government regarding the emissions that have led to an improvement in standards.
Banking Industry
The Indian banking industry is one of the largest industries across India. The updated technology in this firm over the years has made transactions easy for the people. At present, there are different types of banks in India such as,
Savings Banks.
Commercial Banks.
Scheduled Banks.
Public Sector Banks.
Private Sector Banks.
Foreign Banks.
Non-Scheduled Commercial Banks.
Industrial or Development Banks.
Land Mortgage or Land Development Banks.
Indigenous Banks.
Central or Federal or National Bank (Reserve Bank of India).
Cooperative Banks.
Foreign Exchange Banks.
Consumer Banks.
FAQs on Contribution by Major Industries to Economic Growth
1. What is the fundamental role of major industries in the economic growth of a country like India?
Major industries play a pivotal role in a nation's economic growth by transforming raw materials into valuable goods, a process known as secondary activity. This leads to several key benefits: it boosts the Gross Domestic Product (GDP), creates large-scale employment opportunities, promotes modernisation of other sectors like agriculture, and increases national income. Furthermore, a strong industrial base helps in earning foreign exchange through exports, contributing to overall economic stability and development. For more details, explore the Sectors of the Indian Economy.
2. Which are the major industries that significantly contribute to India's economy?
India's economic growth is driven by several major industries. Traditionally, these include:
Iron and Steel: Forms the backbone of infrastructural development.
Textiles: A major employer and significant contributor to exports.
Sugar: A key agro-based industry supporting millions of farmers.
Cement and Jute: Crucial for construction and packaging, respectively.
In recent decades, new industries have emerged as dominant contributors, including Information Technology (IT), Automobiles, and Banking & Insurance.
3. How does the textile industry specifically contribute to the Indian economy?
The textile industry is one of India's largest and most important sectors. It contributes approximately 20% of the total industrial output and makes up about 33% of the country's total export earnings. It is a massive source of employment, providing jobs to over 20 million people across a wide spectrum, from highly mechanised mills to traditional handloom and weaving units.
4. What is the economic significance of the sugar industry in India?
The sugar industry is India's second-largest agro-based industry, playing a critical role in the rural economy. India is one of the world's largest producers and consumers of sugar. The industry provides direct employment to over 3.25 lakh people in sugar mills and offers indirect employment to approximately 45 million farmers and agricultural labourers involved in sugarcane cultivation and transportation.
5. What has been the impact of the Information Technology (IT) and automobile industries on the Indian economy?
The IT and automobile industries have revolutionised the Indian economy. The IT sector has made India a global hub for software development and outsourcing services, contributing significantly to GDP and foreign exchange earnings. The automobile industry, spurred by economic liberalisation, has seen tremendous growth with the entry of global manufacturers. This has not only created jobs but also improved technological standards and driven competition.
6. How does the growth of manufacturing industries support the development of agricultural and service sectors?
The growth of manufacturing industries creates a synergistic effect across the economy. It supports the agricultural sector by providing modern equipment like tractors and tools, as well as fertilisers and pesticides. It supports the service sector by creating demand for transport, banking, insurance, and marketing services to move raw materials and distribute finished goods. This inter-sectoral dependence is crucial for balanced economic development.
7. Why is the iron and steel industry often called the 'basic' or 'key' industry?
The iron and steel industry is considered a 'basic' or 'key' industry because its products are the fundamental raw materials for numerous other industries. Machinery, tools, transport vehicles (trains, trucks), and construction materials for bridges and factories are all made from iron and steel. Therefore, the development and self-sufficiency of nearly all other industrial sectors, including defence, engineering, and consumer goods, depend heavily on a robust iron and steel industry.
8. While industrial growth is crucial, what are some potential negative economic consequences that must be managed?
Despite its benefits, rapid and unplanned industrial growth can have negative consequences. These include regional disparities, where industries concentrate in certain areas, leaving others underdeveloped. It can also lead to increased pollution and environmental degradation, imposing long-term economic costs. Sometimes, automation in large industries can lead to jobless growth, where GDP increases without a proportional rise in employment. Effective government policies are needed to ensure balanced and sustainable industrial development.
9. How do small-scale industries (SSIs) complement the role of major industries in economic growth?
Small-scale industries (SSIs) play a vital complementary role to major industries. They are often less capital-intensive and more labour-intensive, making them crucial for employment generation, especially in semi-urban and rural areas. SSIs frequently act as ancillary units, supplying components, raw materials, and services to large-scale industries. This symbiotic relationship promotes balanced regional development and fosters entrepreneurship, contributing significantly to the national economy. Learn more about the role and importance of small scale industries.
