Explain the factors affecting the location of industries.

Answer: The location of an industry is decided by physical and human factors that keep the cost of production lowest and profit highest.

Physical factors:

• Raw material: industries using heavy, bulky or weight-losing raw material (iron and steel, sugar, cement) are located near the source, e.g. sugar mills near cane fields in Maharashtra.
• Power / energy: industries needing much power locate near coal fields or hydel power, e.g. aluminium smelting.
• Water: industries like iron and steel, textiles, paper and chemicals need plenty of water, so they are located near rivers or lakes.
• Climate and site: a humid climate suits cotton textiles (Mumbai); level land is needed for factories.

Human / economic factors:

• Labour: availability of cheap and skilled labour, e.g. diamond cutting in Surat, IT in Bengaluru.
• Market: industries making perishable or bulky finished goods locate near markets.
• Transport and communication: efficient roads, railways, ports and airports reduce costs of moving raw materials and products.
• Capital and banking: investment and credit are easily available in big cities.
• Government policy: concessions, SEZs, MIDC areas, tax benefits and policies for backward areas attract industries.
• Agglomeration and technology: existing industries, infrastructure and research centres attract new ones.
• Political stability and security also encourage investment.

The importance of these factors differs from industry to industry; modern footloose industries (electronics, software) are less tied to raw materials and depend more on skilled labour, markets and connectivity.