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Eight main Factors Influencing Location of Industries

Factors Influencing Location of Industries


Location of Industry's concern may be a simple village workshop owned by a single man or a highly complex corporation. When an industrialist sets out to find a suitable location for his industry, he has to assess various factors, which give him more advantages. Some of the factors that influence a location of industries are as follows:

The following image explain about the factors influencing location of industries

factors influencing location of industries

Image credits © Manoj Patil.

The eight factors influencing location of industries are follows:

  1. Raw Material
  2. Fuel & Power
  3. Transport & Communication Network
  4. Site & Land
  5. Labour
  6. Market
  7. Capital
  8. Government Policies

Now let's discuss above factors influencing location of industries.


1. Raw Material


Location of Industry's plant / Industrial unit must be situated in an area where plenty of raw materials exist & are easily available. This reduces the cost of transport. This is true in case where raw materials are heavy and bulky.


2. Fuel & Power


Location of Industries earlier were situated near the coal fields. In recent years, Electricity gives more freedom. Electricity can be easily transmitted through grid networks to desired industrial sites & petroleum & natural gas can be transported through pipelines. So Industries have more freedom in case of power & fuel.


3. Transport & Communication Network


Location of Industries must have best transport & communication network. Good transportation & communication system helps to curtail the cost & make the action of material easier. A manufacturing unit producing bulky & heavy goods should be located near the railway line while a unit producing export items should be located near a port town. Communication is also equally important as such facilities are useful for quick marketing of goods.


4. Site & Land


Location of Industries require large accessible areas of cheap flat land on which to build their factories. Site selection also takes into account the topography & soil structure of land. Today with new modern building techniques the limitation of soil can be overcome. However, if more improvement is required it result in more cost.


5. Labour


Location of Industries require adequate labour force whice is equally essential in the functioning of an industry. There is always a cheap and large worker team are required for manufacturing industries. Now industries have to locate where high-skilled labours are available. For Eg. Volkswagen company in Germany includes in it the factory sites, assembling units, workshops, repairing units, administrative centers, offices, etc., thus employing huge quantity of labour force.


6. Market


Location of Industries is essential for selling the product easily & quickly in the market. When goods are perishable, market must be near to industry. The industries that produce high-tech goods, which are lightweight and economical in transport, such types of industries don't require market.


7. Capital


Location of Industries the capital is the basic requirement for establishment of manufacturing unit. The amount of financial investments decides the scale of industrial functioning. Today not only manufacturing but also its marketing requires a lot of capital. The role of financial institutes is going on expanding. Capital investment has no national boundaries.


8. Government Policies


Location of Industry's government polices plays an important role. Government is encouraging the industrialist by providing commercial space outside of the city. It also provides land for industrial development at cheap price. It uses positive & negative incentives to motivate entrepreneur & promoters to choose a particular location.


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