Localisation of Industries | Meaning, Advantages, Disadvantages

Localisation of Industries

What is Localisation of Industries
What is Localisation of Industries

The term localisation means concentration of many industries in a particular area. For instance, cotton industry in India is almost localised in Mumbai and Ahmedabad due to availability of raw materials, physical location etc. Hence the phrase localisation denotes the concentration of industries in a particular region.

Advantages of Localisation of Industries

Localisation of industries has several merits. The following are the important advantages of localisation.

Localisation of Industries - Advantages
Localisation of Industries – Advantages

1. Variety of Materials

Concentration of similar type of industries enables increase in variety of materials that can be offered by the suppliers.

2. Improvement of Labour Market

Localisation of industry helps to improve the labour market for both the employer and employees.

3. Banking Facilities

In the modern world, the entire business community requires the services of banks. This enables the banks to gather full information about the industrial establishments located in its area.

4. Repair Facilities

Concentration of industries in a particular area attracts the establishment of the necessary repair plants say foundries, tool makers, machine shops, mill stores suppliers etc. In addition, other supply houses will also set up their establishments nearer to the industrial area.

5. Prestige to the Firms

A group of similar industrial establishments located in a particular region serves to perfect the local market reputation of each establishment supplement to that of others. Thereby, a firm enjoys prestige from the mere fact of its location in the specified place.

6. Division of Labour

Localisation enables division of labour. The principle of division of labour may reach a high perfection and particularly new enterprises will find it easy in getting specialised and skilled labour in other areas.

7. Development of Transport Facilities

The development of industries facilitates the development of means of transportation and communication, which the society at large also can avail at cheaper rates.

8. Arrangement of Training Facilities

As many industries are located in a particular area, arrangement of training for their labourers can be made easily and economically. Further, research facilities can also be developed.

9. Development of Subsidiary Units

The development of large-scale industries provides for the development of subsidiary units there. Thus, localisation of industries results in rapid industrialisation and development of the country’s economy as a whole.

Demerits of Localisation of Industry

Localisation of Industries - Disadvantages
Localisation of Industries – Disadvantages

1. Attack During War Periods

In times of war, if the enemy attacks that region where the majority of the industries are situated, that will destroy all the industries located there. Hence the entire economy of the nation will collapse.

2. High Cost of Living

Localisation of industries facilitates increase in the standard of living, which ultimately result in high cost of living.

3. Effects of Trade Cycles

Effects of trade cycles would be greater on the areas where more industries are concentrated. Since the investing public may lose their confidence in the capital market under such circumstances, all the industries located there will suffer.

4. Change in Customer Preference

If there is any change in the customer’s taste, fashion or technology, it will affect the smooth functioning of all the industries located in the area.

5. Unhealthy Environment

There is generally a regular flow of workers in all industrial areas. So the whole area will be over crowded which result in inadequate housing facilities, unsanitary conditions etc. All these factors contribute to an unhealthy environment to live in.