Notes, Exercises, Videos, Tests and Things to Remember on Industry
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The industry is any business activity that is connected with production, manufacture and construction of goods and services. Broadly on the basis of their production industries are categorized into three groups: primary producing raw materials, secondary producing goods using the raw materials or product of other secondary industries and tertiary producing services, not goods. Agriculture, forestry, mining, etc. belong to primary industries. House building, car factories, furniture, hydropower generation, etc. are examples of secondary industries while tourism, hotels, banks, insurance companies, schools, cinemas, etc. rank in the third category. Raw materials, capital, energy, skilled manpower, political stability, market are important infrastructures of industries.
Manufacturing industries take the raw materials and produce something manufactured that can be sold either inside the countries (so none needs to be imported) or to other countries (thus earning foreign currency). There can be small scaled industries, in a home or village, or large scale in many factories. In all cases, industries provide work and earn money for individuals or a country.
Agriculture produces food and raw materials. Raw materials are ones you can't use straightaway. You need to process them before they can be used. Mining and forestry produce raw materials. Tourism and other services have similar effects, so nowadays they are also called industries.
In Europe, industries started and grew rapidly 200 years ago but are now declining or changing. In Nepal, they only began in 1936, in the time of Juddha Shumsher. The matches first were jute, cotton, sugar, and hydropower. Many of these industries were later run by the government, and with the lack of good management have had to close. But private enterprise was also possible and is increasing important.
In Nepal industries are classified mainly on the basis of their fixed capital as a cottage, small -scale, medium-scale industries.
According to the Industrial Enterprises Act 2049(with amendment), cottage industries in Nepal include the following types of industries:
Industries with their fixed capital up to two lakhs, that include handloom, warping, semi-power loom, dying and painting, sewing, weaving, carpentry, pottery, bamboo and reed work, paper making, pottery, jewellery, leather work, rural tanning, making goods of cotton, clay, baby, jute, handicraft, doll, batik, making utensils, etc.
Similarly, according to the industrial policy 2067, a small-scale industry has the fixed capital up to 50 million rupees, a medium-scaled industry has its fixed capital from 50-150 million rupees while the large-scale industry has such over 150 million rupees.
Agriculture alone cannot fulfill the human needs in the modern time. Industries are essential components every economy. But industrialization is in its preliminary stage in Nepal. Nepalese agriculture has not improved due to lack of industries. Cottage industries that can be started locally and utilize local raw materials provide employment and supply consumer goods. Industries provide things for making Nepal more self-sufficient so that fewer things are bought from other countries that help to protect our national wealth. They provide jobs for the mass of people both skilled and unskilled. Industries also help in reducing the excessive dependency on agriculture for work and also help in skill development and development of trade and business. More widely distributed industries can help reduce the regional disparity of country.
Nepal is lagging far behind in industrial development.
The following are the major factors responsible for it:
For industrialization several infrastructures such as a supply of raw materials, provision of good transport and communication system, power and skilled manpower are essential. When these infrastructures are constructed well, industrialization begins to pace forward. Such infrastructure is constructed well, industrialization begins to pace forward. Such infrastructures have not properly developed in Nepal. Mineral produced are rare. Many places which could supply agricultural and forest produced raw materials have not been connected by transport. A power supply such as electricity is dreadfully poor. Besides, Nepalese workers are not technically skilled for factory works.
In rich countries, private companies and government have invested a lot in industries. But in Nepal lack of capital has always been a major hindrance of industrialization. The government is also highly dependent on foreign aid for large aid scale industries. Due to lack of capital, the existing industries and factories also cannot be improved.
Nepal itself is not a large market. Nepali consumers have low purchasing power. They cannot use many industrial products. Nepali goods are generally costly because of the manual labor it has involved and small scale production. These goods also cannot maintain quality enough to compete in the competitive international markets. Nepal is an open market for foreign-made products. It does not have easy access to markets in 3rd countries also because it is physically landlocked and economically India-locked.
Infant industries need good protection until they are mature enough to compete. They need to be provided with a subsidiary in certain conditions for obtaining their raw materials and machinery. But industries in Nepal have suffered pressure due to uncontrolled flow of foreign goods which are cheaper and more qualitative. In such conditions indigenous industries collapse. Besides, poor security situations of the country in the last decade has paralyzed Nepal's overall industrialization.
It has not good policy for developing infrastructures, controlling imports, skill development, and modernization of industries and so on. Political instability and poor security situation have become dominant. Industries of Nepal have often fallen victims to strike, extortion and load shedding. Industrial policy is affected by every political change in the country. The market is not secure. Due to lack of good industrial policy and stability, industrialists are slowly discouraged.
The infrastructures mentioned in the first paragraph are raw materials, capital, energy, skilled manpower, political and market. Raw materials are important because without raw materials the industry will come to closure as no raw materials means no production. Capital energy and skilled manpower are also important because without them it will be very difficult to run an industry and will be inefficient. Political stability again is very important as without political stability there is no peaceful environment to work. And lastly, market is important as without market the produced goods cannot be sold and industry will suffer a great loss.
Other areas of development can benefit by creating a platform for employment for unemployed citizens and supply consumer goods to needed people. An Industry makes a country self-sufficient, as fewer things are imported, which protects our national wealth. Industrialization also helps in reducing excessive dependency on agriculture and also helps in skill development of trade and business.
The industries in Nepal can be classifies into 4 types, they are: cottage, small-scale, medium scale and large-scale industries. They are classified in the basis of the fixed capital. The cottage industries are those industries with their fixed capital up to two lakhs, which include making low budget stuffs like weaving, pottery, goods of cotton etc. Similarly, a small-scale are those with fixed capital up to 50 million rupees, a, medium-scale industry has its fixed capital from 50-150 million rupees while large-scale industries has capital over 150 million rupees.
Industries are very important in Nepal as agriculture alone cannot fulfill the human needs in the modern age. Nepalese agriculture has not improved due to lack of skilled resources. Cottage industries that can be started locally and utilize local raw materials provide employment and supply consumer goods. Industries makes Nepal more self-sufficient and help to reduce regional disparity of the country.
Industries are developing very slowly in Nepal. Even traditional small cottage industries have not achieved much progress because of lack of infrastructure, raw materials and other services. Industries have not been developed at the required places. The so-called well established industries of our country are not developed enough to compete with foreign industries. Lack of essential requirements like capital, infrastructure, technological knowledge, market, banking institutions, favorable industrial policy, skilled manpower, etc. as well as lack of facilities of communication and transportation are the factors that have limited industrial growth. At present, the industrial sector contributes only 10-12% to the GDP.
The problems are: