Factors Responsible for Setting up of an Industry in an Area

There are many factors that require due consideration before the industrial establishment of any kind in any place.  These factors include the availability of capital, labor, raw material, access to market, transportation facilities, power supply, government policy, etc.

Following are some of the important factors that influence the industrial establishment in any place:

Availability of Capital

The first and foremost condition for the establishment of an industry is the availability of capital. The industrial process needs labor and machinery. The workers give their services for salary or wage.

Likewise, it needs money to buy industrial plants and related machinery. Moreover, an industrialist needs to buy land in an area where he/she wants to set up an industry.

Similarly, transportation of raw material to the industrial site and finished goods to the market also need to be calculated in terms of expenses and cost. Thus without the availability of capital, one cannot think of the establishment of an industry.

Availability of Power

The second most important factor for establishing an industry in any area is the supply of power. Industrial plants and machinery run on power. Industrialists prefer electricity over others forms of industrial power.

Uninterrupted power supply helps increase industrial production. Frequent power breakdown causes stoppage and break down of industrial process causing huge loss to the industrialist. Therefore, the industrialists prefer places where the supply of electricity sees no interruptions and long cuts. 

Availability of raw material

Raw materials are an important industrial input. Industrialists inspect the areas whether the relevant raw material that he/she needs for the manufacture of any particular goods is available or not.

Supply of raw material from a far place becomes very expensive due to increased transportation costs. Disturbance in its timely supply also leads to stoppage and disruption in the industrial process.

Access to market

An industrialist makes sure that the industry is near to the market. The purpose is to ensure the timely supply of goods to the consumers. It also helps in reduction in transport cost and travel time thus by the safe transportation of goods. Thus access to the market also acts as one of the factors for any industrial establishment.

Transport facilities

Good roads and railway systems are very important for the transport of raw material to the industrial site and finished goods to the market. Therefore, an industrialist would prefer to establish his/her industry in such an area that is connected with cities and other places via an efficient transportation system.

A good transport system also helps in commuting workers from relatively a far area to and from the industrial site thus saving precious time of workers.

Government policy

The government’s rules and regulations with regard to the manufacture of any goods is one of the important factors to take into account. Islam as the main ideological basis of Pakistan prohibits the manufacture and sale of many goods as part of its policy.

For example, a Muslim cannot produce wine and sell it in Pakistan. Similarly, according to government policy, nobody will manufacture and sell arms, ammunition, and drugs unless there is special permission. 

Similarly, an industrialist cannot manufacture arms and ammunition without following government policy.  Therefore, it is important to see what does the industrial policy says about the production of a particular good.

Location away from the residential area

Industries are the main source of all types of pollution. Their establishment needs to be away from schools, hospitals, and populated areas because of pollution. Therefore,  it is very important to select such a site that is away from populated and residential areas.