Generally, “any human activity which is engaged in the conversion of raw materials into readily usable materials is called an industry”. Industrialisation refers to the process of using modern techniques of production to produce goods that are required by both consumers and other producers on a large scale. In this chapter
we will learn the nature of industrialisation of Tamil Nadu, importance of industrial clusters,how industrial clusters have developed in Tamil Nadu and the role of government initiatives in promoting industries.To understand importance of industries,we need to understand why the share of agriculture in an economy's income and employment decreases with development.First, demand for food remains constant with regard to income. Therefore, as an economy grows and incomes increase, consumers tend to spend a lesser share of their income on
products from the agricultural sector.
Second, even the food that is consumed is subject to more transformation. Food products are taken over longer distances, processed and branded. This also requires that food products have to be preserved. As a result, the prices that
farmers get tend to be much less compared to the prices at which consumers buy.Third, there are limits to the ability of agriculture to absorb labour due to the
declining marginal productivity of land. Wages too cannot therefore increase and as a result poverty levels may remain high, especially when more and more people continue to rely on agriculture for their livelihood.Due to all these factors, there is a need for an economy’s production and employment base to diversify away from agriculture.As stated earlier, it is essential to produce inputs to other producers in an economy. Even agriculture requires inputs from industry such as fertilisers and tractors to increase productivity.
Second, a market exists for both producers and consumer goods. Even services like
banking, transport and trade are dependent on production of industrial goods.
Third, by using modern methods of production, industries contribute to better
productivity and hence lower cost of production of all goods produced. It therefore helps people to buy goods at a cheaper rate and help create
demand for more products. Fourth, through such expansion of production, industrialisation helps to absorb the labour force coming out of agriculture.
Employment generation is therefore an important objective of industrialisation.
Fifth,a related advantage of industrialisation is therefore technological
change. Through use of modern techniques, industrialisation contributes to learning of such methods and their improvement. As a result labour productivity, ie, output per unit of labour input increases, which can help workers earn
higher wages. Sixth, expanding incomes lead to more demand for goods and services.
Industrial clusters are groups of firms in a defined geographic area that share common markets, technologies and skill requirements. The advantages of industrial clusters or districts was first observed by the famous economist
Alfred Marshall in the 1920s when he tried to understand the working of clusters of small firms in the metal-working and textile regions in England. While the notion of an ‘industrial district’ was developed by Marshall, it was only after the success of small firms in Italy in the 1980s that it became popular. Policy-makers
in developing countries like India began to promote them actively as they realized that there several such small firm clusters in the country Clusters may arise due to many factors.Certain clusters evolve over a long time in history when artisans settle in one locality and evolve over centuries. Handloom weaving
clusters are one examples of this development. Or else, in some sectors, when a large firm is established, a cluster of firms may emerge to take care of its input and service requirements. At times, governments may decide to encourage
manufacturing using raw materials from a region, which may also lead to emergence of clusters.
There are two sets of factors that have contributed to the process. The introduction
of cotton cultivation in western and southern Tamil Nadu by the colonial government led to the emergence of a large-scale textile sector in
these parts. Second, increase in trade during this period led to industrial development around two of the most active ports in the region, Chennai and Tuticorin. Match factories too emerged during the colonial period in the
Sivakasi region, which later on became a major centre for fireworks production and printing. Port-related activity too contributed to the growth of the region. Leather production was also taking place in Dindigul, Vellore and Ambur areas.
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