UPSC » UPSC CSE Study Materials » General Awareness » Classification of Industries

Classification of Industries

This article will highlight the concept of Industries, their significance, and the different types of Industries- Primary, Secondary and Tertiary and you will learn many things about them.

Industries are economic organisations whose sole purpose is producing and distributing goods and services. As has been witnessed in previous centuries, the development and growth of this form follow a linear pattern. Industries have grown in importance as an emergent economic sector because they specialise in manufacturing certain goods or services to suit market demand. The industry size is likewise categorised, each having its own benefits and drawbacks since larger ones require more capital investment but yield more profits than smaller ones.

Three Different Types of Industries

An industry is a collection of businesses linked by their core business activities. There are dozens of industry classifications in today’s economy. Typically, industry classifications are bundled into broader divisions known as sectors. We’ll go over three different types of industries in this section.

1) Primary Industry:

 The primary industry is the first sector that comes into existence in the production cycle. It includes agriculture, hunting, fishing and other related activities. The primary sector does not involve sophisticated techniques for producing or distributing goods and services. This is also the sector that provides basic needs to human beings like food, water and shelter. One of the most important characteristics of this sector is that it uses minimal technology for cultivating products and producing goods.

This sector can be divided into two types. They are 

  • Genetic Industry 

  • Extractive Industry

2) Secondary Industry: 

The Secondary Industry is directly involved in processing raw materials for consumption by end-users or other businesses to convert crude products into a more refined or usable form. This is usually done to increase the marketability of raw materials. Still, it can also be to prepare a product for more uses or to increase the value of this product. In this way, Secondary Industry plays a very important function by adding value to different raw materials before they are sold in the market. The most important characteristic of any Secondary Industry is that it does not directly produce any goods but rather produces goods through processing or refining raw materials.

Secondary industry is divided into two categories:

  • Heavy industry

  • Light industry

3) Tertiary Industry:

Tertiary Industry is an economic sector that provides services that are not directly related to producing or processing raw materials. This includes retailing, banking, insurance and other services considered indispensable for a modern economy. Unlike primary and secondary Industries, the tertiary sector produces goods that are not tangible but rather intangible goods like knowledge. The tertiary industry is the economy’s services sector, which includes medical professionals, educators, financial services, hairdressers, and personal trainers, among other things. The tertiary sector can be classified into two categories: for-profit and nonprofit.

The tertiary sector is divided into two categories:

  • The first category includes companies that are in the business of making money, such as those in the banking sector.

  • The nonprofit sector, which includes services such as public education, is the second group.

Distinction Between Primary, Secondary, And Tertiary Sectors:

 Primary

Secondary

Tertiary 

The agricultural industry and related services comprise the primary sector.

The manufacturing industry is part of the secondary sector.

The service sector makes up the tertiary sector.

The primary sector provides goods and services with raw materials.

The secondary sector increases the utility of one good by converting it into another.

By providing services, the tertiary sector aids the elementary and secondary sectors.

The primary sector, which is mostly unorganised, uses traditional methods.

The secondary sector is better organised and uses more efficient manufacturing methods.

The tertiary sector is well-organised and employs advanced logistical systems to fulfil its responsibilities.

The primary sector includes agriculture, forestry, fishing, and mining.

The secondary sector includes huge corporations, manufacturing units, small businesses, large corporations, and international corporations.

Banking, insurance, finance, trade, and administration are all part of the tertiary sector.

India employs many workers in this area in contrast to other developed countries.

Because employment in this field necessitates a specialised set of skills, the secondary sector’s employment rate is stable.

This sector’s employment proportion is constantly increasing.

Conclusion:

There are dozens of industry classifications in today’s economy. Typically, industry classifications are bundled into broader divisions known as sectors. Primary industry uses natural resources, supplies necessities, and has a low productivity rate. It is also the most significant sector because it provides human beings with goods such as food and shelter. Economic shocks, vulnerability to external variables, and a restricted ability to diversify output to sell their produce on the international market are all issues with primary agriculture.

Secondary and tertiary industries, which generally provide commodities after processing raw materials, are similarly out of sync with primary industries.

faq

Frequently asked questions

Get answers to the most common queries related to the UPSC Examination Preparation.

What do you understand by the term Primary Industry?

Answer.The term Primary industry is used to refer to the first stage in the production cycle. This involves activiti...Read full

What are some of the advantages of the primary industry?

Answer.Economic growth, employment, tax income, and export revenues all benefit from the industry. Countries would s...Read full

What are some disadvantages of the primary industry?

Answer.One drawback is that primary producers cannot diversify their production because they produce only one commod...Read full

What is the difference between primary, secondary and Tertiary Industries?

Answer.All three are economic sectors with specific characteristics, but their functions differ based on the differe...Read full