Highlight the factors that lead to industrial inertia and also give a few examples from Indian context.

When industries don’t move away from an area, despite the disadvantages of the location where it is located, this phenomenon is called industrial inertia.

Factors that contribute to Industrial Inertia:

  • Labour – availability of a large pool of skilled and experienced workers that support the services.
  • Transport – Well-developed rail and road connectivity. In this case, even if the raw material supply is exhausted, it can still be imported from other areas.
  • Capital – Heavy industries especially require a lot of capital to start with and also have a long gestation period. Hence, it is always cheaper to expand or modernize the existing facility rather than move to some other location.
  • Market – Primary industries like cement, iron & steel provide the raw materials for secondary industries like automobiles, heavy engineering, etc. So the existence of the market becomes a crucial factor.
  • Government policies that are applicable to industries of a particular region also play a role, like land subsidies, tax benefits, etc.

Examples from the Indian context:

  • Beedi industry in Jabalpur due to the supply chain of tender leaves.
  • Lock industru in Aligarh.

Way forward:

  • Promotion of ease of doing business across states and regions.
  • Promoting one nation, one market.
  • Integrating industrial policy and export policy.
  • This must be supplemented by the development of backward and remote areas.
  • Transportation and logistical network must be boosted to enhance reach to all places.

Industrial inertia has both pros and cons, on one hand, it helps in the development of manufacturing and industrial hubs, and on the other hand, it limits the development of certain regions and contributes to migration. While industrial inertia holds its own importance, efforts must be made to boost MSMEs and standalone industries to promote a more holistic growth environment.


Leave a Reply