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Types of Industries – Primary, Secondary & Tertiary?

August 1, 2022

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If you have ever engaged in a conversation about the economy or progress of a country, then you might have heard the word ‘industry’ being thrown around quite often. This is because a country’s industrial operations serve as an important benchmark to gauge the level of economic growth in it. But this begs the important question, what exactly is an industry? Is it any different from a ‘sector’?

The industry is essentially a cumulation of all the companies and enterprises engaging in similar work. These too can be categorized into three, more about which is enumerated later in this article. On the other hand, a sector covers a broader definition of business operations. It comprises several industries and breaks the overall economy into sub-categories.

Primary Industries

Primary industries comprise those industries wherein the business processes require minimal value addition. It primarily contains operations in which raw materials are extracted from their primal state and processed for secondary industries. The scale of operations in these industries is generally moderate to large since removing raw materials from their core state requires large working capital. These primary industries can also be further classified into sub-categories based on their core functionalities.

Primary Industry Classification

Extractive industries: – Extractive industries are those enterprises that engage in activities concerned with extracting and removing raw materials from their rudimentary state. This includes operations such as removing minerals from their ores, mining coal, petroleum, etc. The presence of such industries is largely visible in underdeveloped and developing countries.
Genetic industries: – This category of industries is involved in operations that focus on processing raw materials to generate some form of enhancement. The raw materials go through various levels of manufacturing, which require a huge amount of scientific and technical research. Livestock, agriculture and fishing industries are some major examples of genetic industries.

Secondary Industries

Secondary industries engage in slightly high-level operations when compared to their primary counterpart. These industries direct their resources towards converting the products produced by primary industries into usable consumer or producer goods through manufacturing and processing. The production of capital products is generally done in this industrial type. Since secondary industries encompass such a wide range of business processes, it helps to understand their totality by dividing them into further categories.

Secondary Industries Classification

Manufacturing industries: – In manufacturing industries, the primary function performed is that of converting raw materials into finished finish-consumer or producer goods through multiple rounds of processing and value addition. These enterprises generally function at a large-scale level.
Construction industries: – Construction industries are concerned with all the operations relating to the construction, building, and development of the infrastructural framework. The business processes utilize raw materials and combine them with other resources in order to develop roads, buildings, structures, and much more.
Light industries: – Light industries comprise those business enterprises that follow a relatively low scale of production. They generally produce durable-use consumer goods. Light industries require lesser working capital, cause low pollution levels and even have a lower electricity consumption rate.
Heavy industries: – Heavy industries are categorized based on the large volume of operations that are conducted. They generally produce capital and producer goods, which weigh a lot and require high levels of manufacturing. Contrary to light industries, these enterprises require a higher degree of power and cause a higher level of pollution.

Tertiary Industries

Tertiary industries are quite different from their counterparts since it does not deal with manufacturing or procuring goods in any form. Rather, this industry focuses on intangible services which generate gains and income. Services like consulting, health, professional services, franchises, and more constitute this type of industry. Service industries play a pivotal role in the economy since they offer employment to a huge portion of the population in our country.

Since tertiary industries encompass a wide variety of services, give below are some of the major industrial groups that come under its purview.

Tertiary Industries Classification

The financial services industry constitutes a broad range of services concerned with regulating, distributing, and circulating finances in the economy. Banks, financial institutions, and all forms of payment platforms come under the segment of financial services. Some examples include lending loans by banks, mortgaging homes by borrowers, purchasing mutual funds and other forms of financial assets, etc. With increasing digitization, financial services are becoming increasingly competitive, shifting to online platforms.

In this growing digital age, most of us are familiar with the many gains that the entertainment industry is making these days. This industry comprises all the activities that earn an income by garnering an audience and piquing their interest through music, dance, theatre, etc. Television channels, OTT platforms, production labels, news agencies, and more all fall under the umbrella term that blankets entertainment-related enterprises.

The software industry encompasses all the activities related to programming, network security, coding, and development of the digital infrastructure that supports most operations. The expanding IT industry in India is a direct result of the rise in outsourcing prospects within this country. These industries provide the backbone to various other sectors of the economy by working the backend and frontend operations through the development, maintenance, and distribution of business software.

The health care industry focuses on the improvement and maintenance of the health of the citizens. The enterprises in this industry are entrusted with the chief task of offering patients a reprieve from their maladies and restoring them to good health. Both private and public hospitals form an integral part of the medical industry. With increasing innovation, the level of technology used during the services offered to patients is also becoming more complex, thus setting higher medical standards in the country.

The educational services industry is concerned with imparting knowledge to the students through building schools, coaching centers, and even online learning platforms. Today, the field of academic services has grown tenfold, with the digital boom pushing remote learning and online learning facilities. Not-for-profit and commercial educational service enterprises come under the purview of this industry, and they generally include schools, universities, tutors, research facilities, and much more.

In the age of digital retail and e-commerce, the industry of marketing services is gaining quite a bit of traction. It consists of services relating to the spread of awareness and information regarding products and startups. This process can be quite extensive, given the number of competitors and type of product. Advertising forms a major chunk of the marketing services industry, along with other media-based services that allow business owners to spread the word about their services. Social media advertising and targeted ads have become quite a popular marketing service with the growth in digital platforms.

The hospitality industry combines all those activities directed towards ensuring that tourists and visitors in any place receive all the facilities required for a good stay. Services such as lodging, tourism management, event planning and more come under the purview of the hospitality industry. Various hotel chains and travel management agencies form the hospitality industry’s backbone, contributing to a large part of the economic progress in most scenic states and countries.

The legal services industry is responsible for upholding the country’s legal integrity by following the judicial system’s standards and ensuring that those deviating from the same receive the right recourse. Numerous enterprises, such as legal houses, consultants, etc., come under the legal industry, and it contributes to a good portion of the business transactions in the country.

Here is a brief differentiation of the three main types of industries for a better understanding of the same:

Basis	Primary industries	Secondary industries	Tertiary industries
Definition	Primary industries focus on converting and extracting raw materials.	Secondary industries perform the function of converting and processing raw materials into usable goods.	Tertiary industries provide services that are intangible in nature.
Technique	The techniques used in these industries are generally traditional.	The techniques used in secondary industries are extremely advanced.	Modern logistics and supply chain techniques are used.
Scale of operations	These generally have medium to large-scale operations.	These industries generally operate on a large scale.	Tertiary industries can be run at pretty much any scale of operations.
Examples	Mining, forestry, agriculture, etc.	Bearing, manufacturing, etc.	Consulting, financial services, delivery services, etc.

While industries can be broadly categorized into three primary groups, they form a cumulation of various functions and business processes that contribute to the spokes of the wheel of progress in any economy. A brief understanding of their classification becomes impertinent to understand the level of value addition brought about by them and how important it is to factor them in for any conversation regarding the development and growth of a country.

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Types of Industries FAQs:

1. How many types of industries do we have?

The basic framework of industries can be divided into primary, secondary and tertiary, which perform the functions of extraction, processing and service provision, respectively.

2. Which types of industries can price discriminate?

Price distribution, which refers to the regulation and manipulation of the price through some form of discrimination such as age-based discounts, gender-based incentives and more, are generally done by travel industries, telecom industries, pharmaceutical industries, textile industries, industries in the retail space, etc.

3. What type of industry is tourism?

The tourism industry comes under the third type of industry, which is tertiary industries, since it is a service-based industry that focuses on providing accommodation, leisure activities and other such services to tourists. It also forms a crucial part of the hospitality industry.

4. Which types of industries are hit hardest by a recession?

The effect of a recession generally is not confined to just a specific type of industry since it takes its toll on every kind of enterprise. That being said, some of the main industries heavily exposed to a recession’s shortcomings include real estate, automobiles, energy-based industries and more.

5. What types of industries are called cottage industries?

Cottage industries are those types of industries operated on a very small scale, generally out of the owner’s home. They follow a decentralised method of operation and generally engage in the production of handcrafted products.

6. What are some main large-scale industries?

Large-scale industries refer to those with a high number of operations and require a huge investment in working capital. Some of the main large-scale industries include petroleum and natural gas, automobile, iron and steel, telecommunication, fertiliser, and so on.

7. Is there any difference between sectors and industries?

Yes, sectors refer to a broader classification of economic activities and encompass the operations of industries, whereas industries categorise similar business operations of enterprises with a comparatively narrow scope. While sectors are a group of industries, industries are a group of business organisations engaged in the same activities.

8. What type of industries can be established at a local level?

The most sought-after industries are small-scale and cottage industries at the local and grassroots levels. Such industries generally do not require a very high investment in working capital and can be organised from pretty much anywhere in the world. Moreover, due to their ease of access, they also help contribute to the economic progress of the rural areas.

9. What type of industries can B2B commerce be applied to?

B2B commerce is not restricted to any type of industry since it has wide applications in this age of growing e-commerce. That being said, manufacturing industries generally use this type of commerce the most.

10. What type of industry is banking?

The banking industry falls under the purview of tertiary industries since their operations are highly service-based. Banking industries also form a part of the financial-services industry, albeit it is a highly developed and large-scale industry in itself.

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