According to Conventional economics  industrialization and urbanization go hand in hand as policymakers often adopt an active industrial policy to accelerate growth. Along with it they also embrace an active urban policy since industrialization without urbanization gets stalled.However this changed in India as the manufacturing growth in urban areas which was initially concentrated around the mega cities has reduced and share of manufacturing has increased in rural areas.

Causes :-

• Large-scale manufacturing enterprises, that account for 80% of output, are moving into rural areas in search of lower land costs to remain competitive.
• Cheap labour :-Huge unskilled labour in rural areas which is suitable for manufacturing enterprises of leather, textile etc. Also Labour laws might not be very strictly implemented
• Raw materials and inputs are readily available especially for food processing and agro based processing industries.
• Environmental regulation may not be that strict in rural areas unlike urban areas where stricter pollution norms.
• Government giving impetus by skill development mission, Mudra loans, Startup and standup India

Consequences :-

Positives:  

• Employment in the rural areas  will increase reducing the burden on agriculture sector leading to increased standard of living as well .
• The gap between urban and rural areas will reduce leading to easing of migration from rural to urban areas.
• Infrastructure in rural areas will improve leading to better education and health facilities.
• India’s future economic growth may not be in its mega cities, which are already dense, but in its secondary cities, where there is substantial untapped potential.
• Next phase of urbanization could result in a four-fold increase in per capita income.
• Provides immense potential for regional and spatial development

Negatives:-

• Will lead to De-congestion of urban areas
• Questions whether manufacturing sector moving away from cities will compromise economic growth and job creation, low levels of infrastructure investments in rural areas will slow down the pace of spatial transformation are raised
• The purity of villages would fade away with pollution rising, groundwater contamination increasing 
• Threatens food security as due to rise of land prices agricultural land can be sold to industries .

Way forward :-

• Building a smart tier II and tier III city calls for scaling up investments in physical and human infrastructure to make them more competitive, attract new enterprises, and create more jobs.
• India can also draw upon other policy levers to make tier II cities more competitive.
• New technology can play a more dynamic role in urbanization. It can deliver better outcomes to entrepreneurs and citizens. It can reduce congestion costs, make cities green and sustainable, and increase the efficiency of local government programmes.
• Agricultural processing industries can be given impetus in rural areas.
• Connectivity between rural and urban areas can be increased by industrial corridors, Bharatamala scheme etc