Step 1: Location.
Bhilai is located in the state of Chhattisgarh. It is one of the most important industrial towns in India.
Step 2: Major industry.
The city is globally known for the Bhilai Steel Plant, which was set up with the collaboration of the former USSR in 1955. It is one of the largest steel plants in India.
Step 3: Elimination of incorrect options.
- Cotton textile industry → mainly concentrated in Mumbai, Ahmedabad, and Surat.
- Sugar industry → mainly in Uttar Pradesh, Maharashtra, and Bihar.
- Jute industry → mainly in West Bengal (Hooghly region).
\[
\boxed{\text{Thus, Bhilai is famous for its Iron and Steel Industry.}}
\]