Importance of Small Scale Industries in Indian Economy

The Small Scale Sector is the natural habitat of entrepreneurs. Most entrepreneurs start small and then nurture their units into large industries. The SSI Sector provides an opportunity for them to hone their skills and talents, to experiment, to innovate and transform their ideas into goods and services needed by the society. Over the last six decades the Small Scale Industry sector has emerged as a highly vibrant and dynamic sector. It has acquired a prominent place in the socioeconomic development of the country. Mostly this sector exhibited positive gro th trends even during periods hen other sectors of the economy experienced either negative or nominal gro th. Today this sector accounts for !" percent of the industrial units, provides nearly #$ percent of manufacturing employment and contributes around %" percent of exports. It produces &"$$ items and provides employment to more than '!" lakh persons. It is a ell(recognised fact that a vibrant small(scale sector holds the keyto economic prosperity in an economy like India. Profile of SSI Sector in India !") of Industrial *nits in the +ountry %!.!,) of -alue .dded in the Manufacturing Sector %/.,!) of 0ational 1xports 2.#2) of 3ross 4omestic 5roduct 1mployment To '!% 6akh 5ersons 5roduction of Over &"$$ Items in the Industrial Sector ,!# Items 7eserved for 1xclusive Manufacture %"# Items for 1xclusive 5urchase from This Sector

Small business has played a very crucial role in transforming the Indian economy from a back ard agrarian economy to its present stature. Its benefits range from creating 8ob opportunities for millions of people, including many ith lo levels of formal education. It has nurtured the inherent entrepreneurial spirit in far flung corners of the nation resulting in the gro th and development of all regions. It has been instrumental in raising the standard of living of the multitudes. The small scale sector has contributed specifically in the follo ing areas9 '. Employment Generation: The SSI sector in India is the second largest manpo er employer in the country next only to the agriculture sector. India is characteri:ed by abundant labour supply and is plagued by unemployment and underemployment. *nder these circumstances the small(scale sector is a boon .;or every 7s.$.'million of investment, the small(scale sector provides 8obs to ,2 people as compared to / 8obs created in the large(scale sector. ,. Low Initial Capital Investment: .nother feature of the Indian economy and most of the developing economies is the scarcity of capital. The modern largescale sector requires colossal investments hereas the small sector is 8ust the opposite. 0ot only is the employment capital ratio high for the SSI but the output capital ratio is also high. %. Balanced Regional Development: 4ispersion of small business in all parts of the country helps in removing regional imbalances by promoting decentrali:ed development of industries. It helps in industriali:ation of rural and back ard areas. It also helps to reduce problems of congestion, pollution, housing, sanitation etc.

/. Eq ita!le Distri! tion of Income: This is a natural corollary of the above. <hen entrepreneurial talent is tapped in different regions and areas the income is also distributed instead of being concentrated in the hands of a fe individuals or business families. ". Promotes Inter"Sectoral Lin#ages: SSI units are supplementary and complementary to large and medium scale units as ancillary units. Many small units produce sub(parts, assemblies, components and accessories for the largescale sector especially in the electronic and automotive sectors. 2. E$ports: The most significant contribution of the SSI has been in the field of exports. There has been a significant increase in the exports from this sector of both traditional and non( traditional goods including 8e ellery, garments, leather, hand tools, engineering goods, soft are etc. &. Development of Entreprene rs%ip: Small business taps the latent potential available locally. This ay they facilitate the spirit of enterprise, hich results in overall gro th, and development of all the regions =sectors of the nation.