Professional Documents
Culture Documents
A STUDY
On
1
Small Scale Industries And Their Big Role
TABLE OF CONTENTS
2. Interim Report 5
3. Objective 8
4. Literature Review 10
5. Questionnaire 12
6. Methodology 17
7. Reference 21
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Small Scale Industries And Their Big Role
Overview:-
Since the time of independence, the small-scale sector in India has been a
major contributor to country’s Gross Domestic Product (GDP). This traditional
sector in India is considered to have huge growth prospect with its wide range of
products. With 40 percent share in total industrial output and 35 percent share in
exports, the small-scale industrial sector in India is acting as Engine of Growth in
the new millennium.
The definition for small-scale industrial undertakings has changed over time.
Initially they were classified into two categories- those using power with less than
50 employees and those not using power with the employee strength being more
than 50 but less than 100. However the capital resources invested on plant and
machinery buildings have been the primary criteria to differentiate the small-scale
industries from the large and medium scale industries. An industrial unit can be
categorized as a small- scale unit if it fulfils the capital investment limit fixed by
the Government of India for the small-scale sector.
As per the latest definition which is effective since December 21, 1999, for
any industrial unit to be regarded as Small Scale Industrial unit the following
condition is to be satisfied: -
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Small Scale Industries And Their Big Role
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Small Scale Industries And Their Big Role
Since independence the Government of India has nurtured this sector with
special care with the following aims: -
Small scale industries were the dream of Mahatma Gandhi, father of our
nation. He has supported the growth of small sector industries in India, because he
had the vision that it will helped the poor people of India to come up. Small scale
industries or cottage industries are not capital based, but the talent and effort based
business. So even a middle class person can own run this.
Ministry of Agro and Land Rural Industries and Ministry of SSI have been
merged into a single namely, Ministry of Micro Small & Medium Enterprises.The
President under Notification 9th May 2007 has amended the Government of India
(Allocation of business) Rules 1961, Pursuant to this amended Ministry of Agro
and rural Industries ( Krishi Evam Gramin Udyog Mantralay) and ministry of SSI
(Laghu Udoyag Mantralay) have been merged into a single Ministry, namely,
Ministry of Micro Small & Medium Enterprises ( Suksham Laghu Aur Medium
Udyam Mantralay )
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Small Scale Industries And Their Big Role
In most parts of the world the nomenclature used is small and Medium
Enterprises (SMEs) and the citeria for defininig include the number of employees
and /or the turnover. In India the Small Scale Industry eoveks different meanings
for different agencies and the financial institution. For example for the purpose of
excise and sales Tax Exemption, the turnover alone is the determinig criterion.
However in broder terms, currently, an SSI is defined in terms of investment
ceiling on the original value of instlled plant and machinery.
7.65 The small scale sector has played a very important role in the
socio-economic development of the country during the past 50 years. It has
significantly contributed to the overall growth in terms of the Gross Domestic
Product (GDP), employment generation and exports. The performance of the small
scale sector, therefore, has a direct impact on the growth of the overall economy.
The performance of the small scale sector in terms of parameters like number of
units (both registered and unregistered), production, employment and exports is
given in Table 7.15. 7.66 During the one year period i.e., 2000-01
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Small Scale Industries And Their Big Role
by the Ministry of Small Scale Industries during 2000-01, the SSI sector recorded
growth in production of 8.09 per cent over the previous year. The small scale
industries sector has recorded higher growth rate than the industrial sector as a
whole (4.9 per cent during 2000-01). It contributed about 40 per cent towards the
industrial production as a whole and 35 per cent of direct exports from the country.
7.68 The Government has been taking various measures from time to time in order
to enhance the productivity, efficiency and competitiveness of the SSI sector. In
pursuance of the comprehensive policy package announced last year, the major
developments that have taken place in the SSI sector during 2001-02
Small scale industrial units are those engaged in the manufacture, processing
or preservation of goods and whose investment in plant and machinery (original
cost) does not exceed Rs.1 crore. These would, inter alia, include units engaged in
mining or quarrying, servicing and repairing of machinery. In the case of ancillary
units, the investment in plant and machinery (original cost) should also not exceed
Rs. 1 crore to be classified under small-scale industry.
The investment limit of Rs. 1 crore for classification as SSI has been
enhanced to Rs.5 crore in respect of certain specified items under hosiery, hand
tools, drugs & pharmaceuticals, stationery items and sports goods by the
Government of India.
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Small Scale Industries And Their Big Role
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Small Scale Industries And Their Big Role
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Small Scale Industries And Their Big Role
As Small Scale Businesses are less capital intensive and highly labor
intensive, there are huge opportunities for this sector in a labor-abundant capital-
scarce economy like India. The other factors that are cater to the fast growth of this
sector are Extensive Promotion & Support by the govt., available grants &
Subsidies, raw material procurement, rising export demand for Indian products and
rising domestic demand which is the result of overall economic growth. But, the
growth rates can increase further if more development measures are taken to
improve the Technology and Marketing side of Small Scale Business and thus
small-scale businesses can construct the most dynamic and vibrant sector of the
economy.
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Small Scale Industries And Their Big Role
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Small Scale Industries And Their Big Role
By its less capital intensive and high labor absorption nature, SSI sector has
made significant contributions to employment generation and also to rural
industrialization. This sector is ideally suited to build on the strengths of our
traditional skills and knowledge, by infusion of technologies, capital and
innovative marketing practices. This is the opportune time to set up projects in the
small-scale sector. It may be said that the outlook is positive, indeed promising,
given some safeguards. This expectation is based on an essential feature of the
Indian industry and the demand structures. The diversity in production systems and
demand structures will ensure long term co-existence of many layers of demand for
consumer products / technologies / processes. There will be flourishing and well
grounded markets for the same product/process, differentiated by quality, value
added and sophistication. This characteristic of the Indian economy will allow
complementary existence for various diverse types of units. The promotional and
protective policies of the Govt. have ensured the presence of this sector in an
astonishing range of products, particularly in consumer goods. However, the
bugbear of the sector has been the inadequacies in capital, technology and
marketing. The process of liberalization coupled with Government support will
therefore, attract the infusion of just these things in the sector.
Small industry sector has performed exceedingly well and enabled our
country to achieve a wide measure of industrial growth and diversification.
In India, the latest definition of a small-scale industry (SSI) is any unit with
an upper limit on investment (in plant and machinery) of from Rs. 0.20 million to
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Small Scale Industries And Their Big Role
Rs. 0.35 million in the case of SSI and Rs. 0.45 million in the case of ancillary
units. What is called the village and small industries (VSI) sector comprises both
traditional and modern small industries; it is constituted by eight specific group’s
viz. Handloom, Handicrafts, Coir, Sericulture, Khadi, Village Industries, Small-
Scale Industries and Power looms. The last two items constitute the modern group
of industries, the others being traditional.
Exports:
35%
(50% of
Direct & Indirect)
GDP Share:
7%
• Ownership pattern :
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Small Scale Industries And Their Big Role
Proprietorships
– :
78%
– Partnerships :
16%
– Corporate & Others :
6%
• Industrial Units :
96%
• Service Enterprises :
3%
• Ancillary Units :
1%
• Produces Diverse range of products (more than 8000-
consumer items, capital goods and intermediates)
During the sixth plan period (1979-80 to 1984-85) production in this sector
increased from Rs. 335380 million to Rs. 657300 million at current prices and
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Small Scale Industries And Their Big Role
employment from 23.37 million to 31.50 million persons. The latter figure
represents nearly 80 percent of the entire industrial employment. Of this total,
modern small-scale industries employ 9 million people; next in importance is the
handloom subsector which employs about 7.5 million people. During the seventh
plan period (1985-90) the total value of production of the VSI sector is expected to
increase by about 52.4 percent and employment by 27 percent to 40.0 million. The
seventh plan also lays emphasis on the necessity of providing a new thrust for tiny
units having fixed investment of less than Rs. 0.2 million. They form nearly 90
percent of the total number of small-scale industrial enterprises. A modified
strategy will provide adequate facilities in rural and semi-urban areas which will
increase dispersion of these industries.
Productio
Number of Enterprises Growt
n (Rs. Share In
(Lakh Nos.) Empl. h
(Lakh Crs.)
Year
Person at
Register Unregister Rate
Total ) Current GDP (%)
ed ed (%)
prices
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Small Scale Industries And Their Big Role
2007-
2008 133. 322.2
24.68 108.99 695126 13.00 NA
(Project 67 8
ed)
Majority of the small scale units use old techniques of production and out
dated machinery and equipment. Up gradation of the technology and achieving
economies of scale is one of the major problems facing the sector? They cannot
afford new machines and equipments and are therefore not in a position to use the
latest techniques of production. They do not find it possible to conduct research
and development on a continuing basis. Therefore, productivity and quality in
small scale firms tends to be low while unit cost of production is generally high.
But with liberalization of the economy, the MSMEs are facing stiff competition
from imports and need technological up gradation in order to produce better quality
products at cheap rates.
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Small Scale Industries And Their Big Role
Technology 14.60%
• Obtaining information about technology is the first important issue. For most
of them, information about available technology options is through word of
mouth or from a visit to an advanced unit. Few have access to technical
literature, professional journals or information about new product launches.
But with the advent of internet, new vistas are opening up through electronic
journals, catalogue downloads and advanced search facilities.
With a view to foster the growth of MSME sector in the country, government has
taken up several initiatives:
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Small Scale Industries And Their Big Role
incentive to those small scale/ ancillary undertaking who have acquired ISO
9000/ISO 14001/HACCP certifications.
• In order to reduce the cost of funds, a scheme called Credit Linked Capital
Subsidy Scheme (CLCSS) for Technology Up gradation in Small Scale
Industries has been put into place. It aims at facilitating technology up
gradation by providing upfront capital subsidy to small scale industry units,
including tiny, Khadi, village and coir industrial units, on institutional
finance (credit) availed of by them for modernization of their production
equipment (plant and machinery) and techniques.
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Small Scale Industries And Their Big Role
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Small Scale Industries And Their Big Role
Textile Industry
Cement Industry
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Small Scale Industries And Their Big Role
The state of Rajasthan is also the major producer of cement and accounts for
15 per cent of the cement output of the country.
Salt Production-
Wooden handicraft:-
The wooden handicrafts industry plays an important role in the Indian economy.
This industry requires low capital investment and other resources. The wooden
handicraft sector provides a high ratio of value addition, and has emerged as one of
the major sources of foreign exchange earnings for India.
Indian wooden handicrafts are much sought after the world over, and form
an important export commodity of India. Although India's handicraft exports show
a consistent increase of sixteen per cent every year, its share in the international
market is not more than two per cent.
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Small Scale Industries And Their Big Role
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