Role of SSI in the economic

development of India

FAUZAN AZEEM
ROLL NO. - 077

Entrepreneur

Any person who takes a valid commercial activity

with the aim of earning a reward for the efforts
or capital employed therein.
Fauzan Azeem

SSI - Definition
An industrial undertaking in which the
investment in fixed assets in plant and
machinery whether held on ownership terms
on lease or on hire purchase does not exceed
Rs 10 million.

FACTS
No. of units: 12.34 million
Registered: 1. 87 million
Unregistered: 10.47 million
Employment: 29.49 million
Production: Rs. 4,71,966 crores
Exports: Rs. 1,24,416
Share in GDP: 5. 81 %
Share in Industrial production:
38.55 %
Share in national exports: 34.38
%
No. of product manufactured:

No. of items reserved for SSIs: 326

Credit from PSU banks: 82,275 crores
Share in net bank credit: 8.5%
Sick units: 1,38,000
Loan to sick units: Rs. 5,380 crores

Source: Ministry of Small Scale Industries (Figur

What is the difference between Small Scale
Industry and Agro & Rural Industry ?

Ancillary Industrial Undertakings

An industrial undertaking which is engaged
or is proposed to be engaged in the
manufacture or production of parts,
components, sub-assemblies, tooling or
intermediates, or the rendering of services
and the undertaking supplies or renders or
proposes to supply or render not less than 50
per cent of its production or services, as the
case may be, to one or more other industrial
undertakings and whose investment in fixed
assets in plant and machinery whether held
on ownership terms or on lease or on hirepurchase, does not exceed Rs.10 million.

Tiny
Enterprises
Investment
limit in plant and machinery in
respect of tiny enterprises is Rs 2.5 million
irrespective of location of the unit.

Women
Entrepreneurs
A Small Scale Industrial Unit/ Industry
related service or business enterprise,
managed by one or more women
entrepreneurs in proprietary concerns, or
in which she/ they individually or jointly
have a share capital of not less than 51% as
Partners/ Shareholders/ Directors of Private

Objectives of SSI
Elimination of economic backwardness of
rural under -developed regions in India.
Attainment of self reliance.
Reduction of regional imbalance.
Reduction of disparities in income, wealth and
consumption
Mobilization of resources of capital and skill
and their optimum utilization.
Creation of greater employment opportunities
and increased output, income and standard of
living.
Provides employment and steady source of
income to the low income group.

Small Scale Industries

Traditional
Khadi

Modern
Small scale With Power

Village Industry

Export

Handloom

Ancillary

Coir
Cottage ,Artisan

W/o Power

Tiny Enterprises

Fig: Small Industries

Classification

Advantages of SSI
Creates immediate and permanent
employment at relatively small cost.
Meets substantial part of increased consumer
demand.
Mobilization of idle resources.
Short gestation period.
Integration with rural economy on one hand
and large scale enterprises on the other.
Favorable capital output ratio.
Equitable distribution of national income.
Save foreign exchange by producing in house.
Training ground for local entrepreneurs.
Do not require high end technology.
Labor intensive and not capital intensive.

Performance of SSI

Production Employment

Export

PERFORMANCE

Opportunities

Production
Production: Rs. 4,71,966 crores
Contributes almost 40% of the gross
industrial value added in the Indian economy.
The number of small-scale units has
increased from an estimated 0.87 million units
in the year 1980-81 to over 3 million in the
year 2000.

Year

Target

Achiev
ement

1991-92

3.0

3.1

1992-93

5.0

5.6

1993-94

7.0

7.1

1994-95

9.1

10.1

1995-96

9.1

11.4

1996-97

9.1

11.3

1997-98

8.43

1998-99

7.7

1999-00

8.16

2000-01
(P)

8.90

P-Projected (AprilDecember)
* Target not fixed at
constant prices

Employment
Provides 2nd largest employment opportunities
next to Agriculture
Estimated that 100,000 rupees of investment
in fixed assets in the small-scale sector
generates employment for four persons.
Food products industry has ranked first in
generating employment, providing employment
to 0.48 million persons (13.1%). The next two
industry groups were Non-metallic mineral
products with employment of 0.45 million
persons (12.2%) and Metal products with 0.37
million persons (10.2%).

Per unit employment

Highest (20) in units engaged in beverages,
tobacco & tobacco products
Next came Cotton textile products (17),
Non-metallic mineral products (14.1)
Per unit employment was the highest (10) in
metropolitan areas and lowest (5) in rural
areas.
However, in Chemicals & chemical products,
Non-metallic mineral products and Basic
metal industries per unit employment was
higher in rural areas as compared to
metropolitan areas/urban areas.

ocation-wise Employment - Rural

Non-metallic products contributed 22.7% to
employment generated in rural areas. Food
Products accounted for 21.1%, Wood Products
and Chemicals and chemical products shared
between them 17.5%.

Location-wise Employment Urban

Food Products and Metal Products almost

equally shared 22.8% of employment.

Machinery parts except electrical, Nonmetallic mineral products, and Chemicals &
chemical products between them accounted
for 26.2% of employment.

State-wise Employment
Distribution

Year

Target
(lakh
nos.)

Achiev
ement
(lakh
nos.)

Growth
rate

1992-93

128.0

134.06

3.28

1993-94

133.0

139.38

3.28

1994-95

138.6

146.56

5.15

1995-96

144.4

152.61

4.13

1996-97

150.5

160.00

4.88

1997-98

165

167.20

4.50

1998-99

170.1

171.58

2.61

1999-00

175.4

177.3

3.33

Fig: Employment

Export
45%-50% of the Indian Exports is contributed
by SSI Sector.
Direct exports from the SSI Sector account for
nearly 35% of total exports
Small-scale industrial units contribute around
15% to exports indirectly.
Garments, leather and gems, plastic products,
processed food and jewellery
The major export markets are US, EU and
Japan.

Year

Exports
(Rs. Crores)
(at current
prices)

1994-95

29,068
(14.86)

1995-96

36,470
(25.50)

1996-97

39,249
(7.61)

1997-98

43946
(11.97)

1998-99

48979
(10.2)

1999-00
(P)

53975
(10.2)

EXPORTS

Opportunity
Less Capital Intensive
Extensive Promotion & Support by
Government
Reservation for Exclusive Manufacture by
small scale sector
Project Profiles
Funding - Finance & Subsidies
Machinery Procurement
Raw Material Procurement
Manpower Training
Technical & Managerial skills
Tooling & Testing support

Growth in demand in the domestic market size

due to overall economic growth
Increasing Export Potential for Indian
products
Growth in Requirements for ancillary units
due to the increase in number of greenfield
units coming up in the large scale sector. Small
industry sector has performed exceedingly well
and enabled our country to achieve a wide
measure of industrial growth and
diversification.

The Product Group Matrix

There are about twenty-one major industry
groups in the small scale sector. These are:
- Food Products
- Chemical & Chemical Products
- Basic Metal Industries
- Metal Products
- Electrical Machinery & Parts
- Rubber & Plastic Products
- Machinery & Parts Except Elecetrical
goods
- Hosiery & Garments - Wood Products
- Non-metallic Mineral Products

Paper Products & Printing

Transport Equipments & Parts
Leather & Leather Products
Miscellaneous Manufacturing Industries
Other Services & Products
Beverages, Tobacco & Tobacco Products
Repair Services
Cotton Textiles
Wool, Silk, Synthetic Fibre Textiles
Jute, Hemp and Mesta Textiles

Scale sector has emerged as a major

supplier of mass consumption items like
- leather and leather goods
- plastic and rubber goods
- ready-made garments
- hosiery goods, sheet metal goods
- stationery items - soap and detergents
- domestic utensils
- toothpaste and toothpowder
- safety matches
- preserved foods and vegetables
- wooden and steel furniture
- paints and varnishes etc.

Reserved Items for Exclusive

Manufacture

First time in 1967 with the reservation of 47 ite

February, 1970 - 55
February, 1971 - 128
November, 1971 - 124
February, 1974 - 177
June, 1976 - 180
April, 1978 504
March, 2005 - 506 items are reserved
May,2006 - 326

List of reserved items

FOOD AND ALLIED INDUSTRIES (9)
WOOD AND WOOD PRODUCTS (9)
PAPER PRODUCTS (19)
PLASTIC PRODUCTS (13)
CHEMICALS AND CHEMICAL
PRODUCTS (7)
NATURAL ESSENTIAL OILS (2)
ORGANIC CHEMICALS, DRUGS AND
DRUG INTERMEDIATES (12)
OTHER CHEMICALS AND CHEMICAL
PRODUCTS (20)
GLASS AND CERAMICS (27)
MECHANICAL ENGINEERING

TRANSPORT EQUIPMENT (61)

ELECTRICAL MACHINES, APPLIANCES &
APPARATUS (17)
ELECTRONIC EQUIPMENTS AND
COMPONENTS (1)
TRANSPORT EQUIPMENT BOATS AND
TRUCK BODY BUILDING (3)
BICYCLE PARTS, TRICYCLES AND
PERAMBULATORS (41)
MISCELLANEOUS TRANSPORT EQUIPMENT
(4)
SPORTS GOODS (7)
STATIONERY ITEMS (13)
OTHERS (21)

Food and Allied

Industries

Pickles & chutneys , Bread, Pastry, Hard

boiled sugar candy
Rapeseed Oil (except solvent extracted) ,
Mustard Oil (except solvent extracted) ,
Sesame oil (except solvent extracted)
Ground nut oil (except solvent extracted),
Ground and processed spices other than spice
oil and Oleo resin spices

Wood and Wood Products

Sawn timber , Wooden crates, Seasoned
wood, Wooden sewing machine covers , Cable
drums for AA & ACSR conductors, Wooden
furniture and fixtures, Wooden storage
cupboards, Wooden storage shelves & racks,
Wood wool
slabs
Paper
Products
Decorative papers, Paper Bags, Paper cups/
plates ,Paper board cartons (unlaminated),
Paper envelopes , Corrugated fibre board
containers , Paper napkins including facial
tissue napkins, Teleprinter rolls, Stencil paper ,
Slitting of ordinary paper into rolls & sheets,

Plastic Products
Full PVC footwear chappals, sandals and
shoes, Acrylic sheets except by continuous
extrusion process.
Fibre-Glass reinforced plastic products
other than the following:
1.SMC & DMC and its mouldings.
2.Continuous Filament Winding (Pipes above
600 mm diameter)
3.Pultruded products
4.FRP sheets by continuous process
Spectacle frames by fabrication or by
injection moulding
Polypropylene box strapping, Polythylene

FINANCIAL SUPPORT MEASURES

Subsidized/cheap credit
Equity participation exceeding 24 per
cent of the total shareholding.
A Limited Partnership Act was be
introduced
Small Industries Development Bank of
India -SIDBI

INFRASTRUCTURAL FACILITIES
Scheme of Integrated Infrastructural
Development
Technology Development Cell (TDC) To
provide technology inputs to improve productivity
and competitiveness of the products of the small
scale sector.
Adequacy and equitable distribution of
indigenous and imported raw materials
A proper and adequate arrangement for delivery
of total package of incentives and services at the
District level will be evolved and implemented.

REGISTRATION
Benefits of Registering
- Credit prescription (Priority sector
lending), differential rates of interest
etc.
- Excise Exemption Scheme
- Exemption under Direct Tax Laws.
- Statutory support such as reservation
and the Interest on Delayed Payments
Act.
Provisional Registration Certificate
(PRC)

PROCEDURE FOR
REGISTRATION
A unit can apply for PRC for any item that does not require

industrial license .
Unit applies for PRC in prescribed application form. No field
enquiry is done and PRC is issued.
PRC is valid for five years. If the entrepreneur is unable to set
up the unit in this period, he can apply afresh at the end of five
years period.
Once the unit commences production, it has to apply for
permanent registration on the prescribed form.

DE-REGISTRATION
It crosses the investment limits.
It starts manufacturing any new item or items that
require an industrial license or other kind of statutory
license.
It does not satisfy the condition of being owned,
controlled or being a subsidiary of any other industrial
undertaking.

THANK YOU !!