CONTENTS

Small Scale Industries

INTRODUCTION
DEFINITION
EMERGENCE

OF SSI
SCOPE OF SSI
WHY WE NEED SSI?
PERFORMANCE OF SSI IN INDIA
EXPORT ORIENTED SSI UNITS
STEPS IN SETTING UP SSI
ROLE OF GOVT.FOR PROMOTING SSI
COMMERCIAL BANK SERVICES AND PROMOTING SSI
ADVANTAGES OF SSI
PROBLEM FACE BY SSI
SMALL BUSINESS SERVES AS A SEED BED FOR LARGE
BUSINESS
CONCLUSION

Small scale industry

SSI means small scale industries, which

is an industrial undertaking with the
investment not exceeding Rs.100 lakhs
in plant and machinery. In cases of
auxiliary industries the investment
ceiling on plant and machinery is also
Rs.100 lakhs.
2

DEFFINATION OF SSI
ACCORDING TO DIFFERENT
ACTS:ACCORDING TO FISCAL COMMISSION -1950: A UNIT OPRATING

ACCORDING TO FISCAL COMMISSION -1950: A UNIT OPRATING

WITH HIRED LABOUR , USUALLY 10 TO 50 HANDS .

ACCORDING TO SSI BOARD -1955: A UNIT EMPLOYING LESS THAN

50 PERSONS IF POWER AND LAESS THAN 100 PERSONS WITHOUT
THE USE OF POWER AND WITH A CAPITAL INVESTMENT RUPEES 5
LAKH.
3

Emergence OF SSI UNITS IN INDIA

SMALL SCLAE INDUSTRIES PERIOD

SSI PREINDEPENDANC
E

SSI POST
INDEPENDANC
E
4

SSI Pre-independence
Before Independence, the present small scale industry
was meant to denote the village and the urban
cottage industry.
This group included a variety of industries ranging from
manufacturing of Iron safes, locks, carpets, marble
jigs, baskets, hand-loom cloth and the like.
In fact, at that time the term cottage and Small scale
industries was used in juxtaposition to large scale industries,
which were established under the British patronage.
They received encouragement and support during the
freedom movement.
The small scale industries found a prominent place in the
economic programme envisaged by the Indian
National Congress.

SSI Post-Independence
After 1947
Jawaharlal Nehru maintained separate entities of small scale industries.
He was of the view that a small industry was the middle sector and it
would overlap both the cottage and the large industries.
1977 industrial Policy
The basic policy support of SSI sector had its roots in the Industrial Policy
Resolution 1977, laid emphasis on reservation of items.
The reservation economically viable and technologically feasible products
to be exclusively manufactured by small scale industry began with a list
of 47 items which was gradually extended to too many products.
At Present 812 items are in the reserved list.

The limit on the fixed capital investment for SSIs was Rs 7.5 lakhs and
for ancillaries it was Rs 10 lakhs. After the Industrial Policy, the ceiling for
investment for SSIs was raised to Rs 60 lakhs and Rs 70 lakhs for
ancillaries .

SCOPE OF SSI IN DIFFERENT

SECTORS
SCOPE OF SSI
UNITS
MANUFACTIRING
INDUSTRIES

SERVICES
INDUSTRIES

TRADING
INDUSTRIES
7

MANUFACTURING

industries
VILLAGE AND
COTTAGE
INDUSTRIES

THESE ARE CARRIED ON IN

HOMES OF WORKER
(USE LOCAL RESOURSES ,
USE LOCAL MARKET
,LOCAL SKILLS )

HANDLOOMS
&
HANDICRAFT
S

THESE INDUSTRIES
INCLUDE ARTISANS,
SKILLED CRAFT MEN SHIP

TRADING industries

WHOLESALER

RETAILER

COMMISSION
AGENT

Personor firm thatbuyslarge

quantityof goodsfrom various
producersorvendors,warehouses
them, and resells toretailers.

Abusinessorpersonthatsellsgoods
to theconsumer, as opposed to a
wholesalerorsupplier, who normally
sell their goods to another business.
Commission agents thrive in a variety
of businesses. International agents
work in the export/import arena.
Insurance and real estate agents also
often work on a sales-based
commission.
9

SERVICES industries
PROFESSIONA
L
SERVICES

(LAW,MEDICINE,ACCOUNTING
)

COMMISSION
SERVICES

(TRANSPORT,
WAREHOUSING,REPAIR SHOP)

PERSONAL
SERVICES

(FASHION SHOPS, DRY

CLEANING )

10

WHY WE NEED SSI?

FOR EMPLOYMENT GENRATION

FOR BALANCE REGIONAL
GROWTH
FOR MOBILISATION OF LOCAL
RESOURCES
FOR EXPORT PROMOTION
FOR CONSUMER SURPLUS
FOR DEVELOPMENT OF
ENTERPRENEURSHIP
FOR LARGE SCALE EMPLOYMENT
WITH LOW INVESTMENT
FOR ATTAINING SELF RELIANCE
AND SELF DEPENDANCE
FOR ENSURING EQUAL
DISTRIBUTION OF INCOME AND
WEALTH

11

PERFORMANCE
OF
SMALL SCALE
INDUSTRIES
IN
INDIA
12

PRODUCTION

It contributes almost
40% of the gross
industrial value
added in the Indian
economy.

Production (Rs. '000 crores) at 1993-94 prices

300000

250000

200000

It has been
estimated that a
million Rs. of
investment in fixed
assets in the small
scale sector
produces 4.62
million.

150000

Production (Rs. 000'

crores) at 1993-94
prices

100000

50000

According
According to
to small
small industries
industries development
development
(sidco)
(sidco)
13

Employment Distribution
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%.
Urban
As for urban areas, Food Products
and Metal Products almost equally
shared 22.8% of employment.
Machinery parts except electrical,
Non-metallic mineral products, and
Chemicals & chemical products
between them accounted for 26.2%
of employment.
DATA
DATA REALISED
REALISED BY
BY :-NATIONAL
:-NATIONAL INSTITUTE
INSTITUTE FOR
FOR
ENTREPRENEURSHIP
AND
SMALL
BUSINESS
ENTREPRENEURSHIP AND SMALL BUSINESS
DEVELOPMENT(NISEBOD)
DEVELOPMENT(NISEBOD)
14

State-wise Employment
Distribution

Punjab
Punjab (5.6%)
(5.6%)
Tamil
Tamil Nadu
Nadu (14.5%)
(14.5%)
Karnataka
Maharashtra
(6.7%)
(9.7%),
Uttar
Karnataka
Maharashtra
(6.7%)
(9.7%),
Uttar
West
West
Gujarat
(7.6%)
Pradesh
(9.5%)
Gujarat
Pradesh
(7.6%)
(9.5%)
Bengal
Bengal (8.5%)
(8.5%)

DATA
DATA REALISED
REALISED BY
BY SIDO
SIDO

15

ROLE OF SSI IN DEVLOPEING MORALE OF

WOMEN

SELF ACTUALISATION
ECONOMIC INDEPENDENCE
SELF IDENTIFICATION AND SOCIAL STATUS
INCREASE CONFIDENCE
SELF RESPECT

16

PROGRAME RELATED TO WOMEN IN

PUNJAB
(Phulkari )

PSIEC Ltd. helps creative and skillful

artists in Punjab by selling their
handicrafts in the Showrooms at various
places in India. It owns a chain of
emporia which is famously called
Phulkari in the major cities of Punjab
(Amritsar, Ludhiana, Jalandhar, Patiala),
Chandigarh, Delhi and Kolkata. Phulkari
Showrooms are a home to the best of
the handicrafts in the world. Visit any
Showroom near you and you will be
amazed at the creativity in everything
they make- carpets, furniture, textiles
and many household items like crockery

17

18

EXPORT

SSI Sector plays a major role in India's present

export performance.

This takes place through merchant

exporters, trading houses and export
houses. They may also be in the form of
export orders from large units or the
production of parts and components for use
for finished exportable goods.

The product groups where the SSI sector

dominates in exports, are sports goods,
readymade garments, woolen garments and
knitwear, plastic products, processed food
and leather products.

SSI Sector contributes about 45%-50% of

the Indian Exports.

Data realised by commerce

ministry of india

19

Major Export Destination

S. NO

PRODUCT GROUP

MAIN DESTINATION

READYMADE GARMENT

USA,WEST ASIA,NORTH AFRICA

SPORTS GOODS

UK,USA,GERMANY

SPICES

4
5
6
7
8
9
10

EAST ASIA, UNION ,NORTH

AFRICA
LEATHER &LEATHER ITEMS
GERMANY , UK,
ITALY,USA,FRANCE
WOOL& WOOLEN KNITED GARMENT EUROPE,BANGLADESH ,JAPAN
,SHRI LANKA , BHUTAN ,
PROCESSED FOOD ITEMS
EUROPE,BANGLADESH ,JAPAN,
USA
TABACCO AND TABACCO ITEMS
EAST EUROPE
ELECTRONIC ITEM AND COMPUTER
SOFTWARE
CASHEW ITEM

USA , UK , HONGKONG
UAE,JAPAN
USA ,UK , JAPAN ,NEATHERLAND

MARIENE PRODUCT

UK,USA,GERMANY
EUROPE,BANGLADESH

20

STEPS IN SETTING UP
SSI
IMPLIMENTATION
PRELIMINARY STAGE
STAGE

SCANNING OF BUSINESS ENVIROMENT

SELECTION OF IDEA

STATUTORY LICENCES

ARANGEMENT OF FINANCE

DECIDING ORGANISATIONAL STRUCTUER

POWER AND WATER CONNECTION

PROJECT APPRAISAL

RECRUITMENT OF PERSONNEL AND TRAINING

SELECTION OF ILOCATION AND SITE

RAW MATERIAL PRECURMENT

MARKETING AND PROFIT GENRATION

21

Role of government for

promoting ssi
RESERVATION
RESERVATION
POLICY
POLICY

CONCESSIO
CONCESSIO
N
N IN
IN
CENTRAL
CENTRAL
EXCISE
EXCISE

PURCHASE
PURCHASE
ASSITANCE
ASSITANCE

SALE
SALE TAX
TAX
EXEMPTION
EXEMPTION

SIDBI
SIDBI

Role
Role of
of
government
government for
for
promoting
promoting ssi
ssi
SUPPLY
SUPPLY OF
OF
RAW
RAW
MATERIAL
MATERIAL

TCOS
TCOS

MARKETINF
MARKETINF
ASSITANCE
ASSITANCE

FINACIAL
FINACIAL
INCENTIVE
INCENTIVE
INDUSTRIAL
INDUSTRIAL
ESTATES
ESTATES

22

GOVERNMENT POLICIES FOR

SSI

INDUSTRI
AL
POLICY
RESOLUTI
ON 1948

INDUSTRIA
L POLICY
RESOLUTIO
N 1956

INDUSTRIA
L POLICY
RESOLUTIO
N 1977

INDUSTRIA
L POLICY
RESOLUTIO
N 1991

INDUSTRIA
L POLICY
PACKAGE
FOR SSI
2001-02

INDUSTRIA
L POLICY
ON SSIS
2004-05

23

RESERVATION POLICY
Out of 836 items reserved in 1989,39 items were
dereserved in four phases viz.,
15

items in 1997
9 items on 1999
15 item on 2001
51 item were reserved in 2002,
75 item in 2003 and
85 items in 2004,
108 in March 2005 and
180 in May 2006.

Now 298 items stand reserved for this sector.

24

CONTRIBUTION OF COMMERCIAL
BANKS IN PROMOITING AND
SERVICING SSI

25

COMMERCIAL BANKS IN PROMOITING

SSI
STATE BANK OF INDIA (SBI)
BANK OF INDIA
PUNJAB NATIONAL BANKS (PNB)
UNION BANK OF INDIA
SYNDICATE BANK
CANRA BANK
26

STEP TAKEN BY COMMERCIAL

BANKS TO IMPROVE THE FLOW
OF CREDIT TO SMALL BUSINESS
LOAN UPTO RS 5 LAKH TO ALL SSI UNITS WAS
ANNOUCED BY RBI IN YEAR 2000.LATER IN 2002
THE LOAN LIMIT WAS INCREASE TO RS 15 LAKH.
(WITOUT TAKING ANY COLLATERAL SECURITY )

OPEN ATLEAST ONE BRANCE IN EVERY DISTRICT

WHERE SSI UNITS HAVE CLUSTER
(417 SPECIAL;ISED BRANCES OPRATING IN THE
COUNTRY AT THE END OF MARCH 2006)

27

Cont

RBI ISSUED DETAILED GUIDELINES TO

SCHEDULED COMMERCIAL BANK FOR
TIMELY ASSISTANCE TO POTENTIALLY VIABLE
SSI UNITS AT REDUCED RATE IN 2002.

RBI ADVISED SOFT LOAN ASSISTANCE TO

WOMEN ENTREPRENEURS BESIDE USUAL
TERM LOAN IN SSI, TINY AND SERVICE TO
PROMOTE WOMEN ENTREPRENEURS.
28

OTHER INSTITUTION ALSO HELP

TO PROMOTE SSI
NATIONAL SMALL INDUSTRIES CORPORATION LTD. (NSIC)
SMALL INDUSTRIES DEVELOPMENT ORGANIZATION (SIDO)
SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (SIDBI)
SMALL INDUSTRIES SERVICE INSTITUTE (SISI)
SMALL INDUSTRIES DEVELOPMENT CORPORATION (SIDC)
TECHNICAL CONSULTANC ORGANISATION (TCOs)
29

ADVANTAGES OF ESTABLISH
SSI
EMPLOYMENT
GENRATION
MAKE USE OF
INDUSTRIAL WASTE

MEETS THE DEMAND

OF THE MARKET

ADVANTAGE
S OF
ESTABLISH
SSI

REDUCES REGIONAL
DISPARITY

SHARE IN NATIONAL
INCOME

EXPORT PROMOTION

SOCIAL ADVANTAGES

MOBILIZATION OF
LOCAL RESOURCES

30

PROBLEMS FACE BY SSI

INTERNAL
PROBLEMS
FAULTY
PLANNING

POOR PROJECT
IMPLEMENTATION

EXTERNAL
PROBLEMS

LOCATION

POWER
PROBLEMS

POOR
MANAGEMENT

INPUT

INADEQUATE
FINACE
PROBLEMS

MARKET
PROBLEMS

LABOUR
PROBLEMS

GOVT. POLICY

31

SMALL BUSINESS AS A SEED BED OF LARGE BUSINESS

SEED BED REFERS TO

PREPARING THE SOIL
FOR SOWING OF SEEDS
FOR A GOOD CROP. AS
IT PROVIDES
CONDUCIVE
CONDITIONS FOR THE
DEVLOPMENT AND
GROWTH OF
ENTREPRENEURS
E.g:-AMUL,TOPS,VARDHMAAN, HIMALYA.PVT.LTD
32

CONCLUSION

TO SUM UP WE CAN SAY THAT SSI SERVES

AS A SEED BED OF ENTREPRENEURISHIP AS
IT PROVIDES CONDUCIVE CONDITIONS FOR
THE DEVLOPMENT AND GROWTH OF
ENTREPRENEURS . SMALL ENTREPRISES
REQUIER LOW INVESTMENT AND SIMPLE
TECHNOLOGY AND USE LOCAL RESOURCES
TO MEET LOCAL DEMANDS THROUGH
PERSONAL CONTACTS.
33

34