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Small Scale Industry 08

Small Scale Industry 08



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Published by ajabrao

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Published by: ajabrao on Jul 29, 2009
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The definition for small-scale industrial undertakings has changed over time.Initially they were classified into two categories- those using power with less than 50employees and those not using power with the employee strength being more than 50 butless than 100. However the capital resources invested on plant and machinery buildingshave been the primary criteria to differentiate the small-scale industries from the largeand 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-scalesector.As per the latest definition which is effective since December 21, 1999, for anyindustrial unit to be regarded as Small Scale Industrial unit the following condition is to be satisfied: -Investment in fixed assets like plants and equipments either held on ownershipterms on lease or on hire purchase should not be more than Rs 10 million.However the unit in no way can be owned or controlled or ancillary of any other industrial unit.The traditional small-scale industries clearly differ from their modern counterpartsin many respects. The traditional units are highly labor consuming with their age-oldmachineries and conventional techniques of production resulting in poor productivity ratewhereas the modern small-scale units are much more productive with less manpower andmore sophisticated equipments.Khadi and handloom, sericulture, handicrafts, village industries, coir, Bell metalare some of the traditional small-scale industries in India. The modern small industriesoffer a wide range of products starting from simple items like hosiery products, garments,leather products, fishing hook etc to more sophisticated items like television sets,electronics control system, various engineering products especially as ancillaries to largeindustrial undertakings. Nowadays Indian small-scale industries (SSIs) are mostly modern small-scaleindustries. Modernization has widened the list of products offered by this industry. Theitems manufactured in modern Small-scale service & Business enterprises in India nowinclude rubber products, plastic products, chemical products, glass and ceramics,mechanical engineering items, hardware, electrical items, transport equipment, electroniccomponents and equipments, automobile parts, bicycle parts, instruments, sports goods,stationery items and clocks and watches.1
Ministry of Agro and Land Rural Industries and Ministry of SSI have been merged into asingle namely, Ministry of Micro Small & Medium Enterprises.The President under Notification 9
May 2007 has amended the Government of India(Allocation of business) Rules 1961, Pursuant to this amended Ministry of Agro and ruralIndustries ( Krishi Evam Gramin Udyog Mantralay) and ministry of SSI (Laghu UdoyagMantralay) have been merged into a single Ministry, namely, Ministry of Micro Small &Medium Enterprises ( Suksham Laghu Aur Medium Udyam Mantralay )
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 theturnover. In India the Small Scale Industry eoveks different meanings for differentagencies and the financial institution. For example for the purpose of excise and sales TaxExemption, 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 significantlycontributed 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 smallscale sector in terms of parameters like number of units (both registered andunregistered), production, employment and exports is given in Table 7.15. 7.66 Duringthe one year period i.e., 2000-01Over 1999-2000, the number of SSI units is estimated to have increased by1,58,000, production at current prices by Rs. 72,609 crore and at constant prices by Rs.33,714 crore. Employment increased by 7,14,000 persons, while exports were higher byRs. 5,778 crores. 7.67 According to projections made by the Ministry of Small ScaleIndustries during 2000-01, the SSI sector recorded growth in production of 8.09 per centover the previous year. The small scale industries sector has recorded higher growth ratethan the industrial sector as a whole (4.9 per cent during 2000-01). It contributed about40 per cent towards the industrial production as a whole and 35 per cent of direct exportsfrom the country. 7.68 The Government has been taking various measures from time totime in order to enhanceThe productivity, efficiency and competitiveness of the SSI sector. In pursuanceof the comprehensive policy package announced last year, the major developments thathave taken place in the SSI sector during 2001-022
An industrial undertaking in which the investment in plant and machinery,whether held on ownership terms or on lease/hire-purchase basis, does not exceed Rs.10million (Rs.1 crore) is regarded as a small scale undertaking. These includemanufacturing and service units.
Status of Small Scale Industries Undertaking
 a)Ancillary Industries Udertaking :- Engaged in manufacture of parts, componentSub-assemblies, The investment in fixed assets doesn’t exceed 1 crore. b)Tiny Industries :- All small scale units, which investment on plant & machinery(excluding land & building) upto Rs.25 Lakhs.c) Export Oriented Units :- All small scale units, which export more than 50% of Their output.
Tiny Enterprises
A unit is treated as a tiny enterprises where investment in plant nad machinerydoes not exceed Rs.2.5 million (Rs.25 Lakhs) irrespective of the location of the unit.Many shops,
Export Oriented Unit [Eou]
A unit with an obligation to export at least 30 percent of its annual production bythe end of the third year of commencement of production and having an investmentceiling up to Rs.10 million (Rs.1 crore) in plant and machinery is termed as an exportoriented SSI unit.In India no separate definition of medium enterprises exists and as such there is nospecific definition of Small and Medium Enterprises [SMEs.] Administratively, in theIndian context ,the industry universe is divided into three major segments. 
Modern Small Scale Industries
These cover SSI units [both in the factory and Non /Factory sectors] and power loom units. Such units mostly use power driven machinery and possess superior  production techniques. Units in this sub-sector are generally located in close proximity tolarge industrial centers or urban areas. These industries are moving away from thetraditional products to knowledge-based products.
Traditional Small Scale Industries
This sector Comprises tiny and cottage industry segments like handlooms, Khadi andVillage Industries, handicrafts, sericulture and silk, rubber and coir. These units arelabour- intensive, are generally located in rural and semi-urban areas and are artisan based. Usually the capital invested is also nominal.3

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