“ENGINES FOR GROWTH & EMPLOYMENT”

PRESENTED BY :-
Prakash Sharma
PGDM/ MBA, 2nd Sem.
IMM, New Delhi
 DEFINITION OF SMALL
INDUSTRIES
Year 1950
Size of Gross Investment in fixed assets in plant and
machinery, land, building etc. (not exceeding Rs. 5 lakhs and
strength of workforce (employment less than 50 workers / day
using power or less than 100 workers / day without use of
power).
“Eligibility criteria based on investment in Machinery and
Equipment only.”
 SSI – THE MOST VIBRANT &
POTENTIAL GROWTH SEGMENT
A recent World Bank Report states: “There is now widespread
recognition within India that vibrant SMEs are potentially a
key engine of economic growth, job creation and greater
economic prosperity”.

10th Plan Document of Govt. of India states: “Growth as

planned will come from a sharp step-up in industrial and
services growth, spurred by SMEs”.
SSI SECTOR – SIGNIFICANCE IN
INDIAN CONTEXT
 SSIs are generally less capital-intensive and more labour-intensive.

 Are best suited for countries like India, China and most of the developing world
having abundant supply of low-cost manpower and bountiful natural resources
 Have provided seed bed for Enterprise Development in the country

 Provide large scale employment, ensure equitable distribution of income and

facilitate effective mobilization of resources of capital and skills, which would
otherwise remain unutilized, particularly in rural and backward areas.
 India has already established a niche in SME Development Strategy and
providing excellent support in product development, R&D, financial
instruments, Infra-structure, marketing and export development
 Consequently, India is fast emerging as a global hub for labour-intensive
manufacturing and knowledge-oriented businesses.
 PERFORMANCE OF SSI SECTOR IN
INDIA No. of Production (Rs. Billion)
No. of Unregistered Total SSI Employment
Year
Registered SSI SSI working working Units (Million
working Units (Millions) At current At constant Persons)
Units
(Million) prices prices (1993-
(Millions)
94 prices)

1990-1991 0.79 6.00 6.79 635.18 682.95 15.834

1991-1992 0.87 6.19 7.06 730.72 791.80 16.599
1992-1993 0.99 6.36 7.35 855.81 935.23 17.484
1993-1994 1.06 6.59 7.65 988.04 988.04 18.264
1994-1995 1.16 6.80 7.96 1222.10 1091.16 19.140
1995-1996 1.16 7.12 8.28 1482.90 1216.49 19.793
1996-1997 1.20 7.42 8.62 1684.13 1353.80 20.586
1997-1998 1.20 7.77 8.97 1891.78 1478.24 21.316
1998-1999 1.20 8.14 9.34 2129.01 1594.07 22.055
1999-2000 1.23 8.48 9.71 2342.55 1707.09 22.910
2000-2001 1.31 8.80 10.11 2612.89 1844.28 23.909
2001-2002 1.37 9.15 10.52 2822.70 1956.13 24.909
2002-2003 1.59 9.36 10.95 3119.93 2106.36 26.021
2003-2004 1.70 9.70 11.40 3514.27 2265.81 27.142
2004-2005 1.85 10.11 11.86 4182.63 2515.11 28.257
Source : SIDO’s Half Century y DCSSI, Govt. of India, 2004, and Economic Survey, Govt. of India, 2006-2007, Feb. 2007
COMPARATIVE GROWTH RATES OF SSI SECTOR AND
Year TOTALSSIINDUSTRIAL
Sector Growth Rate Total Industrial Sector
SECTOR
Growth Rate
1993-94 5.65 6.00
1994-95 10.44 9.10
1995-96 11.49 13.00
1996-97 1.29 6.10
1997-98 9.19 6.70
1998-99 7.84 4.10
1999-2000 7.09 6.70
2000-01 8.04 5.00
2001-02 6.06 2.70
2002-03 7.68 5.70
2003-04 8.06 6.09
2004-05 9.96 8.04
Source: SIDO Half Century by DCSSI, Govt. of India 2004 and Annual Report of the Ministry of SSI 2005-06
 TRENDS OF LENDING BY BANKING
SECTOR TO SSI
Rs. in Crores
As at end March Total advances by Total Advances to Proportion of SSI to
Banking Sector SSI Sector Total Advances
1999 246203 42674 17.30
2000 292943 45788 15.63
2001 469153 56002 1.94
2002 536727 57199 10.66
2003 669534 60394 9.02
2004 764383 65855 8.62
2005* 972587 76114 7.83
Source : RBI Report on Trend and Progress of Banking in India
* Provisional
INDIAN SSI SECTOR – AT A GLANCE
SSI units : 12.3 million
Employment generated in
SSIs : 29.5 million
Production : At current
Princes Rs. 4762.01 billion
Exports : Rs. 1215 billion
SSIs account
 Industrial Production : 40%
 Exports : 35% (50% of
Direct & Indirect)
 GDP Share : 7%
Ownership pattern :
 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)
Contribution Of SSI In India
 AIMA –Impact Assessment
IMPEDIMENTS TO GROWTH
Problems Faced by SSIs as Barriers to Growth

Market Related 70%

Market Related 70%

Finance Related 25%

Government Policy Related 12.78%

Power Related/Infrastructure 14.0%

Technology 14.60%
 FUTURE ASPECTS OF SSI
To facilitate growth of this sector with changing economic
scenario
To facilitate growth within the framework of social and
economic policy of the country
To encourage technology modernization
To promote entrepreneurship among technically qualified
persons
To improve product standards
To create opportunities for in house R&D
To provide greater export thrust
OPPORTUNITIES FOR SSI
HEALTH TECHNOLOGY INFORMATION TECHNOLOGY
 Personal Health Care      Media & Entertainment
 Preventive Health Care
     Contents,
 Yoga & Naturopathy
     Animation,
 Herbal Therapies
     Games,
 Environmental Health
 Food Supplements  Gaming.
 Food, Inspection and Testing
etc.
 Medical Waste Management
 Hospital Supplies & Staffing
Services
Contd….
FASHION TECHNOLOGY
 Personal Embellishment (Face,
Hair, Hands, Feet, Cosmetics,
Perfumes etc.)
 Glamour & Limelight
 Creative
 Fashion Accessories (purses, bags,
carryon, watches etc.)
DESIGN TECHNOLOGY
• Interiors - (Furniture & Furnishing
– homes, work places, community,
hospitals, schools, shopping places,
recreation, sports)
• Exteriors - (Architectural)
• Dies and tools
• Watches
• Jewellery
• Hospital equipments
INDIA: ECONOMIC ENABLERS FOR SSI
 10thlargest economy in the world - 4th in terms of PPP
 Will overtake Japan in PPP terms by 2010, to be 3rd largest
in the world
 Large entrepreneurial base and diversified manufacturing
structure
 Large reservoir of skilled labour at internationally
competitive cost
 Vast pool of scientifically and technically qualified
manpower of 20m
 A large domestic market - 300 m + strong middle class
population
 having substantial purchasing power
 Largest democratic set - up
 A broad based and transparent legal framework including
arbitration
CONTD…..
 Vast network of bank branches, financial institutions and
well-organized
 capital and money markets
 A network of technical and management institutes of
highest
 International standards for development of human
resources
 India has a record of meeting its international financial
obligations as
 Per schedule and has never been a defaulter
 No communication barrier, as English is the most prevalent
business Language
 Strong and vibrant small scale sector that is keen to
establish
 Strategic alliances with their foreign counterparts
 CONCLUSIONS
 It can be seen that the policy framework is consistent since independence

 The specific definition for medium enterprises augurs well for graduation
of micro enterprises to small and small enterprises to medium enterprises

 With more budgetary allocation to service sector, SSIs will be able to

generate more employment opportunities to educated unemployed youth

 The launching of Technology Mission will facilitate the Government to

work out a long term action plan to ensure organized growth of this sector
to face competition in liberalized services sector and knowledge based
economic scenario