SMALL SCALE INDUSTRY

.At present the Small Scale Industry (SSI) constitutes a Very Important Segment of the Indian Economy & It has emerged as a Dynamic & Vibrant Sector of the Economy.

• Scarcity of Finance. The Small Scale Industry has grown phenomenally during the last Six Decades & has acquired a very prominent place in the Socio – Economic Development in the Country.The Small Scale Industry Sector holds the Key to Economic Prosperity of the Indian Economy Characterized by • Abundant Labor Supply. • Growing Modern Large Industries providing scope for development of Ancillary Industries & so on. • Unemployment & Under Employment . .

if using power and less than 100 persons without the use of power and with capital assets not exceeding rupees five lakhs” . • In 1955 Small Scale Industries Board defined small scale industry as “A unit employing less than 50 persons.Concepts & Definitions of Small Scale Industry Small scale industries are defined in terms of investment in plant and machinery under section II B of Industries (Development and Regulation) Act 1951 • The limit is revised from time to time to offset the impact of inflation and to meet the technological needs.

• According to it “small industries will include all industrial units with a capital investment of not more than rupees five lakhs.• The Ministry of Commerce and Industries modified the above definition in 1960 on the recommendation of the Small Scale Industries Board. irrespective of the number of persons employed” .

1 crore. on the recommendation of Abid Hussain Committee. 3 crore • In 2000.• In 1997. 60/75 lakh to Rs. 3 crore to Rs. . the Union Government has reduced the investment limit in plant and machinery for small scale units from Rs. the Government has raised the investment limit in plant and machinery for small units and ancillaries from Rs.

The manufacturing enterprises are defined in terms of investment in plant and machinery.The enterprises engaged in producing or rendering of services and is defined in terms of investment in plant and machinery. . small and medium enterprises are classified into two classes a.The enterprise engaged in the manufacture or production of goods pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act. 1951. Service Sector . Manufacturing Enterprises .The micro. b.

Medium enterprises .Enterprises Investment in plant and machinery Micro-enterprises Small enterprises Investment in plant and machinery Does not exceed twenty five lakh rupees More than twenty five lakh rupees but does not exceed five crore rupees. More than five crore rupees but does not exceed ten crore rupees.

25 Lakh is referred to as a “Micro Enterprise. 5 Crore is referred to as “Small Enterprise.” c) Medium Enterprises : An Enterprise where the Investment on Plant & Machinery is above Rs.” . 5 Crore & upto Rs.Manufacturing Enterprises : They have been defined in terms of Investment on Plant & Machinery (Excluding Land & Buildings) & further classified into 3 Categories as under : a) Micro Enterprises : An Enterprise where the Investment on Plant & Machinery is upto Rs.” b) Small Enterprises : An Enterprise where the Investment on Plant & Machinery is above Rs. 10 Crore is referred to as “Medium Enterprise. 25 Lakh upto Rs.

” 3) Medium Enterprises : An Enterprise. 2 Crore is referred to as “Small Enterprise. 2 Crore & upto Rs. 10 Lakh is referred to as “Micro Enterprise. 10 Lakh & upto Rs.” 2) Small Enterprises : An Enterprise. 5 Crore is referred to as “Medium Enterprise.II) Service Enterprises : They have been defined in terms of their Investment in Equipment (excluding Land & Building) & further classified into 3 Categories as under : 1) Micro Enterprises : An Enterprise where the Investment in Equipment is upto Rs. where the Investment in Equipment is above Rs. where the Investment in equipment is above Rs.” .

The Owner has First Hand Knowledge of all aspects of the. in most cases. He takes effective participation in all matters of Business Decision Making.. i. 2) Owner himself / herself is also a Manager of the Enterprise. the period after which the return on Investment starts. . the activities are mainly carried out by one of the Partners or Directors. Thus.e.Characteristics of Small Enterprises “Small Enterprise is Beautiful” because of its following Important Characteristics : 1) A Small Enterprise is generally a “One Man Show”. Even Small Enterprises which run by a Partnership Firm or a Private Limited Company. a Small Enterprise is managed in a personalized manner. 3) A Small Enterprise has lesser Gestation Period compared to a Large Enterprise.

substituting New Raw Materials. for the same Investment. They are more flexible to adapt changes like Diversification to New Products. New Market etc. a Small Enterprise provides more jobs to the people compared to a Large Enterprise 7) Using Local Resources 8) Small Enterprises are more susceptible & highly reactive & receptive to Socio – Economic conditions compared to larger enterprises.to the Local & Regional Markets. That is. Labor. Changes in Organization Structure. Transport Facilities etc. . 5) Small Enterprises use indigenous resources & therefore can be located anywhere subject to the availability of these resources like Raw Materials.4) Small Enterprises generally carryout their operations . 6) They are fairly Labor Intensive with comparatively smaller Capital Investment than the Larger Units. adopting to New Production Techniques.

They encourage growth of Local Entrepreneurship. They Increase Revenue to Central & State Govts by way of Taxes Paid by them.Advantages of Small Enterprises 1. 3. 12. 9. 7. They influence & improve Standard of Living of Local People. They provide equitable dispersal of enterprises throughout Rural & Backward Areas.help in tackling the Unemployment Problem. They earn Vital Foreign Exchange for the Country through their Exports of Goods / Services. 11. They have Low Gestation Period & thereby Expensive Financial Resources are not idled unproductively for long periods. They create Decentralized pattern of Ownership. 2. They can be set up easily in Rural & Backward Areas. 6. 8. . They need Small / Local / Regional Market. 4. They Innovate & Introduce New Products particularly to cater to Local Needs. They create greater Employment Opportunities . 5. They foster Diversification of Economic Activities. 10.

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