Assignment -1

Small Scale Industries

A small scale industry is an industrial undertaking in which the investment under

fixed assets in plant and machinery or equipment, whether held on ownership term or on

lease or hire purchase, does not exceed ₹ 10 crore for manufacturing enterprise

and ₹ 5 crore for service enterprise. However, the investment limit changes overtime as

prescribed by the government.

In accordance with the provision of Micro, Small & Medium Enterprises

Development (MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are

classified in two classes:

1. Manufacturing Enterprises : The enterprises that are involved in the manufacturing

or production of goods pertaining to any industry specified in the first schedule to the

industries (Development and regulation) Act 1951 or employing plant and machinery in the

process of addition of value to the final product having a distinct name or character or use.

The Manufacturing Enterprise are defined in terms of investment in Plant and Machinery.

2. Service Enterprises: The enterprises engaged in providing or rendering of services

and are defined in terms of investment in equipment.

In creating nations like India, these small scale enterprises are the life saver of the economy.

These are by and large work serious businesses, so they make much business. They likewise

help with per capita pay and asset usage in the economy. They are a vital division of the

economy from a monetary and social perspective.

• Total Production
These ventures represent practically 40% of the absolute products and enterprises created in

the Indian economy. They are one of the primary purposes behind the development and

fortifying of the economy.

• Employment

These small scale ventures are a noteworthy wellspring of work in the nation. The

entire work drive can't look for some kind of employment in the formal segment of the

economy. So these work serious enterprises give an employment to a huge segment of the

workforce.

• Contribution to Export

Almost 50% of the products (45-55%) of the merchandise that are sent out from India

are delivered by these small endeavours. About 35% of direct fares and 15% of the circuitous

fares are from the small scale enterprises. So India's fare industry significantly depends on

these small ventures for their development and advancement.

• Welfare of the Public

Other than monetary reasons, these businesses are additionally critical for the social

development and improvement of our nation. These enterprises are generally begun by the

lower or white collar class open. They have a chance to gain riches and worker other

individuals. It assists with pay dispersion and adds to social advancement.

The challenges in establishing such units in the rural and urban sectors

This area can animate monetary movement and is depended with the duty of

acknowledging different destinations age of greater work openings with less venture,

lessening local lopsided characteristics and so on. Small scale enterprises are not in a
situation to assume their job adequately because of different requirements. The different

imperatives, the different issues looked by small scale enterprises are as under:

• Finance

Account is a standout amongst the most critical issue going up against small scale

ventures Finance is the existence blood of an association and no association can work

appropriate у without satisfactory assets. The shortage of capital and insufficient accessibility

of credit offices are the significant reasons for this issue.

Right off the bat, satisfactory assets are not accessible and furthermore, business visionaries

because of powerless financial base, have lower credit value. Neither one of the they are

having their own assets presently are others arranged to loan them. Business visionaries are

compelled to obtain cash from cash loan specialists at extravagant rate of premium and this

miracles every one of their computations. After nationalization, banks have begun financing

this segment. These undertakings are as yet battling with the issue of deficient accessibility of

staggering expense reserves. These endeavours are advancing different social targets and so

as to encourage then working satisfactory credit on less demanding terms and conditions

must be given to them.

• Raw Materials

Small scale ventures typically tap nearby hotspots for meeting crude material

necessities. These units need to confront various issues like accessibility of insufficient

amount, low quality and even supply of crude material isn't on ordinary premise. Every one

of these elements antagonistically influences the working of these units. Expansive scale

units, in view of more assets, ordinarily corner whatever crude material that is accessible in

the open market. Small scale units are in this manner compelled to buy a similar crude
material from the open market at high costs. It will prompt increment in the expense of

generation in this manner making their working unviable.

• Idle Capacity

There is underutilisation of introduced ability to the degree of 40 to 50 percent in the

event of small scale businesses. Different reasons for this under-usage are deficiency of crude

material issue related with assets and even accessibility of intensity. Small scale units are not

completely prepared to defeat every one of these issues just like the case with the opponents

in the huge scale segment.

• Technology

Small scale business visionaries are not completely presented to the most recent

innovation. Also, they need imperative assets to refresh or modernize their plant and

hardware Due to out of date techniques for generation, they are gone up against with the

issues of less creation in second rate quality and that too at greater expense. They are in no

situation to contend with their better prepared adversaries working modem vast scale units.

• Marketing

These small scale units are likewise presented to showcasing issues. They are not in a

situation to get direct data about the market for example about the challenge, taste, loving,

hating of the customers and pervasive design. With the outcome they are not in a situation to

overhaul their items remembering market necessities. They are creating less of sub-par

quality and that too at greater expenses. Along these lines, in rivalry with better prepared vast

scale units they are set in a generally disadvantageous position. So as to protect the interests

of small scale undertakings the Government of India has saved certain things for select
creation in the small scale division. Different government offices like Trade Fair Authority of

India, State Trading Corporation and the National Small Industries Corporation are stretching

out assistance to small scale segment in selling its items both in the local and fare markets.

• Infrastructure

Foundation perspectives antagonistically influence the working of small scale units.

There is insufficient accessibility of transportation, correspondence, control and different

offices in the retrogressive zones. Business people are looked with the issue of getting power

associations and notwithstanding when they are sufficiently fortunate to get these they are

presented to unscheduled long power cuts. Insufficient and wrong transportation and

correspondence system will make the working of different units even more troublesome.

Every one of these elements are going to unfavourably influence the amount, quality and

creation calendar of the endeavours working in these zones. Accordingly their activities will

wind up uneconomical and unviable.

• Under Utilization of Capacity

The vast majority of the small scale units are working underneath true abilities or

there is gross underutilization of limits. Huge scale units are labouring for 24 hours every day

for example in three movements of 8 hours each and are in this manner making most ideal

utilization of their apparatus and hardware. Then again small scale units are making just 40 to

50 percent utilization of their introduced limits. Different reasons credited to this gross under-

use of limits are issues of fund, crude material, control and immature markets for their items.

• Project Planning
 Another critical issue looked by small scale business people is poor venture arranging.

These business people don't connect much essentialness to suitability contemplates for

example both specialized and prudent and dive into innovative movement out of unimportant

energy and fervour. They don't try to ponder the interest perspective, advertising issues, and

wellsprings of crude materials and even accessibility of appropriate foundation before

beginning their ventures. Task attainability investigation covering every one of these

viewpoints notwithstanding specialized and monetary feasibility of the activities, isn't at all

given due weight-age.

• Skilled Manpower

A small scale unit situated in a remote in reverse territory might not have issue

concerning incompetent specialists, however talented labourers are not accessible there. The

reason is Firstly, talented labourers might be hesitant to work in these zones and also, the

undertaking may not stand to pay the wages and different offices requested by these

specialists. Other than non-accessibility business visionaries are stood up to with different

issues like non-appearance, high work turnover indiscipline, strike and so on. These work

related issues result in lower efficiency, disintegration of value, increment in wastages, and

ascend in other overhead expenses lastly antagonistic effect on the productivity of these small

scale units.

• Managerial

Administrative deficiencies represent another major issue for small scale units.

Present day business requests vision, learning, ability, fitness and entire hearted dedication.

Skill of the business person is essential for the achievement of any endeavour. A business

person is a turnaround whom the whole venture spins. Numerous small scale units have

turned debilitated because of absence of administrative skill with respect to business people.
A business visionary who is required to experience preparing and advising for building up his

administrative aptitudes will add to the issues of business visionaries.

The impact on small scale industry on the economy at a macro and micro level

 Creates substantial scale business

Since the ventures falling in this segment require low cash-flow to begin the business, it

makes gigantic work open doors for some jobless youth. India creates about 1.2 million

alumni for each year, of the absolute number about 0.8 million are engineers. Also, there is

no economy on the planet that can give occupations to such huge numbers of new alumni in a

single year. MSME is the shelter for huge numbers of these new labor.

• Economic security as far as Growth and influence Exports

Small Scale Industries are a huge development driver in India, with it adding to the

tune of 8% to GDP. As referenced in the table, Exports division in India comprises about

40% of commitment from small scale enterprises alone. Taking a gander at the sort of

commitment of small scale ventures to assembling, fares and work, different segments are

additionally profiting by Small Scale businesses MNCs today are purchasing semi-

completed, and helper items from small endeavours, for instance, purchasing of grips, and

brakes via vehicle organizations. It makes a linkage between Small Scale Industries and

enormous organizations. Indeed, even after the usage of the GST 40% this part likewise

connected GST Registration which increment the administration income by 11%.

• Encourages Inclusive Growth

About half of riches in India in possessed by only 100 individuals which is because of

unequal appropriation of riches. Comprehensive development is over the plan of Ministry for

Small estimated undertakings for quite a long while. While neediness and hardship are an
obstacle to the improvement of India, including minimized segments of society is a key test

lying before the Ministry of Small scale enterprises.

• Cheap Labour and least overhead

In expansive scale associations, one of the key difficulties is to hold the human asset

through a viable human asset the board proficient administrator. Be that as it may, in the

event of a Small scale enterprises, the necessity of work is less, and it needn't bother with a

profoundly talented worker. Subsequently, the aberrant costs caused by the proprietor is

likewise low.

• Simple Management Structure for Enterprises

Small scale ventures don't require a tremendous money to begin. With constrained

assets accessible inside the control of the proprietor, basic leadership turns out to be simple

and effective. As in the event of a vast partnership wherein a master is required for each

departmental working as a result of complex hierarchical structure, a small venture does not

have to enlist an outside pro for its administration. The proprietor himself/herself can oversee

it. Along these lines, it tends to be run without any help.

• Plays an essential job in making "Make in India" conceivable

Post the commencement of 'Make in India', a mark activity by the head administrator

of India, the way toward joining another business has been made simple. Since the Small

scale businesses is the spine in making this fantasy a plausibility, the legislature has guided

the budgetary organization to loan more credit to undertakings in this segment.

• Increases Export

Aside from creating more merchandise and enterprises, SSIs have had the capacity to

send out them in extensive numbers also. Practically 50% of India's all out fares nowadays
originate from small scale organizations. 35% of the all out fares represent direct fares by

SSIs, while circuitous fares add up to 15%. Notwithstanding exchanging houses and shippers

help SSIs trade their merchandise and enterprises to remote nations.

• Opens New Opportunities

Small scale enterprises offer a few points of interest and open doors for ventures. For

instance, they get many tax reductions and refunds from the legislature. The chance to

acquire benefits from SSIs are huge because of numerous reasons. Initially, SSIs are less

capital serious. They even get budgetary help and subsidizing effectively. Besides, obtaining

labor and crude materials is likewise generally simpler for them. Indeed, even the

administration's fare approaches support them vigorously.

• Advances Welfare

Aside from giving productive chances, Small Scale Industries assume an extensive

job in propelling welfare measures in the Indian economy too. A substantial number of poor

and underestimated segments of the populace rely upon them for their sustenance. These

enterprises decrease destitution and pay disparity as well as raise ways of life of needy

individuals. Moreover, they empower individuals to bring home the bacon with respect.

Cottage industries and its role in rural development and women empowerment

 A Background about cottage industries in India

Cottage Industry refers to the traditional artisanship of the rural people of India, who

produce various household items with locally available raw materials and artistic

skills inherited from past generations. For their own use and for livelihood, they make
those artistic products by hand depicting the designs and motif of the nature of

Bangladesh and its people, birds and animals, foliage, plants and trees, rivers, streams

and sky. Cottage industry is called a synonym of handicrafts, artistic work in wood

and metal, amateur artworks and rural artistry. At present the cottage industry has

expanded to the urban area. Cottage industries provide economic opportunities for the

poor or the middle-income section of people through employment and income

generation schemes all over the world, and especially in low income and

technologically less developed countries such as ours.

Traditionally, cottage industries have been rural-based, but in course of time and with

technological advancements, they spread to urban areas to avail of transport and

marketing facilities and financial support from institutional sources. The area of

cottage industries has now broadened remarkably from simple indigenous technology

based and home-made products to sophisticated handicrafts of wide varieties. Among

the cottage industries of Bengal, cotton is the most important, and has a history of at

least two thousand years. During Roman times, muslin of Eastern Bengal was a

passion and a fashion for the richest Roman ladies. One of the striking characteristics

of Bengal's handloom cotton textile and silk industry was their exceptional diffusion

throughout the country. In pre-British Bengal, the cotton industry was organized

under pure handicraft or the domestic system of production. Small but independent

producers carried on the process of production with the assistance of their own

families and occasionally with the help of waged labourers. Some craftsmen, artisans,

and other small industrial entrepreneurs and workers were dependent on the capital of

money-lenders.
 During the Mughal era, cottage industries were allowed to flourish. Only a few

weavers who worked in the royal factories were affected to some extent because of

Mughal rules. With the coming of Europeans, the domestic system of production of

cottage industries became much more common. Then European merchants, including

the English and Dutch East India Companies, financed artisans, weavers, and other

handicraft workers for producing goods for export to foreign destinations. Company

officials, however, attempted to oppress handloom cotton textile, weaving, and other

cottage industries. British rulers imposed series of repressionary regulations by which

they controlled price and production of textile and other cottage industry goods. In

addition the regulatory constraints, physical torture, forfeiting of goods, seizure of

property, and prosecution for recovery of advances stifled weavers and made them

disinclined to work for the East India Company. In fact, many indigenous artisans

gave up their professions in protest.

 Role of cottage industries in rural development and women empowerment

Concept of 'Bharat Nirman', 'Shining India', 'Feel Good', 'Rainbow', 'Socio-Economic

Development', 'Mainstream', 'National Building Process', 'Grass Root Administration'

and 'Good Governance' is not possible without participation and empowerment of

rural downtrodden women.

UNDP Report indicates that while 67% of the world's work is done by women, only

10 % of global income is earning by women and a mere 1% of global property is

owned by women. According to Amartya sen, "Women are less likely to secure

favourable outcomes for themselves in housing decision making processes. They feel

that their long term security lies in subordinating their wellbeing to that of male

authority figures".
Women are engaged in a wide variety of occupations especially in the unorganized

sector, women care for cattle, sowing, transplanting, harvesting, weaving, working in

the hand looms and producing handicrafts mostly as low paid wage earners or unpaid

family workers. They are also engaged in producing and selling a variety of goods

such as vegetables, fruits, flowers, cooked food, groceries etc.

Empowerment of women involves many things, economic opportunity, property

rights, political representation, social equality, personal rights and so on. Historically

the world over, either by law or by custom, the status of women is undermined by

asymmetrical power relationships in decision-making, personal and social rights,

access to resources and entitlement. Women in many countries still lack rights to

inherit property, own land, get education, obtain credit, earn income, or work outside

home, control their fertility; they are still under-represented in involvement in

decision making at the household or social level. Empowerment by means of modest

income generation projects is clearly insufficient to ameliorate the prospects for a

high quality of life for women.

The question that needs to be answered is that in a society were men control the

density of women how is it possible to empower women? It is realized that mobilizing

women to take up entrepreneurial and cottage industry activities can ensure and

economic change. Though entrepreneurship develop, a woman can not only generate

employment for other women in the locality. Self-help group and cottage industries is

always considered as a viable occupation by the rural women and generates regular

income round the year. However, it can emerge as a profitable venture if undertaken
as a business, based on proven scientific knowledge, latest package of technology,

training, proper planning and real financial aid and soft lone.

In reality rural farm women are invisible in statistics, they remain unreached and

unattended in planned development efforts and are with no access and control on the

resources. Rural Indian women are extensively engaged in agricultural activities.

However, the nature and extent of their involvement differs with the variations in

agro-production systems. The mode of female participation in agricultural production

varies with the land owning status of farm households. Their roles range from

Managers to landless labourers.