SEMESTER PROJECT REPORT

On
“SMALL SCALE INDUSTRIES IN INDIA”

Submitted By –
Names Roll No.
 ANANYA DUTTA - 1921122006
 KUMARI PRITI BALA - 1921122021
 SANDHYA - 1921122033
 SHREYASI CHAUDHARY - 1921122037

2nd Semester M.SC IN HA

Date of submission: 18th Feb 2020

Under the supervision of

Dr. Neha Sharma
Faculty-“Managing Entrepreneurship: Small and Medium Business
Properties”( MHA08)

M.Sc. Hospitality Administration

In the partial fulfilment of the requirements for the degree of
Master of Hospitality Administration
At
National Council for Hotel Management and Catering Technology
NCHM- Institute of Hospitality, Sector 62, A-34 Noida, Uttar Pradesh

SMALL SCALE INDUSTRY IN INDIA 1

 ACKNOWLEDGEMENT
The study is conducted by assistance of several individuals. We really
appreciated their and here by thank them. We would like to give special
thanks to the following people.

1. Firstly, I would like to thank Dr. Neha Sharma who had supervised the
study and guided us in doing the assignment. His presence and assistance
was remarkable and so I am grateful to him.

2. Secondly, I would like to thank all other people who provided me with
the resources to conduct my study. Their help and assistances was very
valuable and so I would like to acknowledge them as well.

Overall all the above mentioned people had a great role in my study.

Name of the student: Sandhya

Faculty Signature:

SMALL SCALE INDUSTRY IN INDIA 2

 CONTENTS

S.NO TOPIC/PARTICULARS PAGE NO

Introduction
1. 1

Features of Small Scale Industries

2. 6

Objectives of Small Scale Industries

3. 7

Characteristics of Small scale industries

4. 9

Role of Small Sale Industries in India

5. 9

Classification of Small scale Industries in India

6. 10

Summary
7. 15

8. Webliography 16

SMALL SCALE INDUSTRY IN INDIA 3

 SMALL SCALE INDUSTRIES IN INDIA
INTRODUCTION
India is predominantly an agricultural country. Apart from agriculture, small scale & large
scale industries have been also developed. Small scale industries are the backbone of our
industrial structure as they provide a variety of non-traditional, low technology products.
They are also engaged in the processing, preserving, manufacturing & servicing activities and
play a vital role in balanced and sustainable economic growth. Thus, a proper development of
small scale industries is essential for the healthy growth of economy. The primary object of
developing small scale industries in rural areas is to generate better employment
opportunities, raise income levels & standards of living of people. Small scale industries are
essential for providing subsidiary or alternate occupations and utilization of local labour &
raw materials. They facilitate an effective mobilization of resources of capital and skill and
also stimulate the growth of industrial entrepreneurship. Thus, the development of small scale
industries is an integral part of the overall economic, social and industrial development of a
country.

DEFINING
The small scale industrial sector comprising micro and small enterprises (previously known
as tiny and small industrial sector) has been recognized as an engine of growth all over the
world. This sector is characterized by low investment requirement, operational flexibility,
location wise mobility, and import substitutions. They have been the prime mover of
industrial development in many developed economies. The small scale industrial units are the
roots and fruits of economic activities. They provide way of life to more number of people.
With less amount of capital investment, this sector contributes more towards GDP, provides
more employment opportunities, offers unique product and service offerings, and serves
customers with personal attention. Though the large and medium types of industries make the
infrastructure and skeleton of an economy, the blood, flesh and skin of a flourishing economy
is made up of small scale industrial units.

SMALL SCALE INDUSTRIES (SSI) IN INDIA

Small scale industries have made considerable contribution to the socioeconomic
development of almost all the countries including India. In our country, the increasing
pressure of population and unemployment has made this contribution even more significant.
In India, ever since the days of Mahatma Gandhi, the small scale industry movement has

SMALL SCALE INDUSTRY IN INDIA 4

been largely regarded as a vehicle for uplifting the weaker sections of the population whether
it is handloom weavers, handicraft workers, rural women spinning at home, the rural artisans
or the urban craftsmen-all of them look to specific support in being able to compete with the
modern industrial sector. The small scale industry is phenomenal in our country that it has
started thinking global in the wake of liberalization in the nineties. The SSI sector as an
important segment of Indian economy, accounts for 95 per cent of the industrial units; 40 per
cent of output in the manufacturing sector; employment to over 17 million persons; 35 per
cent of total exports. The SSI sector has been receiving due attention Print to PDF without
this message by purchasing makers owing to its special characteristics, namely, low level of
investment required, high potential for creating employment opportunities, least location
constraints, thereby contributing to a balanced regional development and a high utilization of
local resources. This sector covers a wide spectrum of industries categorized under small,
tiny and cottage segments. The sector has also maintained its pace of growth over the years,
and has contributed significantly in supporting the overall economic development of the
country.
(i) Investment on plant and machinery

(ii) Employment generation.

(iii) Investment and Employment.

(iv) Volume and/or value of production.

(v) Volume and/or value of sales. II. Qualitative Aspects:

These can be:-

(i) Ownership of small business is in the hands of an individual or a few individuals.

(ii) Management and control of small-scale firm is with the owner or owners.

(iii) Technology adopted in small-scale unit is normally labour intensive.

(iv) Small-scale business is normally carried on in a limited or local area.

Examples and Ideas of Small Scale Industries

• Bakeries
• School stationeries
• Water bottles
• Leather belt

SMALL SCALE INDUSTRY IN INDIA 5

 • Small toys
• Paper Bags
• Photography
• Beauty parlours
The official definitions of a small scale unit are as follows:
(i) Small-Scale Industries:
These are the industrial undertakings having fixed investment in plant and
machinery, whether held on ownership basis or lease basis or hire purchase basis
not exceeding Rs. 1 crore.
(ii) Ancillary Industries:
These are industrial undertakings having fixed investment in plant and machinery
not exceeding Rs. 1 crore engaged in or proposed to engage in,
(a) The manufacture of parts, components, sub-assemblies, tooling or intermediaries, or
(b) The rendering of services supplying 30 percent of their production or services
as the case may be, to other units for production of other articles.
(iii) Tiny Units:
These refer to undertakings having fixed investment in plant and machinery not
exceeding Rs. 23 lakhs. These also include undertakings providing services such
as laundry, Xeroxing, repairs and maintenance of customer equipment and
machinery, hatching and poultry etc. Located m towns with population less than
50,000.
(iv) Small-Scale Service Establishments:
These mean enterprises engaged in personal or household services in rural areas
and town with population not exceeding 50000 and having fixed investment in
plant and machinery not exceeding Rs. 25 lakhs.
(v) Household Industries:
These cover artisans skilled craftsman and technicians who can work in their own
houses if their work requires less than 300 square feet space, less than 1 Kw
power, less than 5 workers and no

FEATURE OF SMALL SCALE INDUSTRIES:

1. Ownership: Ownership of small-scale unit is with one individual in sole
proprietorship or it can be with a few individuals in partnership.

SMALL SCALE INDUSTRY IN INDIA 6

 2. Management and Control: A small scale unit is normally a one man
show and even in case of partnership the activities are mainly carried out
by the active partner and rest are generally sleeping partners. These units
are managed in a personalised fashion. The owner is actively involved in
all the decisions concerning business.
3. Gestation Period: Gestation period is that period after which teething
problems are over and return on investment starts. Gestation period of
small-scale unit is less as compared to large- scale unit.
4. Area of Operation: The area of operation of small scale unit is generally
localised catering to the local or regional demand. The overall resources at the
disposal of a small-scale units are limited and as a result of this, it is forced
to confine its activities to the local level.
5. Technology: Small industries are fairly labour intensive with
comparatively smaller capital investment than the larger units. Therefore
these units are more suited for economies where capital is scarce and there
is abundant supply of labour.
6. Resources: Small scale units use local or indigenous resources and as such
can be located anywhere subject to the availability of these resources like
labour and raw materials.
7. Dispersal of Units: Small-scale units use local resources and can be
dispersed over a wide territory. The development of small- scale units in rural
and backward areas promotes more balanced regional development and can
prevent the influx of job seekers from rural areas to cities.
8. Flexibility: Small-scale units as compared to large-scale units are more
change susceptible and highly reactive and responsive to socio-economic
conditions. They are more flexible to adopt changes like new method of
production, introduction of new products etc.

OBJECTIVES OF SMALL SCALE INDUSTRIES:

The objectives of small scale industries are:
1. To create more employment opportunities with less investment.
2. To remove economic backwardness of rural and less developed regions of the economy.
3. To reduce regional imbalances.
4. To mobilize and ensure optimum utilization of unexploited resources of the country.

SMALL SCALE INDUSTRY IN INDIA 7

 5. To improve standard of living of people.
6. To ensure equitable distribution of income and wealth.
7. To solve unemployment problem
8. To attain self-reliance
9. To adopt latest technology aimed at producing better quality products at lower costs.

SMALL BUSINESS AS A SEEDBED OF ENTERPRENEURSHIP

Seedbed refers to the preparing of soil for the sowing of seeds so that we may have
good crop. Small business is regarded as a seedbed for entrepreneurship as it
provides conducive conditions for the emergence and growth of entrepreneurs.
Small enterprises are called seedbed of entrepreneurship due to the following
reasons: Small-scale enterprises can be started with lesser investment, which can
be contributed by the promoter or arranged from friends and relatives.
1. Small-scale units carry on business on a small scale and as such the
element of risk is less.
2. Small-scale units are generally based on local resources and as such there
is no problem regarding their availability.
3. Small-scale entrepreneur adopts labour intensive technology. Thus he
generates employment for himself as well as for others.
4. Small-scale units can be located anywhere and thus help in the
development of backward areas of the country.
5. Small-scale units generally cater to local demand and necessary
modifications can be made in the products keeping in mind the changing
demand of people.
6. Small-scale units provide ample opportunities for creativity and
experimentation.
7. Small-scale units have shorter gestation period and hence waiting period
for getting return on investment is less.
8. These units are relatively more environmental friendly.
9. Small-scale units help in building achievement motivation amongst
entrepreneurs.
10. Small-scale units are viewed favorably by the government and society
because these help in equitable distribution of income and wealth.

SMALL SCALE INDUSTRY IN INDIA 8

Keeping in mind the above potentials of small scale industry as a developer of
entrepreneurial talent, the government of India has facilitated this sector by
providing it with various concessions and incentives.

CHARACTERISTICS OF SSI
a. Ownership: SSI ’s generally are under single ownership. So it can either be a sole
proprietorship or sometimes a partnership.
b. Management: Generally both the management and the control is with the
owner/owners. Hence the owner is actively involved in the day-to-day activities of the
business.
c. Labour Intensive: SSI’s dependence on technology is pretty limited. Hence they tend
to use labour and manpower for their production activities.
d. Flexibility: SSI’s are more adaptable to their changing business environment. So in
case of amendments or unexpected developments, they are flexible enough to adapt
and carry on, unlike large industries.
e. Limited Reach: Small scale industries have a restricted zone of operations. Hence,
they can meet their local and regional demand.
f. Resources utilisation: They use local and readily available resources which helps the
economy fully utilise natural resources with minimum wastage.

ROLE IN THE INDIAN ECONOMY

 Employment: SSI’s are a major source of employment for developing countries like
India. Because of the limited technology and resource availability, they tend to use
labour and manpower for their production activities.
 Total Production: These enterprises account for almost 40% of the total production
of goods and services in India. They are one of the main reasons for the growth and
strengthening of the economy.
 Make in India: SSI’s are the best examples for the Make in India initiative. They
focus on the mission to manufacture in India and sell the products worldwide. This
also helps create more demands from all over the world.
 Export contribution: India’s export industry majorly relies on these small industries
for their growth and development. Nearly half of the goods that are exported from
India are manufactured or produced by these industries.

SMALL SCALE INDUSTRY IN INDIA 9

  Public Welfare: These industries have an opportunity to earn wealth and create
employment. SSI’s are also important for the social growth and development of our
country.

CLASSIFICATION OF SSI IN INDIA

Fig: Classification of SSI in India

A. Traditional Industries
Traditional Industries include: -
1) Khadi and Village Industries
Hand woven cloth from hand spun yarn is known as Khadi. Along with certain
specific village industries such as food processing, forest based raw materials and
other miscellaneous manufacturing activities etc. The Khadi and Village Industries
(KVI) sector has much scope for utilizing local skills and resources by providing
employment to rural artisans and women workers in the rural and semi-urban areas.
2) Handlooms
Handlooms from a part of India’s heritage and exemplify the richness and artistry of

SMALL SCALE INDUSTRY IN INDIA 10

 the weavers. The hand weaving of cloth from yarn forms an important segment of
rural industry.
3) Handicrafts
Handicraft embody the traditional skills of artisans who use a variety of materials-
wood, metal, clay, ivory, cloth etc., to produce consumer articles as well as decorative
or artistic products. The important products from this sector are hand knotted carpets,
printed textiles, art metal wares, cane and bamboo crafts, wood wares, scarves and
hand embroidered goods etc.
4) Coir
Coir, obtained from coconut husk, involves operations like netting, spinning and
weaving and is a traditional cottage industry located in coconut producing states. It
forms an important cottage industry in the coastal districts of Kerala, Tamil Nadu,
Karnataka, Andhra Pradesh, West Bengal, Orissa, Maharashtra, Assam, Goa etc. 5.
Sericulture India is the second largest producer of silk in the world. There are four
main varieties of silk produced in the country, viz. mulberry, Taser, and mug
5) Sericulture
Sericulture is an agro-industrial activity based on mulberry and non-mulberry silk
production.
B. Modern Units:
1) Small-scale industrial undertakings
2) Export oriented SSI units
3) Ancillary industrial undertakings
4) Small-scale service and business enterprises
5) Power looms.
6)Modern Sector Power looms-
The unorganized Power loom sector largely meets the clothing needs of the country’s
population.
This sector contributes approximately 54% to the total cloth production .

REGISTRATION OF SSI
SSI registration is a registration provided by the Ministry of MSME. A business should
obtain SSI registration in order to be eligible for a number of schemes, subsidies and other
incentives provided by the Government to such SSI’s. SSI registration can be obtained online
too. Let’s look at the process of SSI registration online:

SMALL SCALE INDUSTRY IN INDIA 11

OVERVIEW OF SSI REGISTRATION
SSI registration is provided by the Ministry of Micro, Small and Medium Enterprises through
the Directorate of Industries of the State Government. The main logic behind the SSI
registration is to set up new SSI businesses in India. SSI registration helps the business to be
eligible for a number of subsidies given by the Government. We can also get SSI registration
online.

ELIGIBILITY CRITERIA FOR SSI REGISTRATION SSI

Registration can be obtained for:
 Manufacturing enterprise; and
 Service enterprise
For manufacturing enterprise, if the investment in plant and machinery (excluding land
& buildings) is within any of the following levels:
1. Micro Enterprises: Investment of up to Rs.25 lakhs in plant and machinery.
2. Small Enterprises: Investment of up to Rs.5 crores in plant and machinery.
3. Medium Enterprises: Investment of up to Rs.10 crores in plant and machin.ery
For service enterprise, if the investment in plant and machinery (excluding land &
buildings) is within any of the following levels:
1. Micro Enterprises: Investment of up to Rs.10 lakhs in equipment.
2. Small Enterprises: Investment of up to Rs.2 crores in equipment.
3. Medium Enterprises: Investment of up to Rs.5 crores in equipment.
4. If the investment is done within the above-mentioned limits then the SSI registration
has to be obtained.

Institutional Finance for Small Scale Industries

The following institutions through their various schemes provide financial support to small
scale industrial sector under the overall policies and guidelines evolved by the Reserve Bank
of India.
 At the National Level
SIDBI (Small Industries Development Bank of India) -mainly in the course of re-finance,
NABARD (National Bank for Agriculture and Rural Development), NSIC(National Small
Industries Corporation), Khadi and Village Industries Commission, IDBI Ltd, IFCI,
Nationalized Banks, DCSSI (Development Commissioner Small Scale Industries ).
 At the State Level

SMALL SCALE INDUSTRY IN INDIA 12

SFCs (State Financial Corporations), SIDCs (State Industrial Development Corporations)-for
Infrastructure / Finance, State Cooperative Banks, Khadi and Village Industries Board. 57
 At Regional and District Level
RRB (Regional Rural Bank), District Central Cooperative Banks, Primary Cooperative
Banks, State level Institutions and Nationalized Banks, Khadi and Village Industries
Commission,
(DIC)District Industries Centre.

BENEFITS OF OBTAINING SSI REGISTRATION

There are various tax rebates offered to SSI’s
1. A credit for Minimum Alternate Tax (MAT) is allowed to be carried forward for up to
15 years instead of 10 years
2. There are many government tenders which are only open to the SSI.
3. They get easy access to credit.
4. Once registered the cost of acquiring a patent, or the cost of setting up the industry
reduces as many rebates and concessions are available.
5. Business registered as SSI are given higher preference for government license and
certification.

Business registered as SSI are given higher preference for government license
and certification.
1. To do the registration the SSI owner has to fill a single SSI online registration form. It
can be done in the offline mode as well.
2. If a person wants to get registration for more than one industry then also he/she can
opt for an individual SSI registration done.
3. To get registered he/she has to fill a single form which is available at the website.
4. The documents required for the SSI registration are Aadhar number, industry name,
address, bank account details and some common information.
5. Here, the person can provide self-certified certificates.
6. No registration fees is required for the registration.
7. Once the SSI registration form is filled and uploaded, very soon you will obtain the
SSI registration number.

CHALLENGES FACED BY SSI’s

In spite of expedient contribution by the SSIs towards the Indian economy, SSIs does not get
the indispensable support from the concerned Government departments, financial institutions,

SMALL SCALE INDUSTRY IN INDIA 13

Banks, credit societies and corporate thus the SSIs are becoming handicap in the face of
competition at national and international markets. The major problems faced by the SSIs are
discussed below:
1. Scanty credit assistance
Scanty and timely supply of credit is one of the major problems faced by SSIs in India.
Scarcity of finance and weak creditworthiness is the main barrier for the development of SSIs
in India. The creditworthiness of these small borrowers is generally weak and therefore they
face unwilling creditors who may be persuading to lend only at high rate of interest.
2. Uneven and poor quality of raw material
SSI units face extreme problems in procurement of raw materials whether from local or
international market. The problems arise due to absence of sufficient quantity of raw
materials, poor quality of raw material at exorbitant price. The entrepreneur of SSI units has
lack of knowledge about the procurement from foreign market. Large scale industries enjoy
economies of large scale operation hence can procure the quality raw material at very
reasonable price, thus can sell the products at cheaper price as compared to SSIs.
3. Absence of organised marketing process
SSI units do not have any organised marketing process and even does not appoint any
marketing organisation for marketing of products or services and hence their products
compare unfavourably with the quality of the products of large scale industries. They suffer
competitive disadvantages in comparison to large scale industries, as large scale industries
infuse large amount of money on branding and promotion activities.
4. Inadequate infrastructure
Inadequate infrastructure is a major problem for the SSI units to grow and prosper. Most of
the SSI units are located in semi urban, urban and rural areas where the power supply is
inadequate to run big machines, several times power cut off, and poor road connectivity.
Thus absence of adequate infrastructure adversely affects the productive schedule of the
enterprise leading to underutilization of capacity. More over the machineries, equipment’s
and technology employed by the SSIs are out dated, where the large scale organisation enjoys
the competitive advantages.
Beside the above mentioned problems SSI units suffer from a number of other problems also
poor managerial capabilities, lack of adequate warehousing for free supply of goods, lack of
skilled manpower, lack of appropriate information, etc. Due to all these problems the
progress and development of Small scale industries could not reach the distinguished stage.

SMALL SCALE INDUSTRY IN INDIA 14

SUMMARY
Small Scale Sector occupies on important position in the industrial structure of
our country. In a country like India, wherein on one hand there is the acute
problem of unemployment and on the other hand scarcity of capital, it is only the
small scale sector which is best suited under these circumstances. Small scale
enterprises play an important role in employment generation, resource
mobilization and utilization, income generation and in helping to promote change
in a gradual and phase manner. Small scale industries have vast potentialities but
they could not progress satisfactorily. Their performance is not good as they face
the problems of labor, availability of raw material, absence of credit facility,
lack of machinery and equipment unsuitable location completion from large scale
units obsolete technology, marketing facilities etc. Suitable measures are
necessary to remove these bottlenecks in the optimum operation of SSI.

SMALL SCALE INDUSTRY IN INDIA 15

WEBLIORAPHY
http://shodh.inflibnet.ac.in:8080/jspui/bitstream/123456789/271/2/02_introduction.pdf

https://cleartax.in/s/small-scale-industries-ssi

http://newhorizonindia.edu/nhc_kasturinagar/wp-content/uploads/2017/10/Unit-2.pdf

http://data.conferenceworld.in/ESM/P1405-1415.pdf

https://shodhganga.inflibnet.ac.in/bitstream/10603/49351/8/08_chapter3.pdf

SMALL SCALE INDUSTRY IN INDIA 16