UNIT NO 10 : Micro and Small Enterprises

1).What is the full form of MSME? Write a short note on MSME.

Answer : MSME stands for “Micro, Small and Medium Enterprises”.
A Short note on MSME
The Government of India has introduced MSME or Micro, Small,
and Medium Enterprises in agreement with Micro, Small and Medium
Enterprises Development (MSMED) Act of 2006. These enterprises
primarily engaged in the production, manufacturing, processing, or
preservation of goods and commodities.
MSMEs are an important sector for the Indian economy and have
contributed immensely to the country’s socio-economic development.
It not only generates employment opportunities but also works
hand-in-hand towards the development of the nation’s backward and
rural areas. According to the annual report by the Government (2018-
19), there are around 6,08,41,245 MSMEs in India.
Points to Remember:
• MSMEs are significant for the economic and social development
of India.
• MSMEs generate immense employment opportunities.
• MSMEs help in the Development of India’s rural landscape.

2) What are the 3 three types of Industries on the basis of scale?

Answer: On the basis of scale, there are three types of Industries :
a) Small Scale and Micro Industries.
b) Medium scale industries.
c)Large Scale Industries.
3 ) Write new definitions of Micro and Small Scale Industries? 3
Answer: On 13th May of 2020, Union Cabinet has approved the
revised new definition of the MSME.
The MSMEs have been redefined on the basis of investment limit
and turnover size.
According to new definition, a Micro Enterprise is one , having
investment limit on plant and machinery up to 1 crore and turnover up
to 5 crores in both the sectors:-- manufacturing and servicing .
Similarly a Small Enterprise is defined as a unit having investment
limit on plant and machinery up to 10 crores and annual turnover up to
50 crores in both the sectors :---manufacturing and servicing.

4) Explain the scope of small industries with reference to self-

employment of Engineers in Assam?
Answer : During the present days of employment, the engineers are
most affected, government, jobs and limited and hence all the and hence
all the engineers cannot be employed in this government, department or
in big industries. Therefore, it is being suggested to start the small scale
industries of their own. We know that these industries require less
amount of capital and hence with less capital investment, the engineers
can start their work without hesitation which will generate more
employment opportunities.
A large no. of articles has been reserved by the Govt. of
Assam to be manufactured by the small scale only. Medium and large
scale cannot produce these articles are given below Aluminum hanger,
battery assembling, steel furniture, vehicle welding, bolt and nut
making, inverter assembling, incense stick making, staple pin, mobile
phone repairing, glass c cutting and frame work, Bick making, coir
ropes, electric door bellis, flexible wire. plastic molded products,
bathroom fittings, computer assembling. Internet cable, dry cleaning,
photo state, automobile repairing sop. leather boots, candle making,
varnishes, dry distemper, red oxide, phenyl, mosaic tiles making, chalk ,
perfumes, citronella extraction lamps, woolen carpets etc. Our engineers
acquiring technical knowledge during their study period can start small
scale units of the above materials and set themselves sell-employed.

5) What are the procedures to start a Small Scale Industries?

Answer: Procedures for Setting Up of a Small Scale Business, Small
Scale Business provides more independence than the large scale
business. So through the Small Scale Enterprise one can fulfill their
dream to become an entrepreneur.
One can set up small-scale industries by following the simple
procedures, which are explained below. :----
1) Decision Making : First of all, the entrepreneur needs to
prepare a description for the small scale industry that he wants to
set up. It is necessary to decide whether he wishes to set up a sole
proprietorship or partnership.
2) Scanning Of Business Environment: Before setting up of a
Small enterprise/ industry, it is always essential to study and
understand the prevailing business environment. Moreover, the
entrepreneur / producer should be aware of industrial policy,
economic policy, licensing policy, legal environment etc. of the
govt.
3) Product Selection : Before starting the business the entrepreneur
must decide , product to be manufactured or the services that he
wishes to offer.
While choosing the product or service , he must conduct a good market
research and learn about the prevailing competition in the market.
• Location :Again the entrepreneur must choose a suitable location
/ site to set up the small scale industry. Location determines the
success or failure of the enterprise.
 • Technology: To manufacture any item, technology is used. So the
entrepreneur should collect information on all available
technologies, and the most suitable one should be identified.
• Finance: Finance is the lifeblood of the enterprise. So, the next big
step is to arrange for finance. No business can be created, with zero
capital. So the best way to arrange finance is to borrow loans from
different financial institutions.
• Power And Water Connection : The sites where the enterprise
will be located should either have adequate power and pure water
connections, or it should be arranged.
• Insurance: It is necessary to have adequate insurance for fixed
assets and later on for the current asset.
• Quality Assurance: Before marketing, the product quality
certification from BIS (Bureau of Indian Standard)/
AGMARK/HALLMARK should be obtained depending upon the
product.
Conclusion :
It can be concluded that setting up small scale industries is not a
difficult task.
The procedures to start of small scale industries are very simple and
easy than the large scale industries.
So, if one wants to set up an industry, one can surely go for
industries.
It is profitable, easier and helps in the growth of the economy of the
country.

6) a. What is idea generation?

Answer: Idea generation is the creative process or procedure that a
company uses in order to figure out solutions to any number of difficult
challenges. It involves coming up with many ideas in a group
discussion, selecting the best idea or ideas, working to create a plan to
implement the idea, and then actually taking that idea and putting it into
practice. The idea can be tangible, something you can touch or see, or
intangible, something symbolic or cultural.

b. What is SWOT analysis? Explain.

Answer: SWOT analysis is a strategic planning technique used to help
a person or organization identify strengths, weaknesses, opportunities,
and threats related to business competition or project planning.
Strengths and weakness are frequently initially-related, while
opportunities and treats commonly focus on the external environment.
• Strengths: characteristics of the business or project that give it an
advantage over others.
• Weaknesses: characteristics of the business that place the business
or project at a disadvantage relative to others.
• Opportunities: elements in the environment that the business or
project could exploit to its advantage.
• Threats: elements in the environment that could cause trouble for
the business or project.

7) Explain the meaning and Characteristics of Small Scale and

Micro Enterprizes.
Answer : Characteristics and examples of Small Scale Industries
Followings are the characteristics of Small scale industries in India :
1) Small scale industries generally have a single ownership, which
means it either has a sole proprietorship structure or a partnership.
2) The management of the small scale industries rests with the
owners and therefore, the owner plays an active role in the day to
day functions of the business.
3) Small scale industries are very much labour intensive, hence there
is limited use of technology.
 4) Small scale industries are flexible and adaptable to a changing
business environment, unlike the large industries.
5) Small scale industries work in a restricted area which makes them
able to meet local and regional requirements.
6) Small scale industries use resources that are local and readily
available, which helps the economy fully utilize the natural
resources and bear minimum wastage.
Examples of Small Scale Enterprizes :
• Coir products
• Handlooms
• Handicraft
• Sericulture
• Mobile repairing center
• Hanger & bolts making
• Bakery
• Beauty parlour
• Inverter repairing etc.
Characteristics and examples of Micro Enterprise:
1. A small or micro enterprise is generally a one-man show. Even
the small units which is run by a partnership firm, the activities
are mainly carried out by one of the partners .
2. In case of micro enterprises, the owner himself/herself is a
manager also. Thus, these units are managed in a personalized
fashion. The owner has firsthand knowledge of what is actually
going on in the business. He takes effective participation in
decision taking.
Example ...
• A tailor's shop,
• A small retailer shop of essential commodities ,
• Pan shop.
• A cycle repairing center ,
 • Manufacturing of goods made up of cane, bamboo, water
hyacinth etc.

8) Explain the factors which must be considered while selecting a

site or location for Small Scale Enterprizes.
Answer: Factors which are to be considered while selecting a site or
location for Small Scale Industries :
1) Land : Suitability, adequacy, and comparable cost of the sites to
install the plant and to expand it in fiture should be considered.
2) Buildings : Availability of buildings for housing the industrustry
and the reasonableness of rent or cost of new constructions should
be cheap.
3) Labour : Availability of the skilled, semi-skilled, un-skilled
person is required ; their wage rates should be reasonable.
4) Raw materials : Adequate raw materials near the plant at cheap
rate must be considered.
5) Transport: Regular and sufficient transportation facilities for
delivery of materials, dispatch of finished products and for the use
of the employees should be considered while selecting site or
location for SSI( Small Scale Industries).
6) Market : Size and nearness to the local market should be
considered.
7) Power facilities : It's not possible to run a SSI without power. So
adequate and good power facilities should be considered.
8) Other facilities:
• pure water for the factory/ industry,
• good drainage system,
• bank, post-office facilities near the industry,
• Fire station near the location,
• Taxes to be paid,
• Legal regulations,
 • Financial facilities etc.
9) Write short note on : a) Ancillary Industries and
b) Industrial estates.
Answer : Ancillary Industries: Industries in India are classified under
three heads : Large scale, Medium scale and small scale. An ancillary
industry is the modern small scale industry which manufacturers parts
or components, sub-assemblies, tools, intermediates etc. and sells 50%
of its products to large scale industries which produce end products.
Thus the programmed of ancillary development has specific advantages
for both for large as well as small industries. This programmed also
helps in overall economy of the country.
Objectives of ancillary development are:
1. Development of employment opportunities coupled with growth of
Entrepreneurship in different fields and different parts of the
country.
2. Increase in the productivity of small scale industries.
3. Growth of a low cost economy through reduction in costs brought
by appropriate technology followed by ancillary units. But a major
problem may be faced by ancillary units. When the large scale
manufacturer producing an end product faces slackness in demand,
the ancillary units supplying the components is hit hard and may
have to remain practically ideal unit till the demand for the end
product revives.

Industrial estates : It is a well planned unit with ready built factory

space which is let out on rent or sold to industries. Small industrialists
who have no capital to build their own premises or do not want to do it
right in the beginning are in a position to acquire factories space ‘t
reasonable rate. The principal objective of the program of Industrial
Estate is to provide small scale industries, a suitable site with facilities
of water electricity, steam, transport, banks. Post offices, canteen, watch
and wards, first aid and they create a healthy atmosphere for the
development I of industries.
The objectives underlined the establishment of industrial estates in
India are as follows :
1. To encourage the growth of small scale industries.
2. To shift small scale industries from congested areas to estate
premises with a view to increase their productivity.
3. To achieve the decentralized development in small towns and large
villages with a view to create job opportunities in these areas. I
The first industrial estate in India was set at Rajkot in September 1955.
The establishment of Industrial estate is primarily the responsibilities of
state government . the role of central government is mainly that of
laying the down the policies for the guidance of the state government
and advancing funds for implementation of these program.
Allotment Generally sheds are allotted to bonafide small scale units.
According to industrial priorities as fixed by the industrial departments
of the State government concerned. Normally industries using modern
techniques, power, treatment, technical knowhow and manufacturing
items which are important from the point of view of national economy
and export oriented industries are given preference in industrial estate.

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