Good evening everyone I am palak and today I will be presenting the topic the impact of

globalisation on small scale industries.

introduction

After attaining independence in 1947 India adopted mixed economic system as a method to achieve
economic development. Along with the Large Scale sector the thrust was on Small Scale sector
because of its small size, indigenous technology, employment intensity and its suitability for rural
area with limited techno-economic structure. . The real thrust to the globalization process in india
was provided by the new economic policy introduced by the Government of India in July 1991 at the
behest of the IMF and the World Bank. Globalization has led to an ‘Unequal Competition’- a
competition i.e. between ‘giant MNC’s and dwarf Indian enterprises’. The small scale sector is a vital
constituent of overall industrial sector of the country and forms a dominant part of Indian industry
and contributing to a significant proportion of production, exports and employment. Therefore,
there is a need to study and analyze the impact of globalization on Indian Small Scale Industries.

So the first question that now pops up is what is globalization?

Globalization may be defined as the process of integrating various economies of the world without
creating any hindrances.it gives an opportunity for cross boarder and free flow of goods and
services, technology, capital and even labour or human capital. It is a process that integrates the
world into one huge market. It provides several things to several people with removal of all trade
barriers among countries. And at the same time it increases the interdependence and
interconnectedness of economies of various countries with each other.

After knowing the meaning of globalisation it is now important to know the meaning of small scall
industries.

Small scale industries are referred to as those industries in which the process of manufacturing,
production and servicing are done on a small scale.The investment on such industries is one
time and these investments are mostly done on plant and machinery, the total investment on
such industries do not exceed 1 crore. The development of SSIs has been one of the major
planks of India’s economic development strategy since independence. Today, SSI sector
occupies a place of strategic importance in the Indian economic structure due to its
considerable contribution in terms of output, exports and employment. In all developing
countries, the small scale industries play a significant role. Since the resources available and
the amount of the capital to be invested in businesses are quite low, hence establishment and
development of large size industries is not an easy task for such economies. Since India is a
developing country, there is no need to justify the role of small scale industries.
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India’s business industry is still dominated by the Small scale industries. Around forty five percent
portion of total business including exports is through small scale industries and same for
employment generation through industries.

Positive

Improve technology:The SSIs in India suffer from outdated technology and sub-optimal scale of
operation. Many foreign companies have partnered with Indian SSIs and helped them to use better
technology, managerial skill etc. Thus, globalization help small firms to develop technology base
through Research & development activities, contribution from the technological institutes,
universities etc.
opportunities to enter the world markets: Globalization has opened up the economy and integrated
it with the world economy. The SSIs enjoy the benefits of selling their products and services to the
world market rather than being confined into domestic market.at the same time The free economy
ushers inaccessibility to bigger markets, greater linkages for SMEs with larger companies and
improved manufacturing techniques and processes.

Higher performance of ssi:Before globalization, the SSI sector was a highly protected sector.
Suddenly, after Globalization they discover that many of such protective measures were withdrawn
and they have to fight for their existence. This competitiveness in domestic and global market
brought out superior performance.

SSIs have been able to identity many uncommon but highly promising business areas like
outsourcing, medical transcription, clinical research trials, sub-contracting,and many new
technologies like biotechnology, nanotechnology etc which are attractive for the new generation SSI
entrepreneurs.

Negative

While the process of globalisation has many advantages, it has also imposed some severe
restrictions on the growth of SSIs. SSIs face ruthless competition from large domestic companies and
multinationals improved technology, managerial ability, skilled workers, marketing skills, better
product quality, and wide variety of products. As mergers and acquisitions become more popular,
small companies are finding it difficult to remain afloat.

Problems of Marketing and Distribution: Marketing is probably the most neglected and less explored
problem for the Small firms. Most of them do not have any well formulated marketing strategy,
market research programmes, innovative advertisement techniques etc. Most of the SSIs do not
have adequate monetary support to develop marketing section and many are not aware of modern
low-cost marketing techniques (blogging, sending mails, developing web site for the company).

Shortage of Skilled workers: Though India has no shortage of human resource, most of them are
unskilled workers. Large firms pay higher remuneration and employ skilled workers. The SSIs have to
operate with unskilled or semi-skilled workers. Thus, the SSIs suffer from low managerial capabilities.

Inadequate infrastructure facility: Infrastructural lacking includes inadequate power supply,

transportation, water supply etc. Small firms cannot bear the cost of setting up independent power
supply unit. They have to depend on irregular power supply from the electricity boards. Inadequate
transportation system increases cost of production. The SSIs producing beverages, tobacco products,
medicines etc face the problem of inadequate water supply.

Problems related to finance: Financing has always been a major problem for the small and medium
industries in India. The SSIs mostly depend on internal sources of finance (personal savings, loan
from relatives, and loan from local money lenders) than that of institutional financing by banks and
other financing institutions.

Conclude

A comparison of the growth patterns of key parameters between the pre- and post-globalization
periods shows that “globalisation” has had a negative effect on the growth of small-scale industries
measured in terms of number of units, production, employment, and exports. Since 1991, India's
small-scale industry has been operating in a highly competitive climate. Small-scale industry in India
has been plagued by a lack of dependable and stable economic infrastructure, a decrease in credit
inflow growth, and technological obsolescence, all of which have resulted in inferior quality and low
productivity. SSI will achieve significant growth with the aid of government policies and investment
from other countries in terms of training and financing. Changes in international and national policy
provide new prospects and markets for Indian small-scale industry. Technical advancement and in-
house technological advances, as well as the promotion of inter-firm linkages, must be actively and
regularly promoted. Globalization has an effect on small businesses in a number of ways.but It is
important that SSIs actively analyse prospects in order to maximise their business potential.