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MADE BY: NAVNEET AMAN KAMAL ABHISHEK MISHRA MBA (B.E) 4th SEM.
scale unit if it fulfils the capital investment limit fixed by the Government of India for the small-scale sector. the capital resources invested on plant and machinery buildings have been the primary criteria to differentiate the small-scale industries from the large and medium scale industries.DEFINITION OF SSIs The definition for small-scale industrial undertakings has changed over time. However. for any industrial unit to be regarded as Small Scale Industrial unit the following condition is to be satisfied: Investment in fixed assets like plants and equipments either held on ownership terms on lease or on hire purchase should not be more than Rs 10 million. An industrial unit can be categorized as a small. 1999. However.5 lacs in Plant & Machinery Upto Rs 10 lacs in Plant & Machinery Upto Rs 20 lacs in Plant & Machinery Upto Rs 35 lacs in Plant & Machinery Upto Rs 60 lacs in Plant & Machinery Upto Rs 100 lacs in Plant & Machinery Upto Rs 100 lacs in Plant & Machinery . the unit in no way can be owned or controlled or ancillary of any other industrial unit. As per the latest definition which is effective since December 21. YEAR 1960 1966 1975 1980 1985 1991 1997 1999 INVESTMENT LIMITS Upto Rs 5 lacs in Plant & Machinery Upto Rs 7.those using power with less than 50 employees and those not using power with the employee strength being more than 50 but less than 100. Initially they were classified into two categories.
hardware. sericulture. electronic components and equipments. One special characterstic of traditional small-scale industries is that they cannot provide full time employment to workers. control system. handicrafts possess the highest labour productivity. instruments. electronics. As against this. besides handicrafts make a significant contribution to earning foreign exchange for the country. glass and ceramics. bicycle parts. sports goods. the share of modern industries in the total output of this sector was 74% in 1979-80 but their share in employment was only 33%. traditional small-scale industries accounted for only 135 of the total output but their share in total employment was 56%. Traditional small industries include khadi and handloom. transport equipment. Among traditional village industries. particularly as ancillaries to the large industries. mechanical engineering items. coir. automobile parts. Modern SSIs produce wide range of goods from comparatively simple items t sophisticated products such as television sets. various engineering products. plastic products. etc. these industrial units would be having higher labour productivity. during 1979-80. . Obviously. electrical items.CLASSIFICATION OF SSIs: A common classification is between traditional small industries and modern small industries. Modernization has widened the list of products offered by this industry. The traditional small industries are highly labour-intensive while the modern small-scale units make the use of highly sophisticated machinery and equipment. handicrafts. Nowadays Indian small-scale industries (SSIs) are mostly modern smallscale industries.. but instead can provide only subsidiary or part time employment to agricultural laborers and artisans. chemical products. village industries. For instance. stationery items and clocks and watches. The items manufactured in modern Small-scale service & Business enterprises in India now include rubber products.
The number of small-scale units has increased from an estimated 0.87 million units in the year 1980-81 to over 3 million in the year 2000.62 million worth of goods or services with an approximate value addition of ten percentage points. It has been estimated that a million Rs. There are several important reasons why these industries are contributing a lot to the progress of the Indian economy: 1) PRODUCTION: The small-scale industries sector plays a vital role in the growth of the country. The small-scale sector has grown rapidly over the years. It contributes almost 40% of the gross industrial value added in the Indian economy. . of investment in fixed assets in the small scale sector produces 4. When the performance of this sector is viewed against the growth in the manufacturing and the industry sector as a whole.ROLE OF SMALL SCALE INDUSTRIES IN INDIAN ECONOMY The small-scale industrial sector plays a pivotal role in the Indian economy in terms of employment and growth has recorded a high rate of growth since Independence inspite of stiff competition from large-scale industries. The growth rates during the various plan periods have been very impressive. it instills confidence in the resilience of the small-scale sector.
84 5.49 314850 8.46 128. next only to Agriculture.64 17.2.32 20.53 101.97 96.) Growth Nos.65 24.95 275.83 5. Office of the Development Commissioner M/O Micro & Small Enterprises Cluster Development Programme (Statistics & Data Bank Division) PERFORMANCE OF MICRO & SMALL ENTERPRISES Number of Enterprises (Lakh Production Empl.42 299.58 109.92 5.00 Share In GDP (%) 5.88 18.71 123.91 93.71 104.55 429796 10.99 133.49 263.59 287.06 118.28 695126 13. EXPORT: .44 312.79 5. Crs.98 107. EMPLOYMENT SSI Sector in India creates largest employment opportunities for the Indian populace. It has been estimated that 100.68 108.000 rupees of investment in fixed assets in the small-scale sector generates employment for four persons.85 497842 12.98 113.30 364547 9.67 322. (Rs.68 16.52 587196 12.94 Year 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 (Projected) NA 3.) (Lakh Person) at Current Rate Registered Unregistered Total prices (%) 15.
OPPORTUNITY: The opportunities in the small-scale sector are enormous due to the following factors: • • • • • • • • • Less Capital Intensive Extensive Promotion & Support by Government Reservation for Exclusive Manufacture by small scale sector Project Profiles Funding .Finance & Subsidies Machinery Procurement Raw Material Procurement Manpower Training Technical & Managerial skills . SSI Sector contributes 45%-50% of the Indian Exports. This takes place through merchant exporters. it is estimated that small-scale industrial units contribute around 15% to exports indirectly. woolen garments and knitwear. 4. are sports goods. processed food and leather products. The exports from SSI sector have been clocking excellent growth rates in this decade. plastic products. The SSI sector is reorienting its export strategy towards the new trade regime being ushered in by the WTO.SSI Sector plays a major role in India's present export performance. Besides direct exports. trading houses and export houses. The product groups where the SSI sector dominates in exports. leather and gems and jewellery units from this sector. Direct exports from the SSI Sector account for nearly 35% of total exports. It would surprise many to know that non-traditional products account for more than 95% of the SSI exports. readymade garments. It has been mostly fuelled by the performance of garments. They may also be in the form of export orders from large units or the production of parts and components for use for finished exportable goods.
the very people among whom these are distributed generate this income. income are distributed among a vast number of persons throughout the country. On the one hand. MEASURES To help the SSIs in meeting the challenges of globalization. these industries enable a vast number of people to earn income. As such these can help in reducing poverty in the country. Small industry sector has performed exceedingly well and enabled our country to achieve a wide measure of industrial growth and diversification. This in turn increases their income levels and quality of life. and that these can be set up anywhere in the country. these industries tend to promote equitable distribution of income. .• • • • Tooling & Testing support Reservation for Exclusive Purchase by Government Export Promotion Growth in demand in the domestic market size due to overall economic growth Increasing Export Potential for Indian products Growth in Requirements for ancillary units due to the increase in number of greenfield units coming up in the large-scale sector. One. Further. All these benefits flow from the fact that these industries are highly labour-intensive. Two. a large proportion of income generated in these enterprises is distributed among the workers. People of small means can organize these industries. and on the other hand. The reasons are obvious. the Government has taken several initiatives and measures in recent years. Distributive aspect of small-scale industries further unravels their twofold beneficial character. WELFARE: These industries are also very important for welfare reasons. 5.
Medium enterprises-investment above Rs 2 crores and upto Rs 5 crores MSMED Act – 2006 and its Impact Clause Salient Features Impact . Micro enterprises-investment upto Rs 10 lakhs b. b. Medium enterprises . 2006’. c.Investment above Rs 5 crores and upto Rs 10 crores.Primarily among them is the enactment of the ‘Micro.investment upto Rs 25 lakhs. Small enterprises-investment above Rs 10 lakhs and upto Rs 2 crore c. Small enterprises . which aims to facilitate the promotion and development and enhance the competitiveness of MSMEs. The Act came into force from 2nd October 2006. The main features of the act are : SALIENT FEATURES OF MSMEDACT – 2006 • Manufacturing enterprises defined in terms of investment in Machinery and Equipment (excluding land and building) classified into a. Micro enterprises . • Service enterprises defined in terms of their investment in equipment (excluding land and building) classified into a. Small and Medium Enterprises Development Act.investment above Rs 25 lakhs and upto Rs 5 crores.
Establishment of Specific representation Statutory Status. Filing of Replacement of Facilitates SMEs to avail the benefits memoranda optional registration with of the act immediately after setting up for Micro and Small memorandum of the unit. compact board and National Small for Women quarterly meetings will address and Medium Mandatory Quarterly problems of SMEs immediately to take Enterprises Meeting corrective action Board – Maximum No. Concept of Clear-cut demarcation of Facilitates SMEs to enter into service Enterprises manufacturing/production enterprises aggressively and rendering services 3. Definition of Specific ceiling limit for Existing small units can graduate into Enterprises manufacturing/production Medium units and avail facilities under and service enterprise the act. yet to be notified .1. enterprises in manufacturing and service sector Medium enterprises in Service Sector but mandatory for Medium enterprises in manufacturing sector Clause 5. Public Procurement Policy under Section 11 of MSME Act. of members 47 2. Procurement Policies Salient Features Notification of preference policies by central or State Governments for goods and services provided by Micro & Small enterprises Impact Facilitates opportunity for supply of goods/services without any hassles. definition for Medium enterprises 4.
Closure of Statutory Facilitates expedition of liquidation Business notification of scheme for closure 6. Delayed Payment – Deduction This will encourage procurement allowable deduction disallowed agencies to ensure timely payment to under IT Act 1961 SMEs. 90 days framework for dispute resolution 8. Council. 9. in recognition of the fact that delivery of credit continues to be a serious problem for MSEs. Dispute Establishment of Easy financial planning and no waste of Resolution MSE facilitation human resources for chasing/follow up.• Period of SMEs can plan their cash flow/financial payment by requirement the procuring organizations – 45 days • Penal interest 200% of PLR 7. Further. a ‘Policy Package for Stepping up Credit to Small and Medium Enterprises (SME)’ was announced by the government with the objective to double the credit flow within the period of five years. Delayed Payment Penalty & dispute resolution Other major initiatives taken by the government are setting up of National Manufacturing Competitiveness Council (NMCC) and the National Commission of Enterprises in the Unorganized Sector (NCEUS). .
The main objective of all these schemes is to promote the interest of the micro and small enterprises and to put them in competitive and advantageous position. since its inception in 1955 has being working with its mission of promoting. Following schemes have been formulated to help MSEs in exporting their products: i. Products of MSE exporters are displayed in international exhibitions and the government reimburses the expenditure incurred. Small and Medium Enterprises Development Organization The Micro. These are: Micro. Small and Medium Enterprises Development Organization (earlier known as Small Industries Development Organization) set up in 1954. 7 Field Testing Centres (FTSs). 4 Regional Testing Centres (RTCs). 6 Process-cum-Product Development Centres (PPDCs) National Small Industries Corporation Ltd (NSIC) NSIC. The Corporation has been introducing several new schemes from time to time for meeting the change aspirations of micro and small enterprises. . 28 branch SISIs.The Ministry of Micro. it provides a comprehensive range of facilities and services to the MSMEs through its network of 30 Small Industries Service Institutes (SISIs). aiding and fostering the growth of micro and small enterprises. small and medium enterprises. As an apex organ. functions as an apex body for sustained and organized growth of micro. Small and Medium Enterprises (MSME) performs its tasks of formulation of policies and implementation of programmes mainly through two Central organizations. The information pertaining to the schemes planned to be continued/implemented in the XI plan period by NSIC with Government support is given hereunder: Measures for Export Promotion Export promotion from the MSE sector has been accorded a high priority.
The SSI Sector today constitutes a very important segment of India's economy and it accounts for nearly 40 of the gross value of output in the manufacturing sector and about 50% of the total exports from the . Under the MSE Marketing Development assistance (MDA) scheme. This Policy got a legal backing when the I (D&R) Act was amended in March. Secretary (ID). To acquaint MSE exporters with latest packaging standards. This policy was initiated in 1967 with 47 items which was enlarged to 807 items in 1978. training programme on packaging for exporters are organized in various parts of the country in association with the Indian Institute of Packaging.ii. Chairman BICP and AS&DC (SSI)..IMPORTS & EXPORTS Exports from the small scale sector over a period of time have acquired great significance in India's foreign trade. 1984 empowering the Government to reserve items under this Act. assistance is provided to individuals for participation in overseas fairs/exhibition. iii. This Act also provided for the Constitution of an Advisory Committee headed by Secretary (SSI & ARI). or tours of individuals as member of a trade delegation going abroad. Other members of this Committee include Secretary (IP&P). GOVERNMENT POLICIES REGARDING SSI Policy Of Reservation Reservation of products for exclusive manufacture in the SSI Sector has been one of the important policy measures for promoting this sector. GENERAL TRADE POLICY . At present 812 items are reserved for manufacture in this sector. techniques. overseas tours. etc.
not to an individual unit. To promote and facilitate the delivery of the technology from its producer to the recipient user. To carry out technology status and technology needs studies of identified clusters of traditional skills-based enterprises. maximum utilisation of capacity. The special features of the scheme is that it encompasses all the areas of technology upgradation and also related issues. if any required. Direct exports from the SSI Sector accounts for 35% of the total exports. . high employment generation. 5. etc. where there is a lot of commonality in the method of production. The small industries due to their inherent strengths of low capital investment. 3. The objective of the programme is given below:1. To scout for and identify appropriate technologies and their provided on the basis of the status and needs studies.country. The programme is directed to a cluster. 2. 1998. To facilitate contract/need based research. To facilitate and promote the demonstration of technologies to the largest groups of small enterprises. 4. .. Export Promotion from the small scale sector has been accorded a high priority in the India's export promotion strategy. flexibility in operation. are highly conducive for rapid industrialization and generation of export surpluses. to adopt the available technology to the specific needs of the end users. Integrated Technology Upgradation and Management Programme (UPTECH) Office of Development Commissioner (Small Scale Industries) has launched a new scheme on Integrated Technology Upgradation and Management Programme called 'UPTECH' in Feb. .
.000/. To promote the assimilation and diffusion of the identified technology across the cluster of small enterprises. The programmes undertaken under this Scheme are:- .The scheme is administered by Development Commissioner (SSI).6.The Small Scale/Ancillary Undertakings are eligible to avail the incentives. is operating a scheme to provide incentives to those Small Scale Undertakings who acquire ISO-9000 Certification or its equivalent. . Salient features of the scheme . to motivate them and to train them through a structured training course so as to enable them to set up their tiny and small scale industrial ventures with the assistance available from different agencies.The scheme envisages reimbursement of charges of acquiring ISO-9000 or its equivalent to the extent of 50% of the cost subject to the maximum of Rs. ISO-9000 Certification The Government has been considering a scheme to enhance the international competitiveness of the Small Scale Sector.The scheme is applicable for one hundred Small Scale/ Ancillary Units on first come first serve basis. 75. Govt. . Entrepreneurship development programme The objective of the Programme is to identify persons with entrepreneurial quality. As a step in that direction.
dies. pickles.per participant is charged in metropolitan cities and Rs. This is how SSIs have been given protection from competition in the matter of procurement of different kind of products e.000/. 50% fee is charged for SC/ST participants. Preference in govt. A course fee of Rs.500/. khaki products. .20. jams. There are 7 Process-cum-Product Development Centres. Identification. The financing pattern was set in 1986 and an upward revision is presently under consideration. These Centres take up jobs from SSIs for specific product development as well process development to improve the quality of products. moulds and fixtures to small scale units at a very low price to enable them to produce quality goods to meet the requirements of supplies of components to large units as well as produce quality goods for direct sale. There are 10 Tool Rooms established in various parts of the country. Process-cum-Product Development Centres : .200/. reduce cost of product and enhance marketability of goods. These Centres deal with specific product groups.per participant in non-metropolitan cities. This enhances their competitiveness and export potentials. 5000/per programme and 2. handloom products etc.g. A training course at an expenditure of Rs.1. sauce. Tool Rooms provide toolings. procurement: Govt has reserved a large number of products which it purchases from a small scale industries.for 30 participants for a duration of 4 weeks. Tool Rooms: . selection and motivation of potential entrepreneurs through intensive campaign and seminars at a cost of Rs.
There are also several technology parks spread all over the India. small industries development organisation (SIDO). etc. Machinery on hire purchase: The national small industries corporations (NSIC) arranges supply of machines on hire purchase to small scale units. Financial Assistance: Financial assistance is provided at concessional terms by commercial banks. regional rural banks (RRBs). Marketing assistance : It includes export promotion assistance this is provided by institution like NSIC. Also small industries development bank of India (SIDBI) was established in 1990 to co-ordinates for the availability of financial and non-financial inputs realized for the orderly growth of this sector. The schemes aims at augmenting infrastructural facilities in the rural and backward areas with . corporative banks. infrastructural facilities. like tax holidays. Special Economic zone (SEZ). Integrated Infrastructural development (IID) Scheme: This scheme was announced by the Govt on 7th Mar. Any enterprise making its establishment in these parks an areas get many incentives provided by the govt. state level institutions etc. 1994. through the establishment of EPZ. to undertake manufacturing of export and industrial items have been provided by the govt. State Finance Corporations (SFCs). SPZ or through 100% export oriented units. district industries centre (DICs).Infrastructural Institutional Support : This kind of existence is provided through industrial estates. KVIC. large. medium. small industries service institute khadi & village industries commission (KVIC) and other specialised institutions provides infrastructural and technical support. Export Processing Zone (EPZ). electricity on concessional rates. export & industrial parks: Special incentives for the firms small. handicrafts and handlooms export promotion corporation.
P. AGRAWAL INDIA 2008 by MINISTRY OF INFORMATION AND BROADCASTING . They also benefit from backward and forward linkages since such units have similar cultural n social backgrounds clusters provide them an active base for social and business interaction. The economies of clusteration ensure a network of suppliers that provide raw material. and division of labor. Clusters encourage specialization. SUNDHARAM INDIAN ECONOMY by A. because of these advantages govt. machinery. The scheme covered centrally developed backward districts other than those covered under growth center scheme. good inter firm relationship.N.the special emphasis on the linkage between agriculture and industry. ------------------------------------------------------ REFERENCES INDIAN ECONOMY by RUDDAR DATT AND K.M. spare parts. sharing of information and experience etc. repairing which would otherwise have not been possible. Cluster Development: SSIs operating in clusters derive their strength through a unique state of togetherness. equipment. and other agencies have been promoting clusters through development of infrastructure & technical consultancy.
in http://dcmsme.nic.in/ssiindia .gov. BUSINESS ENVIROMENT by Francis Cherunilam Websites: http://indiabudget.