Village and Small Scale Industries

VSI Sector
y VSI sector comprises of artisans and handicraft

units on one hand and modern production units with significant investment s on the other.
y They together produce over 7500 products. y VSI consist broadly of

o Traditional cottage and household industries o Modern small-scale industries including tiny units.

Small Scale Industry
y The SSI sector accounts for :

o95 % of industrial units o40 % of output in the manufacturing sector o35 % of total export oEmployment of over 30 million people

Features and Advantages of VSIs
y High Employment Potential. y Provision of reasonable employment, fulltime and y y y

y y

part time. Have location advantage, as they are household oriented. Capital-output and capital-labor ratio is comparatively low. Encourage participation of women from scheduled cast and scheduled tribes and other weaker sections of society. Promote proper utilization of resources. These can develop in almost all areas including backward, tribal, hilly, and other inaccessible areas , thus, covering large business space.

Features contd«
y Increases rural development pace through

generation of additional employment and income opportunities. y They have very less ecological problem. y As oil and power consumption is very less , thus, they do not create any energy resource crises.

Objective of developing VSIs
1. To assist in growth and widespread dispersal 2. 3. 4.



of industries. To increase the level of earning of artisans. To sustain and create avenue of selfemployment. To ensure regular supplies of goods and services through use of local skills and resources. To develop entrepreneurship in combination with improved method of production through appropriate training and package of incentives. To preserve the craftsmanship and art

Promotional Measures
1. 2.

Reservation of products Reservation and preference in Government procurement

3. 4. 5. 6. 7. 8.

Infrastructural and Institutional support Machinery on hire purchases Marketing assistance Financial assistance Training Supply for raw material

Micro, Small and Medium Enterprise Development Act 2006
y MSMED act 2006 provides first ever legal frame

work for recognition of manufacturing and service enterprise
y It also integrated the three tiers of these


oMicro enterprises oSmall enterprises oMedium enterprises

Characterization of SMEs
Under MSMED Act 2006 following characterization has been made y Manufacturing Enterprise
y y y

Micro enterprises : investment up to Rs. 25 lakh Small enterprises : investment above Rs. 25 lakh and up to 5 crore Medium enterprise : investment above Rs.5Crore and up to 10 crore Micro enterprises : investment up to Rs. 10 lakh Small enterprises : investment above Rs. 10 lakh and up to 2 crore Medium enterprise : investment above Rs.2Crore and up to 5 crore

y Service Enterprise
y y y