SMALL SCALE INDUSTRIES IN

INDIA

ROLE
AND
GOVERMENT POLICY
 DEFINITION OF SSI
SSIs
1950

not using power

. with the
using power with
employee strength
less than
being
50 employees
more than 50 but
less than 100
YEAR INVESTMENT LIMITS
1960 Upto Rs 5 lacs in Plant & Machinery
1966 Upto Rs 7.5 lacs in Plant & Machinery

1975 Upto Rs 10 lacs in Plant & Machinery

1980 Upto Rs 20 lacs in Plant & Machinery

1985 Upto Rs 35 lacs in Plant & Machinery

1991 Upto Rs 60 lacs in Plant & Machinery

1997 Upto Rs 100 lacs in Plant & Machinery

1999 Upto Rs 100 lacs in Plant & Machinery

 CLASSIFICATION OF SSIs

TRADITIONAL MODERN

•KHADI •TV sets

•HANDLOOM •ELECTRONICS
•VILLAGE INDUSTRIES •CONTROL SYSTEMS
•HANDICRAFTS •ANCILLARY INDUSTRIES
•SERICULTURE
80% 74%

70%

56%
60%

50% EMPLOYMENT

40% OUTPUT
33%
30%

20%
13%
10%

0%
TRADITIONAL MODERN
 ECONOMY

ROLE OF SSIs IN INDIAN

PRODUCTION

EMPLOYMENT

EXPORT

OPPORTUNITIES

WELFARE PROMOTING.
 PRODUCTION
Contributes almost 40% of the gross
industrial value.

Value of production at current prices are

to increase to Rs.4,97,842 crore .
 EMPLOYMENT
Creates largest employment
opportunities for the Indian
populace, next to Agriculture.

It has been estimated that Rs. 1

lakh of investment in fixed assets in
the small-scale sector generates
employment for four persons.
 EXPORT
33% of the Indian Exports is contributed by SSI
Sector.

non-traditional products account for more than

95% of the SSI exports.

mostly fuelled by the performance of garments,

leather and gems and jewellery units from this
sector.
 OPPORTUNITY
FACTORS
Less Capital Intensive
Extensive Promotion & Support by
Government
Reservation for Exclusive
Manufacture by small scale sector
Funding - Finance & Subsidies
Machinery Procurement
 Raw Material Procurement
Manpower Training
Technical & Managerial skills
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
 WELFARE
Increases income levels.

Equitable distribution of income.

Reduction of regional disparities.

Preservation of inherited skills.

 Year SSI Sector Growth Rate Total Industrial Sector
Growth Rate

2000-01 8.04 5.00

COMPARATIVE GROWTH
2001-02 6.06 RATES OF SSI SECTOR
2.70

AND TOTAL INDUSTRIAL SECTOR

2002-03 7.68 5.70

2003-04 8.06 6.09

2004-05 9.96 8.04

Source: SIDO Half Century by DCSSI, Govt. of India 2004 and Annual Report of the Ministry of SSI
2005-06
 COMPARATIVE GROWTH RATES

9.96

10
7.68 8.06 8.04
9 8.04
8
5.7 6.09
7 6.06
5 SSI
6
5
2.7
4
INDUSTRY
3
2
1
0 SSI
2000- 2001- 2002- 2003- 2004-
01 02 03 04 05

Source: SIDO Half Century by DCSSI, Govt. of India 2004 and Annual Report of
the Ministry of SSI 2005-06
 INDIAN SME SECTOR – AT A
GLANCE 2005-06
SSI units : 12.3 million
• Ownership pattern :
Employment generated in SSIs : 29.5 – Proprietorships : 78%
million – Partnerships : 16%
Production : At current Prices Rs. – Corporate & Others : 6%
4762.01 billion • Industrial Units : 96%
Exports : Rs. 1215 billion • Service Enterprises : 3%
SSI account: • Ancillary Units : 1%
Industrial Production : 40% • Produces Diverse range of
Exports : 35% (50% of Direct &
products (more than 8000-
Indirect)
consumer items, capital
GDP Share : 7%
goods and intermediates)
 AIMA –Impact Assessment
IMPEDIMENTS TO GROWTH

Problems Faced by SSIs as Barriers to Growth

Market Related 70%

Finance Related 25%

Government Policy Related 12.78%

Power Related/Infrastructure 14.0%

Technology 14.60%
 Rs. in Crores

As at end March Total advances by Total Advances to Proportion of SSI to

Banking Sector SSI Sector Total Advances
1999 246203 42674 17.30

2000 TRENDS OF LENDING45788

292943 BY BANKING SECTOR
15.63

2001 469153 TO56002

SSI 1.94

2002 536727 57199 10.66

2003 669534 60394 9.02

2004 764383 65855 8.62

2005* 972587 76114 7.83

Source : RBI Report on Trend and Progress of Banking in India

* Provisional
 MEASURES
CREDIT RATING SCHEME
MARKETING ASSISTANCE SCHEME
TECHNICAL ASSISTANCE
MEASURES FOR EXPORT PROMOTION
INFRASTRUCTURE DEVELOPMENT
ENTREPRENEURSHIP ANK SKILL
DEVELOPMENT
MSME DEVELOPMENT ACT,2006
SALIENT FEATURES OF MSMED ACT - 2006
Manufacturing enterprises defined in terms of investment in Machinery
and Equipment (excluding land and building) classified into

a.  Micro enterprises - investment upto Rs 25 lakhs,

b.  Small enterprises - investment above Rs 25 lakhs and upto Rs 5

crore

c. Medium enterprises - Investment above Rs 5 crores and upto Rs

10 crores

Service enterprises defined in terms of their investment in equipment

(excluding land and building) classified into

a. Micro enterprises-investment upto Rs 10 lakhs

b. Small enterprises-investment above Rs 10 lakhs and upto Rs 2

crore

c. Medium enterprises-investment above Rs 2 crores and upto Rs

5 crores
Clause Salient Features Impact

1. Establishment of National 1. Specific representation Statutory Status, compact

Small and Medium for Women board and quarterly meetings
Enterprises Board – 2. Mandatory Quarterly will address problems of SMEs
Maximum No. of immediately to take corrective
members 47
MSMED Act – 2006 and its Impact
Meeting
action

2. Concept of Enterprises Clear-cut demarcation of Facilitates SMEs to enter into

manufacturing/production service enterprises
and rendering services aggressively

3. Definition of Enterprises Specific ceiling limit for Existing small units can
manufacturing/production graduate into Medium units
and service enterprise and avail facilities under the
definition for Medium act.
enterprises

Contd/----
Clause Salient Features Impact

4.Delayed Payment Penalty •Period of payment by the SMEs can plan their cash
& dispute resolution procuring organizations – flow/financial requirement
45 days
•Penal interest 200% of PLR
MSMED Act – 2006 and its IMPACT

5. Dispute Resolution Establishment of MSE Easy financial planning

facilitation Council; 90 days and no waste of human
framework for dispute resources for
resolution chasing/follow up.

Contd/-
 DISABILITIES
OUTPUT vs EMPLOYMENT

ADVERSE IMPACT ON CAPITAL FORMATION.

INEFFICIENT PRODUCTION

LARGE SICKNESS.

SEVERAL DIFFICULTIES.
 Opportunities
Fashion Technology
Information Technology
Design Technology
Health Technology
Bio Technology
 REFERENCE
INDIAN ECONOMY by RUDDAR DATT AND
K.P.M. SUNDHARAM
INDIAN ECONOMY by A.N. AGRAWAL
INDIA 2008 by MINISTRY OF INFORMATION
AND BROADCASTING
Websites:
http://indiabudget.nic.in
http://dcmsme.gov.in/ssiindia
GAUTAM AILANI:117
PRATIK DHRUV:124
ASMITA GIDWANI:
JAY LOLIANIA:121
DHRUV THAPPAR:
VICKY WADWA :
JAYESH SUGGAND:122