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However. The economic reforms started in 1991 in India provided the opportunity to SSIs to grow big.SSI-SCENARIO This sector constitutes 95% of the industrial units and contributes 40% to the total industrial output of the country and 35% to direct export. investment ceiling for the SSI sector and priority lending. The protection of the SSI sector by way of reservations and quantitative restrictions have been removed. This achievement has been possible due to the Government ‘s policy of reservation.3 million people. There are about 3.6 million SSI units in India and these employ approximately 19. which is second highest next only to agriculture. More than 160 items which were reserved for the SSI sector have been de-reserved. the formation of WTO in 1995 has started posing a major challenge to the SSIs in India. .
SSI-SCENARIO Indian industry does not face any immediate threat from developed countries but faces serious competition from neighbouring countries particularly from Chinese manufacturers where productivity is 60-100% more than the Indian companies. .
use of new raw materials Usage of modern management and IT tools. Changes in manufacturing process Improvement in the quality of products quality assurance. Introduce new tools and Equipments for production. . Introduction of new designs diversification.SSI-SCENARIO The Studies have suggested that competitiveness is possible only if: There is a technology up-gradation adoption of new technologies.
low lobbying capacity. low access to business services. Inspectorraj and infrastructural constraints. low market awareness. constraint of quality of human resources. credit constraint. difficulties in accessing technology.SSI-SCENARIO The vulnerable areas as experienced by the SSIs have been cited as low capital base. .
Definition Govt of India-2000: An undertaking having an investment in plant and machinery of not more than 1 crore. .
.Characteristics of SSI Small capital investment Labor Intensive Small gestation period Create immediate and Permanent employment Use Locally available raw materials Brings Equitable distribution of Income Training ground for Local Entrepreneurs Help Earn Foreign exchange through exports Create Economic Stability and Prosperity Small risk is involved Have a faster rate of growth Tend to meet the increasing demand of the consumer goods.
Importance Source of employment generation Self employment Lesser Capital requirement Mobilization of entrepreneurial skill Equitable income distribution Balance regional Development Savings on Foreign Exchange Quick Investment Beneficial to LSU .
rural development and small scale industry There is also a linkage between the SSI and LSI materials Helps both save and earn foreign exchange by exporting goods from local resources .Advantages of SSI Some small scale industries do not require high level of technology Generally labor intensive and do not require large amount of capital Projects can be undertaken in short period and hence increase production both in short and long run Most developing countries can employ locally available raw Training ground for the local entrepreneurs in decision making Help in the equitable distribution of the income They can help bring economic stability in the country by diffusing prosperity and checking expansion of monopolies Creates jobs in the rural areas in the developing countries Helps transfer the manufacturing monopolies from the congested urban to the rural areas There is a linkage between the agriculture.
though not cost effective they thrive in imperfect competition The development of SSI can be a part of the Integrated rural development programs Other advantages: Immediate and permanent employment Meet increased demand of the consumer goods Facilitate mobilization of the goods and skills with SSI Require short gestation period Don’t require heavy and costly infrastructure Have favorable cost-output ratio The products of SSI can earn substantial foreign exchange They aid in dispersal and avoid the problems of unplanned urbanization.Advantages of SSI SSI have a role in building the Bring integration of the LSI economy . .
6 million currently.000 in 1961 0.86 million in 1985 1.6 million people .50 million in 1991 3. Employment Generation: 19.Role of SSI in India Number of Units: 16.000 in 1950 36.
readymade garments.975 cr in 1999-2000 (sports goods. plastic products.45.Role of SSI in India Investment: 2233 crore 1972-73 to 9588 crore in 1985 7200 cr in 1973-74 6. processed food and leather products.496 cr in 200-01 393 cr in 1973-74 53.) Output: Contribution to Exports: . woollen garments and knitwear.
Role of SSI in India Equitable Distribution of Income Mobilization of Capital Regional Dispersal of Industries .
Problems of SSI INTERNAL EXTERNAL Infrastructural Location Power Water Post Office Etc Communication Capital Working Capital Long term Funds Recovery Choice of and Idea Feeble Structure Faulty Planning Licensing Poor Project Implements Poor Management Poor Production Quality Marketing Inadequate Finance Labor Problems Capacity Utilization Lack of vertical and horizontal integration Inadequate training in skills Poor and loose Organization Lack of Strategies Financial Marketing Raw Material sourcing Inspections Technology Policy Industrial and Financial Regulations and Taxation Competitive and Volatile Environment .
Problems of SSI Marketing Problems: Poor product Quality Poor sales Promotion Scale of Production Lack of Knowledge and Marketing Lack of Marketing Opportunities Absence of Suitable Marketing Channels .
Problems of SSI Production Problems: Maintenance of Delivery Schedules Shortage of Raw Materials Ignorance of latest methods of production Underutilization of Production Capacity Import Restrictions Gestation period Diversification of Products Quality Control Product Cost Electricity .
Problems of SSI Finance Problems: Requirements of Capital and Credit Problems of Working Capital Inappropriate financial structure Hurdles in getting loans sanctioned Pattern of repayment of loan Structure of Interest Rate Wrong Financial Planning Improper Utilization of Funds Recovery of the funds .
Problems of SSI Human Resources Problems: Non Availability of Skilled Manpower Labour Problems .
Problems of SSI Other Problems: Technological changes Land and Building Infrastructural Facilities Inadequate appraisal of projects License System Managerial Inadequacies Analysis of Business Environment Machinery and Other Equipment Lack of Technological Up gradation .