Small scale industry is a profitable business idea for it has certain benefits for the businessperson as well as the economy of the nation. Despite being a labor-intensive industry, it needs less capital to start a small scale industry. Hence, a lot of small business people wish to start a small scale industry of their own.
There are some guidelines for small-scale industries by the Government of India. In terms of financing the company is making and the revenue, it has generated. Small scales industries are classified into three parts are mention below:
- Manufacturing / Production
- Ancillary
- Service industries
Manufacturing/Production Industries: Units that produce finished goods either for consumption or used in processing industries. These types of small scale industries are usually solely owned. Some examples of manufacturing small scale industries are engineering industries, food processing, etc
Ancillary Industries: Big companies or MNC manufactures complete goods, but they don’t generally make all the parts themselves. Vendors of these companies are ancillary industries. Ancillary industries can also be known as those companies which make machines for multinational companies or medium scale industries
Service Industries: Restoration shops and maintenance industries come under the category of service industries.
Objectives of Small Scale Industries
Some objectives of the small scale industries are mention below:
- To create more employment opportunities
- To aid improve the rural and less developed regions of the economy.
- To reduce regional imbalances
- To ensure maximum utilization of unexploited resources of the country
- To assure equal distribution of income and wealth
- To solve the unemployment problem
- To attain self-reliance
- To utilize the latest technology aimed at producing better quality goods at lower costs.
Role of Small Scale Industries (SSIs) in the Indian Economy
Check below the few role of small scale industries in the Indian economy:
1. Production
Small Scale Industries enterprises estimate for almost 40% of the total production of goods and services in India. Small Scale Industries are one of the foremost reasons for the growth and strengthening of the economy.
2. Make in India
Small Scale Industries are one of the best examples of the Make in India initiative. SSIs concentrate on the mission to manufacture in India and sell the products worldwide. That also assists create more demands from all over the world.
Exportation contribution: India’s export industry majorly depends on these small industries for their growth and development. Almost half of the goods that are exported from India are manufactured or produced by these industries.
3. Employment
These small scale industries are a main cause of employment in the country. The labor force cannot find work in the formal sector of the economy. So these labor-intensive industries give a livelihood to a large portion of the workforce.
4. Contribution to Export
Approximately half of the goods that are exported from India are produced by these small enterprises. Nearly 35% of direct exports and 15% of the indirect exports are from the small scale industries. So India’s export industry majorly depends on these small industries for their growth and development.
5. The welfare of the Public
Other than financial reasons, these industries are also necessary for the social growth and development of our country. These industries are normally started by the lower or middle-class public. They have an opportunity to gain wealth and employ other people. It aids with income distribution and contributes to social progress.
Examples and Ideas of Small Scale Industries
Below are the some example and ideas of small scale industries:
- Handlooms
- Handicrafts
- Sericulture
- Power Loom
- School stationeries
- Water bottles
- Small toys
- Paper Bags
Opportunities and Performance of Small Scale Industries
Below are the opportunities and performance of small scale industries:
- Origination of employment
- Equitable distribution of income
- Assembling of resources and entrepreneurial skill
- Regional dispersion of industries.
- Export enhancement
- Supports the growth of large industries
- Better relation between employer and employees
Characteristics of Small Scale Industries
Below are the characteristics of small scale industries:
- Ownership: Small Scale Industries generally are under single ownership. So it can be a sole proprietorship or sometimes a partnership.
- Administration: Usually both the management and the control are with the owner/owners. Hence the owner is actively involved in the day-to-day activities of the business.
- Labor Intensive: Small Scale Industries dependence on technology is pretty limited. Therefore, they tend to use labor and manpower for their production activities.
- Flexibility: Small Scale Industries are more adaptable to their changing business environment. Because of some acts or unexpected developments, they are flexible enough to accommodate and carry on, unlike large industries.
- Limited Range: Small scale industries have a restricted zone of operations. Therefore, they can reach their local and regional demand.
- Resources Utilization: They use local and readily available resources which help the economy fully utilize natural resources with minimum wastage.
Challenges faced by Small Scale Industries
Despite the practical contribution by the Small Scale Industries towards the Indian economy, Small Scale Industries do not get the essential support from the Government departments, financial institutions, banks, credit societies, and corporate thus the Small Scale Industries are becoming handicap in the face of competition at the national and international markets. The major problems faced by the Small Scale Industries are mention below.
- Scanty credit assistance
- Uneven and poor quality of raw material
- Absence of organised meeting practices
- Inadequate infrastructure
Problems of Small Scale Industries
- Lack of Investment: It is the most common problem faced by small scale business. They lack the money to raise funds as borrowed capital.
- Shortage of Raw Materials: Small producers cannot bear to buy in quantity due to limited funds. Hence, their bargaining power is low.
- Lack of Managerial Abilities: Since they are operated by single owners, they lack managerial skills.
- Incompetent Labor: As they cannot afford to pay high wages, they generally do not get competent manpower.
- Marketing Problems: A small business cannot afford to spend too much on an advertisement, offers, and to get information on customer’s changing tastes and preferences.
- Low-Quality Products: Small businesses do not have enough resources to invest in quality research and maintain the standards of the industry. They also do not have the capability to upgrade the technology.
- Idle Capacity: Many small units operate below their capacity.
- Outdated Technology: The use of outdated technology also makes them incompetent in the market.
- Sickness: Many SSIs are sick due to internal as well as external problems like lack of trained labor, delayed payments, lack of working capital, etc.
- Global Competition: Due to the policy of LPG (Liberalization, Privatization, and Globalization) there is an increased competition which is further adding o the problems of small businesses.
Conclusion
The advancement and advancement of Small Scale Industries are important for the development of the Indian economy to accomplish the impartial distribution of income and wealth, economic self-dependence, and economically sustainable developments. To boost the Small Scale Industries sector so that it can take deserved place in the growth mechanism of the Indian economy. Some appropriate measures to be taken by the government in providing financial assistance at minimum formalities, a platform to be built by the government to help the MSMEs in the procurement of quality raw material and train them for the organized marketing process.
Frequently Asked Questions
Q1. What are small scale industries?
Ans. Small Scale Industries are industries that manufacture products on a small scale.
Q2. What kind of manufacturers are termed small scale industries?
Ans. Industries like leather manufacturers, bakeries, photo studios, parlors, and the like come under small scale industries.
Q3. What are the properties of a small scale industry?
Ans. The properties of small scale industries are ownership, labor-intensive, flexibility, management, reach, and resource utilization.
Q4. What industries can be registered under SSI?
Ans. Manufacturing Enterprises and Service Enterprises can be registered as SSI.
