Small scale Industry
It is seen that the classification of industries is relative and often overlap one another. Any industry can be classified into more than two or three categories. Each classification highlights only one aspect of the industry, for example the origin of its raw materials, the number of labour employed, the location, the ownership or the nature of the finished products.
Thus, the Tata Iron and Steel Industry can be classified as a mineral-based industry, a basic or key industry, a large-scale industry, labour-intensive industry, private sector industry and a heavy industry.
Small scale industries may be defined as industrial units with a capital investment of not more than Rs. 750,000, irrespective of the number of workers employed. Small scale industries occupy an important place in the economy of the country. More than 30 million people work in these industries. Most small scale industries are located near urban centres.
They produce goods for local as well as foreign markets. Work is done with simple tools and equipment, some of which may be power driven. Financial assistance is provided by the government.
The manufacture of bicycles, sewing machines, agricultural implements and tools, sports goods, soaps, storage batteries, electric fans, leather footwear and handloom weaving are some examples of small-scale industries.
Cottage Industries:
Cottage industries arc small scale industries but distinguished from the other small scale industries on the basnis of location. Cottage industries are located in villages (they are usually located in the home of the producer and hence the name “cottage’ industries) while the small scale industries mentioned above are located near towns and cities.
Cottage industries include village industries and handicrafts industry since both is located in the village. Cottage industries play a very important role in the economy of the country’. About 40 million people are engaged in cottage industries, which include village industries and handicrafts.
Village Industries:
Village industries are traditional in nature and depend on local raw’ material and cater to the needs of the local population. Processing of pulses and cereals and the manufacture of gur and khandsari are examples of village industries. Some other examples of village industries are handloom, cane and bamboo baskets and other products, coir-making, shoe-making, pottery and leather tanning.
Handicraft Industries:
Handicraft industries include a large number of crafts backed by centuries of experience and skill. These products are mainly produced for markets outside of the villages, in large cities and for international market. Wood carving, inlay lacquer work, decorative furniture, metalware like bidri and filigree, artistic items made from horns and bones are examples of the handicraft industry.
Rapid progress in science and technology, backed by rapid industrialization of the country will not only bring prosperity by raising our standard of living but will also make us self-sufficient and self-reliant. This will enable us to maintain our political independence and pursue policies without being pressured in any way by other countries.
SSIs constitute an important segment of the Indian economy. It is admitted that some of the problems facing SSIs are a part of the problems being faced by the economy in general, but the other problems of SSIs are due to their peculiar character. The State’s role would very much be called for to remove the disadvantages arising out of such peculiarities.
Small scale Industry in India
Small and cottage industries occupy an important place in the Indian economy. These Industries have a special place in the sphere of employment and economic development. Micro small and medium enterprises are important for achieving the national objective of growth with equity.
Small scale industries are the ones which according to the new definition given in 2006 manufacturing Enterprises having investment above rupees 25 lacs hand up to rupees 5 crore in plant and machinery. And service Enterprises having investment above rupees 10 lac and up to 2 crore in equipments can also qualified for a small Enterprise.
Small scale industries are important because it helps in increasing employment and economic development of India.
It improves the growth of the country by increasing urban and rural growth. Role of Small and medium scale enterprises are to help the government in increasing infrastructures and manufacturing industries, reducing issues like pollution, slums, poverty, and many development acts.
Impact of small scale industry in Indian/economic growth
Small business has played a very crucial role in transforming the Indian economy from a backward agrarian economy to its present stature. Its benefits range from creating job opportunities for millions of people, including many with low levels of formal education. It has nurtured the inherent entrepreneurial spirit in far flung corners of the nation resulting in the growth and development of all regions. It has been instrumental in raising the standard of living of the multitudes. The small scale sector has contributed specifically in the following areas. The SSI sector in India is the second largest manpower employer in the country next only to the agriculture sector. India is characterized by abundant labour supply and is plagued by unemployment and underemployment. Under these circumstances the small-scale sector is a boon. For every Rs.0.1million of investment, the small-scale sector provides jobs to 26 people as compared to 4 jobs created in the large-scale sector (C.B Gupta, S.S Khanka, 2003). It helps in industrialization of rural and backward areas. Many small units produce sub-parts, assemblies, components and accessories for the large scale sector especially in the electronic and automotive sectors. The most significant contribution of the SSI has been in the field of exports. There has been a significant increase in the exports from this sector of both traditional and non-traditional goods including jewellery, garments, leather, hand tools, engineering goods, soft ware etc. Development of entrepreneurship is one of the major objectives of SSI‟s. Small business taps the latent potential available locally. This way they facilitate the spirit of enterprise, which results in overall growth, and development of all the regions /sectors of the nation
1. SSI Increases Production
India is one of the world’s fastest growing economies in the world. Consequently, its production output is massive. It is pertinent to note that SSIs contribute almost 40% of India’s gross industrial value.
These industries produce goods and services worth over Rs. 40 lakhs for every investment of Rs. 10 lakhs. Furthermore, the value addition in this output increases by over 10%.
Here is another interesting statistic about Small scale industries. The number of Small Scale Industries in India increased from around 8 lakhs in 1980 to over 30 lakhs in 2000.
This figure has grown even more in recent years owing to the government’s ‘Ease of Doing Business’ policies.
As a result of this, the total industrial production output rose tremendously in the last few years. SSIs are, therefore, strongly responsible for the growth of India’s economy.
2. SSI Increases Export
Apart from producing more goods and services, SSIs have been able to export them in large numbers as well.
Almost half of India’s total exports these days come from small-scale businesses.
35% of the total exports account for direct exports by SSIs, while indirect exports amount to 15%.
Even trading houses and merchants help SSIs export their goods and services to foreign countries.
3. SSI Improves Employment Rate
It is important to note firstly that Small Scale Industries employs more people than all industries after agriculture.
Almost four persons can get full employment if Rs. 10 lakhs are invested in fixed assets of small-scale sectors.
Furthermore, SSIs employ people in urban as well as rural areas.
Consequently, this distributes employment patterns in all parts of the country and prevents unemployment crisis.
4. SSI Open New Opportunities
Small-scale industries offer several advantages and opportunities for investments.
For example, they receive many tax benefits and rebates from the government. The opportunity to earn profits from SSIs are big due to many reasons.
Firstly, SSIs are less capital intensive. They even receive financial support and funding easily.
Secondly, procuring manpower and raw materials is also relatively easier for them. Even the government’s export policies favour them heavily.
5. SSI Advances Welfare
Apart from providing profitable opportunities, Small Scale Industries play a large role in advancing welfare measures in the Indian economy as well.
A large number of poor and marginalized sections of the population depend on them for their sustenance.
These industries not only reduce poverty and income inequality but they also raise standards of living of poor people. Furthermore, they enable people to make a living with dignity.
6. SSI Facilitates Women Growth
1. It provides employment opportunities to women in India.
2. It promotes entrepreneurial skills among women as special incentives are given to women entrepreneurs.
7. SSI Brings Balanced Regional Development
1. SSI promotes decentralized development of industries as most of the small scale industries are set up in backward and rural areas.
2. It removes regional disparities by industrializing rural and backward areas and brings balanced regional development.
3. It promotes urban and rural growth in India.
4. It helps to reduce the problems of congestion, slums, sanitation and pollution in cities by providing employment and income to people living in rural areas. It plays an important role by initiating the government to build the infrastructural facilities in rural areas.
5. It helps in improving the standard of living of people residing in suburban and rural areas in India.
6. The entrepreneurial talent is tapped in different regions and the income is also distributed instead of being concentrated in the hands of a few individuals or business families.
8. SSI Helps in Mobilization of Local Resources
1. It helps to mobilize and utilize local resources like small savings, entrepreneurial talent, etc., of the entrepreneurs, which might otherwise remain idle and unutilized. Thus it helps in effective utilization of resources.
2. It paves way for promoting traditional family skills and handicrafts. There is a great demand for handicraft goods in foreign countries.
3. It helps to improve the growth of local entrepreneurs and self-employed professionals in small towns and villages in India.
9. SSI Paves for Optimisation of Capital
1. SSI requires less capital per unit of output. It provides quick return on investment due to shorter gestation period. The pay back period is quite short in small scale industries.
2. SSI functions as a stabilizing force by providing high output capital ratio as well as high employment capital ratio.
3. It encourages the people living in rural areas and small towns to mobilize savings and channelize them into industrial activities.
10. SSI Complements Large Scale Industries
1. SSI plays a complementary role to large scale sector and supports the large scale industries.
2. SSI provides parts, components, accessories to large scale industries and meets the requirements of large scale industries through setting up units near the large scale units.
3. It serves as ancillaries to large Scale units.
11. SSI Meets Consumer Demands
1. SSI produces wide range of products required by consumers in India.
2. SSI meets the demand of the consumers without creating a shortage for goods. Hence, it serves as an anti-inflationary force by providing goods of daily use.
12. SSI Ensures Social Advantage
1. SSI helps in the development of the society by reducing concentration of income and wealth in few hands.
2. SSI provides employment to people and pave for independent living.
3. SSI helps the people living in rural and backward sector to participate in the process of development.
4. It encourages democracy and self-governance.
13. Develops Entrepreneurship
1. It helps to develop a class of entrepreneurs in the society. It helps the job seekers to turn out as job givers.
2. It promotes self-employment and spirit of self-reliance in the society.
3. Development of small scale industries helps to increase the per capita income of India in various ways.
4. It facilitates development of backward areas and weaker sections of the society.
5. Small Scale Industries are adept in distributing national income in more efficient and equitable manner among the various participants of the society
Thus, Small scale industries play an important role for the development of Indian economy in many ways. About 60 to 70 percent of the total innovations in India comes from the SSIs. Many of the big businesses today were all started small and then nurtured into big businesses.
The case for the development of small-scale industries is particularly strong in under-developed but developing countries like India.
These small-scale industries satisfy many of the investment criteria that one often prescribes for the planned development of the country.
Lastly, by carrying the job to the worker, small-scale industries can overcome the difficulties of territorial immobility. Moreover, unlike large industries, small-scale industries do not create problems of slum housing, health and sanitation, etc., and the attendant disease, misery and squalor. Thus, there is a strong case for encouraging small-scale industries in under-developed countries like India.
By JCB Rocks
Sources Internet.
It is seen that the classification of industries is relative and often overlap one another. Any industry can be classified into more than two or three categories. Each classification highlights only one aspect of the industry, for example the origin of its raw materials, the number of labour employed, the location, the ownership or the nature of the finished products.
Thus, the Tata Iron and Steel Industry can be classified as a mineral-based industry, a basic or key industry, a large-scale industry, labour-intensive industry, private sector industry and a heavy industry.
Small scale industries may be defined as industrial units with a capital investment of not more than Rs. 750,000, irrespective of the number of workers employed. Small scale industries occupy an important place in the economy of the country. More than 30 million people work in these industries. Most small scale industries are located near urban centres.
They produce goods for local as well as foreign markets. Work is done with simple tools and equipment, some of which may be power driven. Financial assistance is provided by the government.
The manufacture of bicycles, sewing machines, agricultural implements and tools, sports goods, soaps, storage batteries, electric fans, leather footwear and handloom weaving are some examples of small-scale industries.
Cottage Industries:
Cottage industries arc small scale industries but distinguished from the other small scale industries on the basnis of location. Cottage industries are located in villages (they are usually located in the home of the producer and hence the name “cottage’ industries) while the small scale industries mentioned above are located near towns and cities.
Cottage industries include village industries and handicrafts industry since both is located in the village. Cottage industries play a very important role in the economy of the country’. About 40 million people are engaged in cottage industries, which include village industries and handicrafts.
Village Industries:
Village industries are traditional in nature and depend on local raw’ material and cater to the needs of the local population. Processing of pulses and cereals and the manufacture of gur and khandsari are examples of village industries. Some other examples of village industries are handloom, cane and bamboo baskets and other products, coir-making, shoe-making, pottery and leather tanning.
Handicraft Industries:
Handicraft industries include a large number of crafts backed by centuries of experience and skill. These products are mainly produced for markets outside of the villages, in large cities and for international market. Wood carving, inlay lacquer work, decorative furniture, metalware like bidri and filigree, artistic items made from horns and bones are examples of the handicraft industry.
Rapid progress in science and technology, backed by rapid industrialization of the country will not only bring prosperity by raising our standard of living but will also make us self-sufficient and self-reliant. This will enable us to maintain our political independence and pursue policies without being pressured in any way by other countries.
SSIs constitute an important segment of the Indian economy. It is admitted that some of the problems facing SSIs are a part of the problems being faced by the economy in general, but the other problems of SSIs are due to their peculiar character. The State’s role would very much be called for to remove the disadvantages arising out of such peculiarities.
Small scale Industry in India
Small and cottage industries occupy an important place in the Indian economy. These Industries have a special place in the sphere of employment and economic development. Micro small and medium enterprises are important for achieving the national objective of growth with equity.
Small scale industries are the ones which according to the new definition given in 2006 manufacturing Enterprises having investment above rupees 25 lacs hand up to rupees 5 crore in plant and machinery. And service Enterprises having investment above rupees 10 lac and up to 2 crore in equipments can also qualified for a small Enterprise.
Small scale industries are important because it helps in increasing employment and economic development of India.
It improves the growth of the country by increasing urban and rural growth. Role of Small and medium scale enterprises are to help the government in increasing infrastructures and manufacturing industries, reducing issues like pollution, slums, poverty, and many development acts.
Impact of small scale industry in Indian/economic growth
Small business has played a very crucial role in transforming the Indian economy from a backward agrarian economy to its present stature. Its benefits range from creating job opportunities for millions of people, including many with low levels of formal education. It has nurtured the inherent entrepreneurial spirit in far flung corners of the nation resulting in the growth and development of all regions. It has been instrumental in raising the standard of living of the multitudes. The small scale sector has contributed specifically in the following areas. The SSI sector in India is the second largest manpower employer in the country next only to the agriculture sector. India is characterized by abundant labour supply and is plagued by unemployment and underemployment. Under these circumstances the small-scale sector is a boon. For every Rs.0.1million of investment, the small-scale sector provides jobs to 26 people as compared to 4 jobs created in the large-scale sector (C.B Gupta, S.S Khanka, 2003). It helps in industrialization of rural and backward areas. Many small units produce sub-parts, assemblies, components and accessories for the large scale sector especially in the electronic and automotive sectors. The most significant contribution of the SSI has been in the field of exports. There has been a significant increase in the exports from this sector of both traditional and non-traditional goods including jewellery, garments, leather, hand tools, engineering goods, soft ware etc. Development of entrepreneurship is one of the major objectives of SSI‟s. Small business taps the latent potential available locally. This way they facilitate the spirit of enterprise, which results in overall growth, and development of all the regions /sectors of the nation
1. SSI Increases Production
India is one of the world’s fastest growing economies in the world. Consequently, its production output is massive. It is pertinent to note that SSIs contribute almost 40% of India’s gross industrial value.
These industries produce goods and services worth over Rs. 40 lakhs for every investment of Rs. 10 lakhs. Furthermore, the value addition in this output increases by over 10%.
Here is another interesting statistic about Small scale industries. The number of Small Scale Industries in India increased from around 8 lakhs in 1980 to over 30 lakhs in 2000.
This figure has grown even more in recent years owing to the government’s ‘Ease of Doing Business’ policies.
As a result of this, the total industrial production output rose tremendously in the last few years. SSIs are, therefore, strongly responsible for the growth of India’s economy.
2. SSI Increases Export
Apart from producing more goods and services, SSIs have been able to export them in large numbers as well.
Almost half of India’s total exports these days come from small-scale businesses.
35% of the total exports account for direct exports by SSIs, while indirect exports amount to 15%.
Even trading houses and merchants help SSIs export their goods and services to foreign countries.
3. SSI Improves Employment Rate
It is important to note firstly that Small Scale Industries employs more people than all industries after agriculture.
Almost four persons can get full employment if Rs. 10 lakhs are invested in fixed assets of small-scale sectors.
Furthermore, SSIs employ people in urban as well as rural areas.
Consequently, this distributes employment patterns in all parts of the country and prevents unemployment crisis.
4. SSI Open New Opportunities
Small-scale industries offer several advantages and opportunities for investments.
For example, they receive many tax benefits and rebates from the government. The opportunity to earn profits from SSIs are big due to many reasons.
Firstly, SSIs are less capital intensive. They even receive financial support and funding easily.
Secondly, procuring manpower and raw materials is also relatively easier for them. Even the government’s export policies favour them heavily.
5. SSI Advances Welfare
Apart from providing profitable opportunities, Small Scale Industries play a large role in advancing welfare measures in the Indian economy as well.
A large number of poor and marginalized sections of the population depend on them for their sustenance.
These industries not only reduce poverty and income inequality but they also raise standards of living of poor people. Furthermore, they enable people to make a living with dignity.
6. SSI Facilitates Women Growth
1. It provides employment opportunities to women in India.
2. It promotes entrepreneurial skills among women as special incentives are given to women entrepreneurs.
7. SSI Brings Balanced Regional Development
1. SSI promotes decentralized development of industries as most of the small scale industries are set up in backward and rural areas.
2. It removes regional disparities by industrializing rural and backward areas and brings balanced regional development.
3. It promotes urban and rural growth in India.
4. It helps to reduce the problems of congestion, slums, sanitation and pollution in cities by providing employment and income to people living in rural areas. It plays an important role by initiating the government to build the infrastructural facilities in rural areas.
5. It helps in improving the standard of living of people residing in suburban and rural areas in India.
6. The entrepreneurial talent is tapped in different regions and the income is also distributed instead of being concentrated in the hands of a few individuals or business families.
8. SSI Helps in Mobilization of Local Resources
1. It helps to mobilize and utilize local resources like small savings, entrepreneurial talent, etc., of the entrepreneurs, which might otherwise remain idle and unutilized. Thus it helps in effective utilization of resources.
2. It paves way for promoting traditional family skills and handicrafts. There is a great demand for handicraft goods in foreign countries.
3. It helps to improve the growth of local entrepreneurs and self-employed professionals in small towns and villages in India.
9. SSI Paves for Optimisation of Capital
1. SSI requires less capital per unit of output. It provides quick return on investment due to shorter gestation period. The pay back period is quite short in small scale industries.
2. SSI functions as a stabilizing force by providing high output capital ratio as well as high employment capital ratio.
3. It encourages the people living in rural areas and small towns to mobilize savings and channelize them into industrial activities.
10. SSI Complements Large Scale Industries
1. SSI plays a complementary role to large scale sector and supports the large scale industries.
2. SSI provides parts, components, accessories to large scale industries and meets the requirements of large scale industries through setting up units near the large scale units.
3. It serves as ancillaries to large Scale units.
11. SSI Meets Consumer Demands
1. SSI produces wide range of products required by consumers in India.
2. SSI meets the demand of the consumers without creating a shortage for goods. Hence, it serves as an anti-inflationary force by providing goods of daily use.
12. SSI Ensures Social Advantage
1. SSI helps in the development of the society by reducing concentration of income and wealth in few hands.
2. SSI provides employment to people and pave for independent living.
3. SSI helps the people living in rural and backward sector to participate in the process of development.
4. It encourages democracy and self-governance.
13. Develops Entrepreneurship
1. It helps to develop a class of entrepreneurs in the society. It helps the job seekers to turn out as job givers.
2. It promotes self-employment and spirit of self-reliance in the society.
3. Development of small scale industries helps to increase the per capita income of India in various ways.
4. It facilitates development of backward areas and weaker sections of the society.
5. Small Scale Industries are adept in distributing national income in more efficient and equitable manner among the various participants of the society
Thus, Small scale industries play an important role for the development of Indian economy in many ways. About 60 to 70 percent of the total innovations in India comes from the SSIs. Many of the big businesses today were all started small and then nurtured into big businesses.
The case for the development of small-scale industries is particularly strong in under-developed but developing countries like India.
These small-scale industries satisfy many of the investment criteria that one often prescribes for the planned development of the country.
Lastly, by carrying the job to the worker, small-scale industries can overcome the difficulties of territorial immobility. Moreover, unlike large industries, small-scale industries do not create problems of slum housing, health and sanitation, etc., and the attendant disease, misery and squalor. Thus, there is a strong case for encouraging small-scale industries in under-developed countries like India.
By JCB Rocks
Sources Internet.
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