INTRODUCTION

A leading, industrially advanced developing country, India has large, medium and small industrial units of production in almost all branches of the industry. Since the time of the independence in 1947, a significant feature of the Indian economy has been the rapid growth of the small industry sector. The small industry sector is considered to have a major role in the Indian economy due to its 40 percent share in the national industrial output along with an 80 percent share in industrial employment and nearly 35 percent share in exports. The small scale industries sector has been assigned an important role in the industrialization of the country by the previous and current governments of India. Since Independence, the growth and development of the small-scale sector has been favored by the GOI on the following grounds: (1) Generation of employment opportunities by SSIs, (2) Mobilization of capital and entrepreneurship skills, (3) Regional dispersal of industries and (4) Equitable distribution of national income. The policies pursued by the GOI over the years have helped in the growth of the SSIs to a considerable extent.

MEANING
There is a clear distinction between the traditional and modern small industries. The traditional small industries include khadi and handloom, village industries, handicrafts, sericulture, coir, etc. Modern small industries manufacture a wide variety of goods from simple items to sophisticated items such as television sets, electronics control system, various engineering products, particularly as ancillaries to large industries. The traditional small industries are highly labor-intensive, while the modern small industries use highly sophisticated machinery and equipment. The term small-scale industry is mostly used to represent modern small industries. The SSIs manufacture many items which include rubber products, plastic products, chemical products, glass and ceramics, mechanical engineering items, hardware, electrical items, transport equipment, electronic components and equipments, automobile parts, bicycle parts, instruments, sports goods, stationery items and clocks and watches. Small Scale Industries may sound small but actually plays a very important part in the overall growth of an economy. Small Scale Industries can be characterized by the unique feature of labor intensiveness. The total number of people employed in this industry has been calculated to be near about one crore and ninety lakhs in India, the main proponents of Small scale industries. The importance of this industry increases manifold due to the immense employment generating potential. The countries which are characterized by acute unemployment problem especially put emphasis on the model of Small Scale Industries. It has been observed that India along with the countries in the Indian continent have gone long strides in this field.
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DEFINITION
The terms small scale industries, has been defined in 3 ways. The conventional definition includes cottage and handicraft industries which employ traditional labor-intensive method to produce traditional products, largely in village households. They employ none or almost a few hired hands. The handloom textile industry is example. Though once famous, this sector has been steadily declining. The operational definition for policy purposes includes all those undertakings having an investments in fixed assets in plant and machinery, whether held on ownership terms or by lease or by hire-purchase, not exceeding Rs.1 crore. A tiny unit is one whose investment in fixed assets in plant and machinery d0oest not exceeds Rs 25 lakhs. The operational definition is considered relevant for discussion in academic circles as well as policy decisions. The third definition of small-scale industries relates to national income accounting. This includes all manufacturing and processing activities, including maintenance and repair services, undertaken by both household and nonhousehold small scale manufacturing units, which are not registered under the Factory Act, 1948.

CHARACTERISTICS OF SSI

1. Small capital investment: SSI requires a capital investment of less than 25 crores which is not much and thus any small entrepreneur can open a SSI. 2. Generates employment: SSI gives employment to a lot of untrained employees as it is a labour intensive sector. 3. Personal contact: There is a personal contact between the owner and the customer in SSI. 4. Location: SSI is located in s uburbs and other less developed areas or special zones provided by the government for SSI. 5. Exploitation of human resource: Generally there are no worker unions in SSI. Hence workers are exploited and do not get facilities which employees of large scale industries usually get. 6. Technology: Very less technology is used in SSI because it is labour intensive. As also the technology is outdated. 7. Dispersal of manufacturing activity: Many SSIs are ancillary industries. They produce components for large industries. Thus manufacturing activity is dispersed. 8. Poor organization and management: The entrepreneurs do not know management concepts and therefore the organization and management of SSI is poor. 9. Export potential: SSIs have a lot of export potential because government provides support and promotes export of SSI products.

SIGNIFICANCE OF SMALL-SCALE INDUSTRIES

The small-scale sector has a high potential for providing employment, dispersal of industries, promoting entrepreneurship and earning foreign exchange to the country. The following points further demonstrate the importance of smallscale industries. 1. Smal l is beautiful: small is beautiful, said E. F. Schumacher. He maintains that mans current pursuits of profit and progress, which promotes giant organizations and increased specialization, has in fact resulted in gross inefficiency, environmental pollution and inhuman working conditions. Schumacher emphasizes on small working units, communal ownership and regional work places utilizing local labour and resources. For him, emphasis should be on person and not on product.

2. Innovative and productive: it is the small units which are highly innovative, though they do not maintain their own research and development wings. .a disproportionate share of innovation success in business seems to come from skunk works, tiny groups that tend to out-perform the much larger labs that often have a cast of hundreds. We have now, several scores examples of effective skunk works.

3. Individual Tastes, Fashion and Personalized Services: small firms are quick in studying changes in tastes and fashions of consumers and in
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adjusting the production process and production accordingly. Small firms seem to have an edge in industries that call for personalized services, attention to detail and the flexibility to adapt quickly to changes in the business or technological environment. For instance, in the garments and electronic fields, the small units have ruled the roost; choruses of garment and TV industry voices say that big companies delegate responsibility down the line and cannot swiftly change the trace when necessary. Says a garment exporter: the garment business is personalized, oriented to changing fashions and has to be tightly controlled. Professional managers do not have the motivation for all this. And most people in the electronic business agree that big firm had so far had limited success because of lack of flexibility.

4. Symbols of national identity: small enterprises are all most always locally owned and controlled, and they can strengthen rather than destroy the extended family and other social systems and cultural traditions that are perceived as valuables in their own right as well as symbols of national identity.

5. Happier in work: people who work in small enterprises are happier in their work then those who work in large once in spite of lower wages and poor standards of safety, comfort and welfare facilities.

6. Always winner of the game: Small companies and new entrepreneurs were at the forefront of practically every business boon of the last
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decade, whether it was computer, television sets, consumer electronics, garment, diamond exports or advertising. And they frequently put the established large industrial houses in the shade with the quality of their performance, their ability to seize business opportunity and their aggressive feeding of burgeoning markets. Remarkably enough, the giants in the corporate sector fell flat on their faces in precisely these areas. With losses piling up, the J.K.group had to pull out of manufacturing television sets, while the Sarabhais Telegrade limped along. In garments, virtually all the big firms, including the cigarette betemoth, the ITC, tested the waters to call it quits or retain a small present in the field.

7. Dispersal over wide areas: it is only small-scale units which have a tendency in disperse over wider areas. According to the second All India Census of Small-Scale units, 62.19% of the units are located in backward areas.

ADVANTAGES ASSOCIATED WITH SMALL SCALE INDUSTRIES

This industry is especially specialized in the production of consumer commodities. Small scale industries can be characterized with the special feature of adopting the labor intensive approach for commodity production. As these industries lack capital, so they utilize the labor power for the production of goods. The main advantage of such a process lies in the absorption of the surplus amount of labor in the economy that was not being absorbed by the large and capital intensive industries. This, in turn, helps the system in scaling down the extent of unemployment as well as poverty. It has been empirically proved all over the world that Small Scale Industries are adept in distributing national income in more efficient and equitable manner among the various participants in the process of good production than their medium or larger counterparts. Small Scale Industries help the economy in promoting balanced development of industries across all the regions of the economy. This industry helps the various sections of the society to hone their skills required for entrepreneurship. Small Scale Industries act as an essential medium for the efficient utilization of the skills as well as resources available locally.

RELATIONSHIP BETWEEN SMALL AND LARGE UNITS:

Small scale Large scale

1) Supplementary: Due to the supplementary role of small scale units they can fill in the gaps between large scale productions. In Madras city a small tricycle factory sustained and flourished alongside a large cycle factory. 2) Competitive: Certain industries like tiles and bricks, preserved fruits, perishable edibles and fresh baked goods required small engineering skill and demands craftsmanship and artistry. The small scale industry can compete in these selected products with the large scale sector.

3) Complementary: Today many small units produce intermediate products for large units. Examples of such complementary items are plastic dust cover for video recorders, electronic passive components etc. under complementary relationship, small scale nits functions under the cover of the large units and enjoy the advantage of protected markets for their products.

4) Ancillarisation: Many small firms supply components parts and accessories to large firms, in the sense they serve as ancillaries. E.g. Maruti Udyog, Bajaj, Mahindras, Telco, etc. buys some components and accessories used in their products.
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5) Jobbing: Sometimes large enterprises provide components and material to small scale units. The small units process these materials and components into finished parts or sub-assemblies.

6) Merchandising: There are small scale units who do not undertake marketing activities but distribute and sell their products through large scale units. For e.g. Hindustan Lever Limited distributes cosmetics and soaps produced by small firms. Even stabilizers, refrigerators, footwear etc manufactured by small firms are marketed by large units.

7) Servicing: Many small firms have been assigned the job of repair and maintenance of products manufactured by large units e.g. digital equipments, personal computers, calculators etc. Small scale industries also start servicing and repairing shops for the products of large units.

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Small Scale Industries

Manufacturing

Trading

Services

(a) Village & Cottage Industries (b)Handloom & Handicrafts (c) Modern SSI (i) Small Scale Units (ii) Ancillary Units (iii) Tiny Units

(a) Wholesale (b) Retail (c) Commission Agents

(a) Professional Services e.g. medicine, law etc. (b) Commercial Services e.g. real estate, wharehousing, repair shop, etc. (c) Personal Services e.g. fashion shops, dry cleaning etc.

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Small scale industries can be classified into five main groups.

1. Manufacturing industries i.e. industries manufacturing complete article. 2. Servicing Industries It covers light repair shops necessary to maintain mechanical equipment. 3. Feeder Industries It specializes in certain types of products and services e.g. electroplating, casting welding etc. 4. Ancillary to Large Industries It produces parts and components ad rendering services. 5. Mining or quarrying. Cottage Industries: 1) They produce mainly traditional goods. 2) They have pre-dominant use of manual labor. 3) They are technically backward. 4) They derive raw material from local sources. 5) They are household enterprises employing very little hired labor. 6) They cater to the needs of the local market. Ancillary Industries : 1) The investment in plant and machinery can go up to Rs. 1 crore. 2) It supplies 50 percent of the production to one or more parent units. 3) It is engaged in the manufacture of parts, components, sub assemblys toolings and renders services to the parent units for production purposes. 4) It is not controlled by any large unit

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PROBLEMS OF SSI
A few internal problems:
Most of these units are set up by individual promoters. They come with personal egos and ideas, attitudes. In short its one man show. The progress of the company depends heavily on mindset, courage and vision of the owners. The organization structure is not built. Targets and budgets are not worked out. The system and procedures are not transparent. Planning is not corporate and dealings are informal. The lack is of professional expertise with not much of real accountability. The emphasis is on short term gain even at the cost of quality. Rather a penny wise pound foolish approach. Though personal loyalty may exist, logical reasoning, career plan and motivation are somewhat lacking while pay scales are generally low, goodwill and job security are less existent. In many cases, business ideas and exposures are not up to date and adequate, rules and regulations are less understood , product and market knowledge bare not up to the mark, business remains confined within local or regional market.

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A few external problems

Surveys of the material and human resources of the countries to identify the regions or areas for the development of small scale and medium scale industrial enterprises. Identification of industrial projects for development. Project preparation and evaluation. Financial or credit support and investment promotion. Consultancy and counseling services. Technology development and applications, such as the designing of prototype machines for products identified according to country resources and requirements. Development of infrastructure of various kinds in the appropriate areas. Entrepreneurship development. Industrial training and skill formation. Linkages between large and small scale industries and the creation of sub-contracting facilities at the national, regional and international levels. Quality control and testing facilities. Market promotion, both domestic and export. Procurement of new materials and equipment. Scientific and industrial research. Information collection and dissemination on technology, markets etc. Identification of and assistance to enterprise which are experiencing difficulties. Management and reorganization or restructuring and small or medium scale industry through various schemes. Productivity increases through modernization. Initiative measures by industry and by area. Local initiative. Creation of institutions and changes in prevailing institutional arrangements. Regional and international technical and financial assistance. Co-operation among the developing countries.

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Finance
Financial inadequacy is also reported to be one of the most important causes leading to sickness of small-scale units. Undoubtedly, the government has extended a number of incentives for the growth of small-scale industries and some people feel that these have had negative effect on the small scale industries. Some others feel that in order to obtain more and more finance and concessions, the small entrepreneur often runs from one agency to another ad consequently cannot concentrate on his industry. There have also been reports that some of these incentives have been misused. However, the discussion here is related the small scale industries who have genuinely suffered for want of adequate and timely financing facilities. It is well-known that a Committee set-up by the Government of India under the Chairmanship of Prof. A. M. Khusro, Ex-Member, Planning Commission is already looking into the financing/ credit problems/ needs of SSIs and it is hoped that a separate Apex Financing Institution for small industries might be recommended. In addition, a separate legislation to protect the genuine interests of SSIs, including tiny and ancillary sector is under consideration of the Government. It could also be expected that the Apex Financing Institution or Bank solely devoted to meet the credit needs of small industries of the sector and come out with remedial measures to improve health of the weaker small units. The Bank may also provide expertise in guiding small entrepreneurs in their financial management problems and offer preventive assistance to them in case where sickness anticipated.

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Technology
Notable technological innovations and changes are taking place in industry tribally advanced countries of the world and SSIs in those countries are also correspondingly responding by upgrading their technology. For example, use of computers is being made in the design and production of individual components in job shops at costs comparable with costs of mass produced techniques. This has meaningful implications for a country like India, where at present a large number of small and ancillary industries are competing with large industries in a number of common product areas. While fiscal incentives given to SSIs are, indeed of help, the ultimate answer will, of course lie in the SSIs upgrading and updating their own technology and skills to meet the stringent within the country and by importers abroad. Small units will have to be technologically modern and price-wise competitive to play a significant role and keep their place in the total industrial structure of the country. In this task, technocrat-entrepreneurs particularly, may have to play a leading role, There is a misconception in some quarters that modernization and up gradation of technology necessarily involves costly equipment and labour reduction. While the initial investment cost in modern plant facilities may be somewhat higher, the investment would ultimately result in long-term benefits somewhat higher and consistent quality and higher productivity achievements. Modern technology also need not necessarily mean adopting automation in every case. In case of small industries, the process of modernization and up gradation of technology could be undertaken in phases depending upon the resources available with the units. Modernization would, of course need higher ad better skills to operate, maintain and run modern plant facilities to get the maximum productivity. While this might mean less demand for uneducated and unskilled personnel, it would on the other hand create opportunities for many skilled and educated operators, technicians and engineers in modern small industries.

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Marketing
The last but not the least, the important factor causing sickness is the small industries inability to market their products in a systematic way. It is wellknown that small-scale industries are mostly one man show or a family business and professional marketing is often not practiced in such units. However, it may also be stated that during the last decade and a half, some of the progressive small-scale industries have also realized the need for scientific marketing methods and have therefore organized their own marketing networks on regional and national basis. This is true in some cases of manufacturers of domestic electrical appliances where these small-scale industries have a national network and a chain of distributors and retailers. Some of the large marketing organizations have also been helpful in undertaking the field of the products of SSIs mostly in the field of domestic electrical appliances. Such contacts have been educative for small industries in learning marketing techniques from their large-scale partners. In this context, it may be admitted that concept of forming consortia of small industries to share the marketing efforts has not been very successful and effective. A view is often expr5essed that marketing is purely an entrepreneurial function and the Government should only provide necessary training and other facilities with the financing institutions providing necessary financial help in initiating market surveys and other allied marketing activities. In this context, it may also be stated that the Government has been quite responsive to the marketing needs of small-scale entrepreneurs producing variety of items and has reserved over 800 items to be procured exclusively from small-scale sector under the Central Government Store Purchase Program implemented by the DGS & D. in addition, instructions have been issued to the public sector enterprises and purchasing organizations of the Central Government to provide price preference to the products of the SSIs wherever they compete with large scale manufacturers against tenders floated by the purchasing organizations. While the above measures are indeed helpful in providing some sort of marketing assurance to SSIs, this meets only a small
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part of small industries production. For a bulk of their production the small industries have necessarily to depend upon their own initiative, drive and innovations. It is here that training program in modern methods of marketing will be helpful to small industries in upgrading their marketing technology on modern lines.

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OTHER PROBLEMS
Regional economic or industrial surveys can identify BOTH the growth points or potentially expanding areas I the country ad the industrial projects that are likely to be developed successfully in the areas. This stage should be followed by the preparation of industrial projects and appraisal of all aspects economic, marketing, financial, social, commercial, managerial, technological and environmental. I other words, a cost-benefit analysis of the projects, including the likely social impact, should be prepared. The preparation of a project and cost-benefit analysis are, however, highly skilled jobs ad the services of experts or consultants and advisers with appropriate skills in more than one discipline may be needed. A further important requirement is the availability of a group of persons or entrepreneurs willing to initiate projects, take risks and put in capital although financing agencies are necessary to help with credit. Obtaining information about technologies available and their appropriateness to the identified projects presents a serious problem o the intending industrialists. Thus technical advice, counseling and information become very important. No projects in an area can develop without essential infrastructure, such as, transport, power supply etc. in addition, industrial training designed t impart to the available labour force a variety of skills must also be given priority. A matter of importance in facilitating the development of small and medium scale enterprises is to ensure the mutuality of interests and the linkages between the large enterprises and the small enterprises so that the former offer a demand for the products of the latter. In many cases, the main role of the mall enterprise is to supply the large-scale industries with inputs such as parts, components and accessories. To establish and facilitate such linkages, it is necessary to identify the products needed by the large-scale enterprises and the methods of producing them effectively and efficiently. For instance, in India which is industrially and technologically advanced among the developing countries, the National Small Industries Corporation has now given a priority to identification and development of the types of products needed by
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the large-scale industries and the designing of the proto-type machines for producing them. The quality of the products must be emphasized: unless modern smallscale industrial enterprises are able to produce good quality products, the large enterprises will rarely buy them. The designing of the machines has, however, to be tailored to the local needs and the resources available within the country. The role of small enterprise in Singapore and Hong Kong, for example, is almost wholly to support large industrial enterprises. The same role is becoming increasingly important for the modern small and medium-scale enterprises in the large countries of the Asian and Pacific region, small-scale and cottage enterprises is of course in addition to the traditional small-scale and cottage enterprises which play an important part in the economies of the region. In the reorientation of the small-scale industrial enterprises to the requirements of large-scale industries, the development and application of appropriate technologies as well as the formation and diffusion of technical skills are of importance. Other factors are extremely important for the development of traditional small-scale and cottage enterprises in such countries as Bangladesh, Nepal and Sri Lanka. These include the upgrading of skill through industrial training, the promotion of markets, and the procurement of raw materials particularly those which must be imported and of equipment. As the developing countries of the Asian and Pacific region for the development of the modern small-scale industries as well as for traditional handicrafts or cottage enterprises vary in different countries.

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CONSTRAINTS IN MODERNISATION
While the need for upgradation of technology and modernization of production process and marketing methods is appreciated by SSIs, there are certain constraints experienced in bringing about desired level of modernization in a definite limited time. These constraints may be stated as follows:

Investment limit
A view is very often expressed by number of people in various quarters that modernization cannot be brought about by SSIs within the present investment limits of Rs 3 crores in case of small scale investment and Rs 3 crores in case of small scale ancillary units. The investment level of tiny sector has been raised to 25 lakhs with effect from 07.02.97. An opposite view is also expressed that since more than 90% of small units have an investment in the plant and equipment of less than 5 lakhs any increase in the investment limits would only benefit a very small percentage of small scale units. Since both points of view have their own merits, the whole question would need to be studied in greater depth to weigh the pros and cons of bringing in an increasing investment of small scale industries.

Pace of change in technology

Due to increase in R and D activities, undertaken by industries in the advance countries, technological changes of far reaching importance are taking place rapidly and SSIs often find it extremely difficult to keep up with these changes. Even in case of foreign technical collaboration from abroad into this country, only such technologies are given which have become partly out modeled in the collaborating countries. Many examples of this type are not difficult to seek in the field of electronics, electrical, automobiles, components, etc. This rapidly changing technology in certain industries in developed countries like USA, Japan, UK and West
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Germany have forced them to vacate certain areas of production in favour of developing countries where the cost of labour element is still less. The investment dynamics in the field of electronics have resulted in a large number of US and European countries establishing a part of their manufacturing processing facilities in far eastern countries like Malaysia, Taiwan, Korea, Indonesia and Thailand. Even in these countries there has not been any marked transfer of technology upgradation in the small scale sector. It has also been experienced in these countries that in most cases the foreign collaborators have not bothered to upgrade the technology of small and medium sector units. The situation in India is perhaps not totally different.

Technology versus employment

One of the biggest constraints felt in upgrading the technology through automation is the fear that it might result in reduction of labour required. Since employment generation is one of the basic objectives of growth of small scale industries in India any proposal to induct modern technology, which would ultimately result in loss of employment, is not received favourably. Here also perhaps such industrial activities could be identified where modernization would not necessarily mean automation resulting into reduction in overall employment in SSIs. For example, in the field of electronic technology, the upgradation, which is continuously taking place, is also providing a lot of scope for horizontal growth in ancillary, as well as assembly based industries in small scale sector, providing thereby increasing scope of employment. It is one of the major industries where small industries are thriving. New technologies are also coming in the field of automobiles an area where the scope of ancillarisation is considered to be of a very high order. Instead of replacing labour from the small scale sector, the input of technology will provide more employment in the ancillary and auxiliary sectors in these groups of industries.

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Inadequate availability of inputs

Another factor which restricts the pace of modernization is the nonavailability of necessary financial, technical, raw material and other input needed by SSIs for modernization. Also many small scale industries would find it difficult to pay the cost of new technology individually and therefore, it would be necessary to identify and design and effective mechanism for import of modern technology for selected fields and delivering them to the needy SSIs. There could be several ways for transfer of technology imported from abroad and the large scale industries in the private sector have to play a very important role in acting as carriers of technology from foreign countries to the small sector in India. An alternative may be to identify a government organization to negotiate and buy appropriate modern technology in selected areas of development and industrial production.

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SICKNESS OF SSIs
Small scale industry has been accorded an important place in the national economy by the national decision makers. Small units generate employment at relatively small capital cost, mobilize resources of capital and skill at microlevels and are expected to meet the rising demand for various goods and services required by the economy. Small scale industry forms an important sector constituting nearly 40 percent of the total output in the private sector. Much more significant is the employment generation capacity of small scale industry. India operates today in sheer size what is perhaps the largest small industries program in any developing country. Small scale sector as a priority sector of the national economy is protected and promoted in a number of ways. The growth of small industry has been sought to be promoted over years through various government policies and measures. However, presently the small scale industrial sector suffers from a high rate of mortality and growing incidence of sickness. According to latest estimates, the percentage of sick unit in the small scale industry varies from ten to fifty percent in various states. The closure of debilitated existence of an industrial unit involves heavy cost to the society: it renders idle its manpower; lays waste scarce financial and material resourced invested in land and buildings, machinery and equipment inventories and stocks. The social cost involved is much more. An industrial unit is defined as sick when it fails to generate internal surplus on a continuing basis and depends for its survival on frequent infusion of external funds. This definition is based on economic criteria. From a sociological point of view however, a unit is sick when it fails to meet its social obligations to society as a creator of employment potential and net economic surplus needed for the development of national economy. The sick status of a unit is further an outcome of its role performance failure along with those of the social entities in its environment.

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If we compare the performance of healthy and sick units in respect of their basic functional subsystems like finance, production, material inputs, manpower and marketing it is revealed that their performance in their respective functional subsystems differs markedly. In the case of sick units we find that they faced difficulty in securing adequate working capital. They were however, able to start production and earned marginal profits in the first two years. From the third year onward their performance began to deteriorate due to internal and external factors. Among the internal factors the most important was the inability of the entrepreneurs to stabilize and consolidate their relationship with the market. It led them to a situation where they failed from third year onward to secure adequate orders and volume of business to cover their operational costs. Disturbed labour relations brought about by their poor financial position further aggravated their low capacity utilization and led them towered a situation of continuing losses. The external factors include the non-availability of assistance regarding marketing, shortages of basic raw materials and working capital needs from the state agencies apart from the damaging delays in the units dealing with the state agencies. The healthy units on the other hand were not crippled by the lack of working capital and they succeeded in stabilizing their market position after the first two years of their operation. With a relatively more adequate financial resource base, they could secure enough volume of business so as to earn modest profits. However, they too have not been able to utilize their production capacity fully due to the constraints they share with the sick units. They are far from the realization of their full production potential and the utilization of growth opportunities. It is seen that the social entities in the environment of small units have failed in their normative role performance. Both healthy and sick units have encountered the apathy and unresponsiveness of the small scale service organizations. The service rendered by these organizations has been characterized by inordinate delays, inadequacy and lack of understanding. The entrepreneurs perceive the role performance of the state institutions as unhelpful and indifferent.

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The work of the state agencies and financial organs is seen to lack coordination and follow-up measures that are indispensable for sustaining the operation of new units. The role failure of these agencies has contributed to the sickness of weak units on the one hand and prevented the proper growth of the healthier units on the other. The state agencies attribute their ineffective role performance to the policy and resource constraints imposed on them by the higher level state organs. They also realize that the depletion of their resources by the sick units and policy implementation lapses on their own part have contributed to their ineffective role performance. Policy inferences are basically of two types: 1. Policies to promote fuller growth of small units by providing required measure of help to the growing units. 2. Policies to identify and revive the weak and sick units in order to make them viable. An important point is that the problem of sick units cannot be understood merely in terms of the surface characteristics of the entrepreneurs. All the entrepreneurs of the study are characterized by a set of common attributes mentioned earlier i.e., education, technical qualifications, work experience etc. The problem of industrial sickness in this study is seen to be the outcome of the varying degrees of role failure of the entrepreneurs and the social entities in their environment. Effective role performance of the social entities in the environment could have potentially prevented the role performance of the enterprises from worsening. The poor performance and role failure of the sick units who cannot repay the borrowed funds in turn depletes the resource base of the state agencies and adversely affects their capacity to help the needy units more effectively and adequately. The sociological nature of the problem hence is one of a cascading set of role failures amongst an interrelated and interacting set of social entities involved in the problem situation.

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REMEDIAL MEASURES
1. Early detection of sickness, it was generally felt, could go a long way in initiating remedial measures for restoring potential sick units to health. Need was stressed for the establishment of a proper management information system for providing early warning signals from within. The management should be able to understand the signals and be ready to take prompt action. They must be responsive to problems and even small problems should not be neglected. 2. Financial institutions and banks should initiate necessary corrective action for sick or prone-to-sickness units based on diagnostic studies. In case of growing sickness, they should also consider assumptions of management responsibility where they are confident of restoring a unit to health. The rate of interest and the securities required should be scraped for the sick units which will help them to revive. 3. Wherever possible, attempts should be made to restore sick units to financial health. However where the judgement is that a sick unit cannot be retrieved, it should be allowed to be wound up. The divestment of a sick unit, if desired by an industrial group, for handing it over to someone else with the requisite experience of running such a unit should be allowed expeditiously so that it can be restored to health before the situation gets out of control. The winding up should be the last resort and efforts must be taken so that the winding up causes the minimum losses to the owners. 4. Excessive concern over unemployment resulting from the closure of a sick unit is unwarranted. This can be taken care of through other measures, such as the setting up of a national fund for the purpose and strengthening of the facilities for retraining of workers.
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5. The proposal to set up a special institution-the Board for Financial and Industrial Reconstruction-appears to be a sound one. It should play the role of a single window clearing agency. However, the Board should not be asked to go merely by mechanical indicators to determine sickness in industry. For instance, the criterion of erosion in net worth for determining the seriousness of sickness, although it does indicate that everything is not well with a unit, is not meaningful. Erosion could take place by internal as well as external factors. There is, therefore, no justification for punishing management for erosion in net worth if it is caused by factors beyond its control. 6. Similarly, the proposal visualizing that the management of a unit that has lost net worth in entirety will not be allowed to manage that unit any more, needs to be considered. Before branding the management as a bad one, all the aspects of the case ought to be examined. 7. The proposal that managements responsible for mismanagement should not be allowed assistance from financial institutions even for new ventures too, needs re-thinking. 8. Nothing will do greater damage to the development of the spirit of entrepreneurship in the community than the fear that one is likely to be punished for sickness which is not of ones own market but is the result of lapses committed elsewhere. 9. It is important that in any scheme of reconstruction of a sick unit, all the stake-holders bear sacrifices on equitable and just basis. 10. The important criterion for take-over of a sick unit by another company should be whether the company taking over the sick unit has skill, technology and finance to save it. Considerations on MRTP/FERA accounts should not come in the way. 11. There is need for a fresh look at Income-tax Act to remove the inhibition caused to companies taking over sick units by insistence on the part of income-tax authorities for prior full implementation of the revival schemes before tax benefits can accrue.

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12. Debt-equity ratio ought to be realistic. Fiscal policy, too, requires rationalization. 13. Incentives should be provided to professional managers helping in reviving sick units. 14. Treatment of capital intensive units prone to sickness has to be on a different footing than tackling of sickness in industry in general.

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SSI AND WTO

The post-liberalization business environment has become harsh for the smallscale industries (SSI) sector because of increased internal and external competition. In addition, the far-reaching impact of the various WTO norms are now threatening to further affect the fortunes of small and medium enterprises. Unfortunately, despite sufficient notice and the growing awareness of the impending threats, the SSI sector does not appear to be adequately prepared for the new challenges. While a number of units in the sector have been striving hard to obtain ISO or BIS certifications and compete against cheaper imports, the overall picture appears gloomy for want of proper policy support. Even after several committees and study group reports over the past decade, the policymakers are still groping for a WTO-compatible policy for this sector. There is much confusion over a number of issues such as the cap on capital investment, foreign direct investment (FDI) ceiling, interest subsidy, dereservation of items, and creation of a technology up gradation fund and so on. It has become fashionable for successive governments to promise a new deal for the SSI sector, but deliver practically nothing. Even the creation of a new Ministry of Small-scale Industry and Agro and Rural Industries in 1999 did not make any difference to the sector's plight. Soon after its creation, the new Ministry decided to do a detailed sector-wise study of the impact of various WTO agreements on the SSI sector but nothing seems to have happened since. Not surprisingly, though the sector has grown at a rapid pace postIndependence, the incidence of sickness is on the rise. While the official figures show only about 10 per cent of the over 32 lakh SSI units as sick, the unofficial figures put this figure at over 40 per cent. Given the crucial importance of the SSI sector to the economy with 40 per cent share in the total industrial output, 35 per cent in exports and over 80 per cent in industrial employment, it deserves all the policy support the Government can offer. What the small entrepreneurs need is not protection but institutional support to fund modernization and technology up gradation, infrastructural support, and adequate working capital finance from the banking sector.
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There is also a need for small entrepreneurs to keep pace with the structural and technological changes taking place in large industries. The accent should be on the much greater degree of ancillarisation and on providing services as the larger companies are keen on offloading a number of job works to smaller units. True, a section of the SSI sector is already undergoing structural changes but the process is still quite slow. There is an urgent need to refashion the policies governing the sector so as to improve its competitive strength and long-term outlook. The recast and reform of the SSI policy will have to largely concentrate on the following areas: Adoption of new definitions: The Government should think of creating a separate category of medium-scale units with investment limits of Rs 10-15 crore and encourage them to raise equity capital, including foreign equity to supplement institutional finance. While the broad policies should be the same for the SMEs, the tiny units could be given a much higher level of institutional support to promote selfemployment.

De-reservation: The argument against reservations are:

The policy has not actually helped the growth of small-scale industries. The units in the unreserved sector have actually grown faster than those in the reserved list. In other words, the SSI units have shown more dynamism in areas where they had to compete with larger units. Reservation in many areas has become irrelevant since a large number of reserved products are not being produced by SSIs. It is also inconsistent with the new trade policy that allows the items reserved for the SSI sector to be freely imported. Reservation has hurt India's ability to expand exports in many crucial areas, including textiles and leather. Hence the government should remove the reservation system and de-reserve the SSI sector.

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 Promoting clusters: International experience suggests that the smallscale enterprises flourish in situations where they can be clustered together in areas where it is easier to develop common infrastructure facilities of high quality. Many such clusters have already emerged. But the number is very low. Hence the clusters should be encouraged. Institutional Credit: Ensuring adequate flow of institutional credit to the SSI sector has remained a major problem despite several attempts made by the Reserve Bank of India over more than a decade to improve the situation. Worse, according to the estimates, only 15-20 per cent of the SSI units could access bank credit. Others have to depend on borrowings from private sources at exorbitant interest rates. This problem has also to be solved. To bring the SSI to the level of the international competition the government must take the above steps.

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SOME INSTITUTIONS HELPING IN SOLVING SSI PROBLEMS

Small Industries Development Organization (SIDO): One of the most important initiative undertaken by GoI is the establishment of the SIDO in 1954. This organization is headed by a Small Industries Development Commissioner (DCSSI). SIDO is placed under the jurisdiction of the Ministry of Industrial Development and has its headquarters in New Delhi, India. The branch offices of the DCSSI that are spread all over the country takes care of the establishment, operation and growth of the SSIs. The organizations under the control DCSSI, at central and state level, organize various types of activities including training, seminar, plant visits, and group discussions. Some of the major programs of the SIDO are technology development, energy conservation, pollution control, ISO-9000 etc. They help the SSIs by providing them with raw materials that are not readily available in the market when needed. (Earlier, the small industries were mostly dependent on local raw materials. However the modern smallscale industries manufacturing more sophisticated and new products are using imported raw materials. Sometimes problems arise in procuring the right quality of raw materials in time, for operating their production plans and delivery schedules, due to foreign exchange crisis or other reasons such as working capital problems.) The DCSSI branch offices also assist the SSIs in collecting outstanding dues from their customers. The SIDO is an umbrella organization under which a number of institutions operate. These are the service institutes, the district industries centers and the information banks.

Small Industries Development Bank of India (SIDBI)

The Small Industries Development Bank of India (SIDBI) was set up by GoI under a special act of the Parliament in April 1990. It is a wholly owned subsidiary of the IDBI. SIDBI has a network of 33 offices (5 regional and 28 branch offices). The Bank was instituted to ensure the increased flow of financial assistance to SSIs. It assists the SSIs through
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direct assistance schemes as well as indirect assistance such as refinancing.

Small Industries Service Institutes (SISIs)

As of 1991, there were 26 SISIs, 32 branch institutes and 39 extension centers under the DCSSI. These institutions are fully devoted to provide assistance to the SSIs in all phases of their operation. These organizations help the SSIs in identifying items for manufacturing, provide information on technologies, feasibility studies, training, organization of workshops and seminars and other such programs. SISIs have a program for stocking up spare parts and other supply items not readily available in the market but necessary for the small-scale industries. The SISIs also have `reasonably well-equipped' workshops and labs that offer testing services to small-scale industrial units which are not equipped or have no proper personnel.

District Industries Centers (DIC)

The idea of District Industries Centers (DIC) was introduced by the Industrial Policy Statement of December 1977. These DICs were established in each district to `provide and arrange a package of assistance and facilities for credit guidance, raw materials, training, marketing, etc. This program began in May 1979. As of 1996, there are 422 DICs operating in 431 districts in the country.

National Small Industries Corporation (NSIC)

The National Small Industries Corporation (NSIC) was formed to assist the small industrial units by providing equipment on hire-purchase basis. The supplied machines are used in various industries such as plastics, leather, printing and stationery, automobile componenets and spares, electronic equipment etc. NSIC projects to promote SSIs include finanacial services, technology upgradation, technical training and marketing assistance. NSIC has prototype development and testing centers at three places in the country to make available improved machine designs and to give advanced technical training to personnel from the small industry. Most states in the country have an industrial infrastructure corporation that provides buildings, sheds and developed plots to small industrial units and small industries marketing boards to
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assist in marketing. These corporations in some state are separate for certain industries such as the electronics, leather, and ceramics. Information banks The GoI has established information banks in certain areas for assisting academic institutions and industry. This system is called the National Information System for Science and Technology (NISSAT). These information banks help the small industrial units with information, particularly with respect to the latest developments in the field of technology. However, these services are not used by the SSIs for various reasons including the lack of information and lack of time to pursue such avenues among others. There is also corruption in these institutions making the SSIs reluctant to take any help from these institutions.

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PRIMARY DATA
R D KNITS
This is a small scale unit producing hosiery knitted fabrics. It originated in the year 1989 with two persons i.e., an owner and one labourer with an investment of around 50,000 and now it has progressed so much that everything is mechanized. With the growth of technology and the changing trends where modernization comes into picture the investment limit has also increased to lakhs and crores of rupees. There is no certification like BIS or ISO because they do not exports and there is no requirement to maintain such standards. This company is a capital intensive industry employing 30 machines and 10-15 labourers. The labourers are consequently trained with the changing technology and expert people are hired so that the company does not lag behind the competitors when it comes to modernization in technology. The experts visit the company twice a week and upgrade the machines at regular intervals. They have mostly Indian machines that are purchased from Ludhiana namely Punjab Machinery Works (PMW) and Teja Singh Machinery Works (TSM). This company does not directly export its fabrics but it indulges in indirect exports i.e., they sell their fabrics to those companies whose prepare the finished product which can be in the form of loungeries, track pants, night suits, undergarments, T-shirts etc. The latest wear i.e., tights which are extremely stretchable, the fabric used for making that cloth is also produced in this company. In these clothes a special type of rubber called lycra is knitted which makes the cloth come to the original shape inspite of stretching it so much.

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It was started with the money which the owner possessed and with the help of some private sources. In case of financial scarcity loans are taken from both public as well as private sources. Process 1. Purchasing yarn 2. Making grey fabric 3. Dyeing or printing Explanation: 1. Purchasing yarn: They purchase yarn from various sources which can be synthetic or cotton depending upon the requirement of the customers. They do not believe the just in time concept which says that the goods should be purchased only when the need arises. They believe in keeping stock of both the raw materials i.e., cotton and synthetic so that there is no scarcity, no delay in delivering which means good relations. 2. Making grey fabric: The yarn which is in the rolled form is given a grey colour or bleached depending upon the requirement. The grey colour is provided so that the colour easily sets on it. This is done by the company itself and the machine with the help of which it is done is called Circular Knitting Machine. This machine varies for different fabrics and width of the cloth. This machine works on the diameter i.e., as per the width of the cloth and they have nearly 30 circular knitted machines depending upon various diameters. If they do not have the machine as for the fabric required by the customer they get it done from Asiad Knitting Works.

3. Dyeing or printing: After the second stage the fabric is either sent for dyeing or for printing depending on the requirement of the customer. This dyeing work is not done at the company itself, they get it done from other industries like Maxwell Industries, Chirag Textile Prints etc. If the

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customer wants the colour first then they get it dyed or if the customer wants the print first they get it printed and then dyed. They market their products through salesman and they do not have any branches. The owner himself visits the various trade fairs held anywhere in India and enhances his knowledge about the changing trends and upgradation in the market. Since the factory is located in a place where there are no power cuts so the industry do not face any problem of power failure which means no stoppage of activities. There are no departments, there is centralization of activities. The company produces a lot of pollution that is in the form of fine cotton particles because the system which can prevent the pollution is very costly that is not affordable by the company. But for the society they give charity to orphanages, to places where there is no water pipeline etc. and there is no fixed amount but as per the capacity of the company but every year they make it sure to fulfill their social responsibility. The workers are also provided free accommodation, bonus and an yearly increment of 5-15%. Due to recession, the companys cost of production is increasing and they have to face losses. And during this time itself they are thinking of collaboration with some process house so that they can overcome this situation and also it will be a boost to their company as they will also be able to produce the final output as well. In future they are thinking to have their branch at Borivali, expand their business, have various departments, have agents employed who will be looking the marketing of the products. Presently their sales are mainly to Maharashtra and Gujarat.

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Complaints to government:
The government has set various institutions for small scale industries who are exporting and various schemes are also provided to them but they have overlooked the textile industries which is the most aspiring industry in the world and due to lack of government support India is behind China was the statement made by the owner. They suggestion was that government should loans at low interest rates and they also complained that the charges charged by Reliance Energy is very high, their cost for industries ranges between Rs9pu Rs12.15pu which is very costly. This shows that small scale units are not happy with the government.

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We wish to express our heartfelt gratitude to those individuals who have been a constant source of inspiration and support professionally and personally. First and foremost, we would like to thank Prof. Sanchita Dutta for her constant encouragement, help and support whenever needed.

We would also like to thank Prof. A. E. Lakdawala and Prof. Kamala. We would also like to express our gratitude to our colleagues for their support and help.

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INDEX
SR NO. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. CONTENTS Introduction Meaning Definition Characteristics of SSI Significance of small-scale industries Advantages Relationship between small and large units: Classification of SSI Problems of SSI Remedial measures SSI and WTO Some institutions helping in solving SSI problems Primary data Bibliography

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BIBLIOGRAPHY
MANAGEMENT OF SMALL SCALE INDUSTRIES http:/indiabudget.nic.in http://ssi.nic.in/ssischeme.htm#schbk4 R D KNITS

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