Small Scale Industry

Small Scale Industry

• It is defined in different ways depending on
country’s pattern and stage of development,
policy aims and administration set up.
• An SSI is defined differently in different
countries depending on their economies. An
SSI in developed countries are defined as
Large scale Industry in India.
 Small Scale Industry
• In SSI Management lies in the hands of one
or two people who are responsible for the
major decisions.
• One or two people bear the responsibility
of many functions, which is generally
distributed among several people in Large
scale Industry.
 Small Scale Industry
• An SSI is a privately owned and operated
business unit that is composed of a small number
of employees and has relatively low turnover.
• SSI can be classified based on
• No. of employees,
• Capital Invested,
• Turnover and
• Type of business.
 Small Scale Industry
• In African Nations SSI employs 5 to 50 people
• In Asian Countries SSI employs 30 to 100
people
• In US SSI employs less than 500 people
• In India SSI lies between Organized sector
i.e., Large scale Industries and highly un
organized sector i.e., Cottage Industries
 Cottage Industry

• An Industry where the creation of product

and service are home based rather than
factory and specific skills are required.
• Normally the members of a family are
involved in the production of goods.
Features of Cottage Industry

• Cultural Heritage is preserved

• Traditional techniques of production

• Total production is less

• Agricultural resources are used
• Gestation period is low
• Employment generation
 Advantages of Cottage
Industry

• Reducing Idle manpower

• Self-sufficient rural people

• Self pride
• Maintenance cost is low
 Rural Industry

• According to KVIC (Khadi and Village

Industry Commission)

• Industry in rural area

• Where population is less than 10,000
• Fixed capital Investment per head of
worker is less than Rs. 1000.
 Rural Industry

• According to Govt. of India

• Industry at Village or town

• Where population less than 20,000

• Total Investment less than 3 Crores
Types of Rural Industry

• Agro - based Industry

• Forest - based Industry

• Mineral - based Industry

• Textile
• Engineering and service rendering Industries
 Type of Industry Investment limit (Rs) Remarks

For specific products it

Small Scale Industry One crore is five crores (71
products so far)
50% of output supplied
Ancillary Industry One crore
to the parent unit
Tiny Enterprise 25 Lakhs No location limit

Service and Business

10 Lakhs No location limit
Enterprise

51% equity holding by

Women Enterprise Any of the above women and managed by
women

Export Oriented Unit 100%, EOUs can sell

One crore
(EOU) 25% in domestic
markets.
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 Examples of SSI
• Bakeries
• Candles • Paper Bags
• School stationeries • Xerox and printing
• Water bottles • T-shirt Printing
• Leather belt • Photography
• Small toys • Beauty parlours

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 MSME
Investment Ceilings for MSME’s
Investment in Plant and
Investment in Equipment in
Enterprises Machinery in
Service sector
Manufacturing Sector

Micro
Does not exceed 25 lakhs Does not exceed 10 lakhs
Enterprise
Small More than 25 lakhs but More than 10 lakhs but

Enterprise doesn’t exceed 5 crores doesn’t exceed 2 crores

Medium More than 5 crores but More than 2 crores but

Enterprise doesn’t exceed 10 crores doesn’t exceed 5 crores

Characteristics and Significance
of SSI

• Labour Intensive- Opportunities

• Flexibility - Dynamic
• Innovative - Survival
• Decentralisation - Dispersion
• Outlet of Entrepreneurial spirit
 Importance of SSI

Total Production
These enterprises account for almost 40% of the
total goods and services produced
Employment
These small scale industries are a major source of
employment in the country.

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 Importance of SSI
Contribution to Export
Nearly half of the goods (45-55%) of the goods that are
exported from India are produced(35% of direct exports
and 15% of the indirect exports)
Welfare of the Public
These industries are usually started by the lower or
middle-class public. They have an opportunity to earn
wealth and employ other people. It helps with income
distribution and contributes to social progress.
 Contribution of SSI
• Employment generation - rate is higher
than LSI

• High Productivity - With 1 lakh Investment

SSI produces 4.62 lakh worth goods
• Poverty alleviation - Use traditional skills
and knowledge, High proportion of unskilled
workers are employed w.r.t M & LSI
 Contribution of SSI

• Better utilization of local resources - less

imports, no difficulties such as labour union
demands and Govt. regulations
• Tapping of Savings - Save large portion of
income for future investments, secured
existence
 Contribution of SSI

• Utilization of Domestic Technology - use

general purpose machines

• C o m p le m e ntar y to L S I - pro d u c i n g
components and distributing goods
Factors influencing SSI
1. Political factors
• Investment policies

• Industrial Estates
• Promotional agencies
• Free trade zones
• Low interest loans
Factors influencing SSI
2. Economic factors
• Investment decisions

• Market conditions
• Forecasting
3. Technological factors
4. Socio cultural factors
Linkage among small, medium
and heavy industries
Small Industries Medium Industries Heavy Industries

Equity held by Founder/ Equity by Family/ Private- Mostly Public Investor

Family Public/ Pubic held Equity/ Some cases
Owners and Professionals
Owner Managed Professional Management
play key role
Decision Making by Decision Making by Distributed decision
Owner Owner/CEO making by Hierarchy

Small term Planning Medium term planning Long term planning

Limited personnel Personal development Multiple career

development limited to key employees development

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 Linkage among small, medium
and heavy industries
• Mutually beneficial and helping each other
rather than competing and conflicting.
• Large scale industries undertake
• manufacture of much bigger and complex
machines or systems
• which demand high technology involving
• large number of components and sub-systems.
 Linkage among small, medium
and heavy industries
• Some parts of components outsourced to either
medium or small scale industries
• the overheads of small scale industries are nominal,
• the cost of production will be much lower compared
to the cost of production in the large scale units.
• The guidance and support rendered by the big
industries, the quality of the products can be
improved to the levels required.
Thank You