Small Scale Industries Role Relevance Rationale behind SSIs

Small Scale Industries Role & Relevance

Rationale behind SSI’s and Social Enterprises or Objective

Employment Argument Equality Argument Decentralization Argument Latent Resources Argument

Types of Small Scale Industry

Modern SSI Cottage Industry Small Scale Industry Village Industry Ancillary Industry

SMALL SCALE INDUSTRIES: Important Features Of SSI • Investment does not exceed Rs. 10 million. • Mainly engaged in the manufacture of parts , components or rendering of services. • It exports 30% of its production. • It invests Rs. 25 lakhs in Plant and Machinery.

COTTAGE INDUSTRIES: These industries which provide part time or whole time work in rural & semi-urban areas. They are generally associated with agriculture.

CHARACTERISTICS 0 F SSI’S: • • • Personal Character Labor Intensive Limited Capital Independent Management Simple Organization

Role of Small Scale Industry in India

• Large Scope for Employment: The small-scale industries provide large scope for employment on a massive scale. In 2001 the employment generated in this sector was 19. 2 million. This is of great significance for a country like India which is a labour-surplus economy, and where labour-force is increasing at a very rapid rate. Moreover, the small-scale industries being labour-intensive they employ more labour per unit of capital for a given output compared to the large-scale industries. This is evident from the fact that the small-scale sector accounts for as much as 80% of the total employment in the industrial sector.

• Large Production: The small-scale industries also contribute a sizeable amount to the industrial output of the country. Out of the total output of the manufacturing sector, as much as 40% comes from these industries. And out of the total supplies of industrial consumer goods a major part originates in the small-scale sector. Almost all the products of this sector are in the nature of consumer goods, with a significant part consisting of luxury goods. The adequate availability of consumer goods plays an important role in stabilizing and developing the economy.

• Large Exports: Many products of the small-scale industries like handloom cotton fabrics, silk fabrics, handicrafts, carpets, jewellery, etc. are exported to foreign countries. Their share in the total exports is as much as 40%. • Use of Latent (domestic) resources: These resources are, the hoarded wealth, family-labour, artisan’s skills, native entrepreneurship, etc. Being thinly spread throughout the country, these resources cannot be used by large-scale industries which need them in big amounts and at a few specified places. These industries also provide opportunities to the small entrepreneurs to learn, to take risks, to experiment, to innovate and to compete with others.

• Promoting Welfare: The small-scale industries are also very important for welfare reasons. This increases their income-levels and quality of life. Further, these industries tend to promote equitable distribution of income. This also helps in the reduction of regional economic disparities. The freedom to work, self-reliance, self-confidence, enthusiasm to achieve and all such traits of a healthy nation can be built around the activities performed in these industries. It also becomes possible to preserve the inherited skill of our artisans which would otherwise disappear

• OPTIMISATION OF CAPITAL – It require less capital & provide quick returns on investment. ROLE OF SSI’S IN INDIAN ECONOMY • MOBILISATION OF LOCAL RESOURSES – SSI’S help to mobilize and utilize local resources. • FEEDER OF LARGE SCALE INDUSTRIES – It plays a complementary role to large scale sector.

PROBLEMS OF SSI’S: • RAW-MATERIAL – A major problem that the SSI’S have to contend with is the procurement of raw material. ü an absolute scarcity ü Poor quality ü High Cost

• FINANCE – ü scarcity of capital ü weak credit worthiness • MARKETING – ü No spend on advertisement & publicity. ü Difficulty in exports due to lack of marketing skills.

• OUTDATED TECHNOLOGY ü Old techniques & equipments ü Limited capital • POOR PROJECT PLANNING ü Lack of education and exposure ü Lack of skill sets and Human Resource

INADEQUATE INFRASTRUCTURE ütransportation ü communication üPower Under – Utilization of Capacity Only 40 – 50 percent of capacity are not utilized

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