LESSON –2 SMALL BUSINESS
Dr. Jyotsna Sethi
2.0 Introduction 2.1 Objectives 2.2 Concepts and Definitions 2.2.1 Small Scale Industries 2.2.2 Ancillary Industry 2.2.3 Tiny Industry 2.2.4 Small Scale Service and Business Enterprises (SSSBEs) 2.2.5 Women Enterprises 2.2.6 Export Oriented Unit 2.3 Nature and Characteristics 2.4 Problems of Small Business 2.5 Role of Small Business in Indian Economy 2.6 Small Business as Seedbed of Entrepreneurship 2.7 Summary 2.8 Glossary 2.9 Self Assessment Questions 2.10 Further Readings
____________________________________________ 2.0 INTRODUCTION You have learnt about the close linkage between entrepreneurship and economic development in lesson 1. The Small Scale Sector is the natural habitat of entrepreneurs. Most entrepreneurs start small and then nurture their units into large industries. The SSI Sector provides an opportunity for them to hone their skills and talents, to experiment, to innovate and transform their ideas into goods and services needed by the society. Over the last six decades the Small Scale Industry sector has emerged as a highly vibrant and dynamic sector. It has acquired a prominent place in the socioeconomic development of the country. Mostly this sector exhibited positive growth trends even during periods when other sectors of the economy experienced either negative or nominal growth. Today this sector accounts for 95 percent of the industrial units, provides nearly 80 percent of manufacturing employment and contributes around 35 percent of exports. It produces 7500 items and provides employment to more than 195 lakh
persons. It is a well-recognised fact that a vibrant small-scale sector holds the key to economic prosperity in an economy like India. Profile of SSI Sector in India
♦ ♦ ♦ ♦ ♦ ♦
95% of Industrial Units in the Country 39.92% of Value Added in the Manufacturing Sector 34.29% of National Exports 6.86% of Gross Domestic Product Employment To 193 Lakh Persons Production of Over 7500 Items in the Industrial Sector
♦ 298 Items Reserved for Exclusive Manufacture ♦ 358 Items for Exclusive Purchase from This Sector
____________________________________________ 2.1 OBJECTIVES
After going through this lesson you should be able • To define a Small Scale Industry, Ancillary Industry, Tiny Unit, Small Scale Service And Business Enterprises [SSSBEs], Women Enterprise and Export Oriented Unit. Differentiate Between The Traditional and Modern Small Scale Sector Explain the Nature and Characteristics of SSIs Examine the Role of Small Business in National Economy Decribe how Small Industries act as Seedbed of Entrepreneurship
• • • •
____________________________________________ 2.2.CONCEPTS AND DEFINITIONS In most parts of the world the nomenclature used is Small and Medium Enterprises (SMEs) and the criteria for defining include the number of employees and /or the turnover. In India the Small Scale Industry evokes different meanings for different agencies and the financial institutions. For example for the purpose of Excise and Sales Tax Exemption, the turnover alone is the determining criterion. However in broader terms, currently, an SSI is defined in terms of investment ceilings on the original value of installed plant and machinery.
2.2.1 THE SMALL SCALE INDUSTRIAL UNDERTAKING
An industrial undertaking in which the investment in plant and machinery, whether held on ownership terms or on lease/hire-purchase basis, does not exceed Rs. 10 million (Rs. 1 crore) is regarded as a small-scale undertaking. These include manufacturing and service units.
2.2.2 ANCILLARY INDUSTRIAL UNDERTAKING
An industrial undertaking which is engaged or is proposed to be engaged in the manufacture or producing of parts, components, sub-assemblies, tooling or intermediates; or the rendering of services is termed as an ancillary undertaking. The ancillary undertaking is required to supply or render or propose to supply not less than 50...
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