Small Scale Industry

Topics: Industry, Venture capital, Finance Pages: 37 (10772 words) Published: November 25, 2010

The definition for small-scale industrial undertakings has changed over time. Initially they were classified into two categories- those using power with less than 50 employees and those not using power with the employee strength being more than 50 but less than 100. However the capital resources invested on plant and machinery buildings have been the primary criteria to differentiate the small-scale industries from the large and medium scale industries. An industrial unit can be categorized as a small- scale unit if it fulfils the capital investment limit fixed by the Government of India for the small- scale sector. As per the latest definition which is effective since December 21, 1999, for any industrial unit to be regarded as Small Scale Industrial unit the following condition is to be satisfied: - Investment in fixed assets like plants and equipments either held on ownership terms on lease or on hire purchase should not be more than Rs 10 million. However the unit in no way can be owned or controlled or ancillary of any other industrial unit.

The traditional small-scale industries clearly differ from their modern counterparts in many respects. The traditional units are highly labor consuming with their age-old machineries and conventional techniques of production resulting in poor productivity rate whereas the modern small-scale units are much more productive with less manpower and more sophisticated equipments. Khadi and handloom, sericulture, handicrafts, village industries, coir, Bell metal are some of the traditional small-scale industries in India. The modern small industries offer a wide range of products starting from simple items like hosiery products, garments, leather products, fishing hook etc to more sophisticated items like television sets, electronics control system, various engineering products especially as ancillaries to large industrial undertakings. Nowadays Indian small-scale industries (SSIs) are mostly modern small-scale industries. Modernization has widened the list of products offered by this industry. The items manufactured in modern Small-scale service & Business enterprises in India now 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.


Ministry of Agro and Land Rural Industries and Ministry of SSI have been merged into a single namely, Ministry of Micro Small & Medium Enterprises. The President under Notification 9th May 2007 has amended the Government of India (Allocation of business) Rules 1961, Pursuant to this amended Ministry of Agro and rural Industries ( Krishi Evam Gramin Udyog Mantralay) and ministry of SSI (Laghu Udoyag Mantralay) have been merged into a single Ministry, namely, Ministry of Micro Small & Medium Enterprises ( Suksham Laghu Aur Medium Udyam Mantralay ) CONCEPT & DEFINATION OF SSI

In most parts of the world the nomenclature used is small and Medium Enterprises (SMEs) and the citeria for defininig include the number of employees and /or the turnover. In India the Small Scale Industry eoveks different meanings for different agencies and the financial institution. For example for the purpose of excise and sales Tax Exemption, the turnover alone is the determinig criterion. However in broder terms, currently, an SSI is defined in terms of investment ceiling on the original value of instlled plant and machinery. 7.65 The small scale sector has played a very important role in the socio- economic development of the country during the past 50 years. It has significantly contributed to the overall growth in terms of the Gross Domestic Product (GDP), employment generation and exports. The performance of the small scale...
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