Essentially small scale industries comprise of small enterprises who manufacture goods or services with the help of relatively smaller machines and a few workers and employees.
Basically, the enterprise must fall under the guidelines set by the Government of India. At the time being such limits are as follows,
- For Manufacturing Units for Goods: Investment in plant and machinery must be between 25 lakhs and five crores.
- For Service Providers: Investment in machinery must be between 10 lakhs and two crores.
In developing countries like India, these small scale industries are the lifeline of the economy. These are generally labour-intensive industries, so they create much employment. They also help with per capita income and resource utilization in the economy. They are a very important sector of the economy from a financial and social point of view.
Examples and Ideas of Small Scale Industries
- School stationery
- Water bottles
- Leather belt
- Small toys
- Paper Bags
- Xerox and printing
- T-shirt Printing
- Beauty parlors
Characteristics of Small Scale Industries
- Ownership: Such units are generally under single ownership. So it is a sole proprietorship or sometimes a partnership.
- Management: Both the management and the control generally is with the owner/owners. So the owner is actively involved with the daily running of the business.
- Limited Reach: Small scale industries have a restricted area of operations. So they meet local and regional demand.
- Labor Intensive: These small scale industries tend to use labour and manpower for their production activities. So their dependence on technology is pretty limited.
- Flexibility: These units are more adaptable to their changing business environment. So in case of sudden changes or unexpected developments, they are flexible enough to adapt and keep carrying on. Large industries do not have this advantage.
- Resources: They use local and readily available resources. This also helps the economy with better utilization of natural resources and less wastage.
Role of Small Scale Industries in the Indian Economy
- Total Production
These enterprises account for almost 40% of the total goods and services produced in the Indian economy. They are one of the main reasons for the growth and strengthening of the economy.
These small scale industries are a major source of employment in the country. The whole labour force cannot find work in the formal sector of the economy. So these labour-intensive industries provide a livelihood to a large portion of the workforce.
- Contribution to Export
Nearly half of the goods (45-55%) of the goods that are exported from India are produced by these small enterprises. About 35% of direct exports and 15% of the indirect exports are from the small scale industries. So India’s export industry majorly relies on these small industries for their growth and development.
- Welfare of the Public
Other than economic reasons, these industries are also important for the social growth and development of our country. These industries are usually started by the lower or middle-class public. They have an opportunity to earn wealth and employee other people. It helps with income distribution and contributes to social progress.