ROLE OF SMALL SCALE
INDUSTRIES
WHAT ARE SSIs?
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 conditions are to be satisfied: Investment in fixed assets like plants and
equipment's either held on ownership term on
lease or on hire purchase should not be more
than Rs 10 million.
Less than 150 employees in a unit.
The policy reservation of items for manufacturing in SSIs
was introduced in 1967. Initially only 47 items were
reserved, but as of today about 675 items are reserved.
SSIs are the second largest employers of Human resources
after agriculture in India.
They generate more employment opportunities per unit of
capital invested than large-scale industries.
Employment provided to more than 273. 97 lakh persons.
Classification of SSIs
TRADITIONAL SSIs
MODERN SSIs
It includes khadi and
handloom, village
industries,handicrafts,
sericulture, etc
Modern SSIs produce
wide range of goods
from comparatively
simple items to
sophisticated products
such as television
sets, electronics,
control system,
various engineering
products etc.
IMPORTANCE OF SMALL SCALE
INDUSTRIES
1. EMPLOYMENT
SSIs are labor intensive so there is a great employment potential.
Large-scale industries are capital intensive, hence not in a
position to solve acute unemployment problems in India.
SSI employed 129.80 lakh people in 1991-92 which increased to
239.09 lakh in 2000-01 and further to 294.91 lakh in 2005-06.
2. CAPITAL LIGHT
India is a capital scarce country, which is why we need to make
optimum use of all the capital and resources available in terms of
employment and productivity.
SSIs are capital light and hence more suitable to underdeveloped
nations.
Limited capital is needed to start an SSI, the returns are quick, and
those returns can again be reinvested.
3. SKILL LIGHT AND IMPORT LIGHT
No technological skill or managerial skill required.
More suitable to underdeveloped countries where literacy rate is
low and skilled labor is scarce.
Require less import of machinery, technical skill hence placing
little or no strain on the scarce foreign exchange reserves of
developing nations.
4. MOBILIZATION OF CAPITAL RESOURCE
AND ENTREPRENEURIAL SKILL
Easy mobilization of capital, entrepreneurial skill and other
sources all over the country.
Savings in rural areas can be mobilized by SSIs more easily
then large scale industries.
Idle resources can be put to effective use.
5. SUPPORT TO AGRICULTURE AND
LARGE-SCALE INDUSTRIES
They help supply inputs , processing facilities as well as
consumer goods to rural masses.
Rural based SSIs help absorb all the surplus labor in villages and
towns thus improving the productivity in the agricultural sector.
SSIs also help large scale industries by supplying spare parts,
components etc.
6. REGIONAL DISPERSAL OF INDUSTRIES AND
BALANCED REGIONAL DEVELOPMENT
Political, social and economic factors affect the development of all regions.
Some regions are more developed while others continue to lag behind.
Large scale industries are mostly centered in some big cities, while SSIs
help decentralize industries thus helping avoid, space crunch, slum
development problems etc.
Since SSIs are easy to set up, they can be set up anywhere and hence
contribute to a balanced regional development.
7. REDUCTION IN INCOME-INEQUALITIES AND
EQUITABLE DISTRIBUTION OF NATIONAL INCOME
SSIs help equitable distribution of national income because of 2
reasons:
a) Ownership of SSI is more widespread than large-scale industries.
b) SSIs possess large employment potential.
8. CONTRIBUTION TO EXPORTS AND
INDUSTRIAL OUTPUT
45%-50% of the Indian Exports is being contributed by SSI Sector.
Direct exports from the SSI Sector account for nearly 35% of total exports.
It is estimated that small scale industrial units contribute around 15% to
exports indirectly.
The exports from SSI sector has been clocking excellent growth rates
mostly fuelled by the performance of garment, leather and gems and
jewellery units from this sector.
No. of industrial units has grown from 23.9L in 93-94 to 118. 59L in 0405. Output has increased from 241,648 cr in 93-94 to 4,18,263 cr in 0405.
9. LESS INDUSTRIAL DISPUTES
Do not face problem of frequent strikes and lockouts. Hence
no loss of man-days and output in SSIs.
THANK YOU
