Table of Contents
What is Small Scale Industrial SSI?
Small Scale Industries (SSIs), also referred to as Small Scale Enterprises (SSEs), are industrial businesses that operate on a relatively modest scale in terms of production, capital investment, and workforce compared to larger industrial enterprises.
These small-scale industrial units are often characterized by their limited size, lower production capacities, and localized operations.
Definition of Small Scale Industrial
These are the following definitions of small scale industrial from 1950 to 2000:
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According to the Fiscal Commission 1950: “A unit operation mainly with hired labor usually 10 to 50 hands.”
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According to Small Scale Industries Board 1955: “A unit employing less than 50 persons if using power and less than 100 without the use of power and with a capital investment not exceeding Rs. 5 lakhs.”
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According to Ministry of Commerce and Industry 1960: “An industrial unit with a capital investment of not more than Rs. 5 lakhs irrespective of the number of persons employed.”
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According to Ministry of Commerce and Industry 1966: “An undertaking having a capital investment in plant and machinery of not more than 7.5 lakhs and Rs. 10 lakhs in case of ancillary units.”
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According to the Government of India 1975: “An undertaking having a capital investment of not more than Rs. 10 lakhs and Rs. 15 lakhs in case of ancillary units.”
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According to the Government of India 1980: “An undertaking having an investment in plant and machinery of not more than 20 lakhs and Rs. 25 lakhs in case of ancillary units.”
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According to the Government of India 1985: “An undertaking having an investment in plant and machinery of not more than 35 lakhs and Rs. 45 lakhs in case of ancillary units.”
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According to the Government of India 1991: “An undertaking having an investment in plant and machinery of not more than 60 lakhs and not more than 75 lakhs in case of ancillary units.”
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According to the Government of Indi 1997: “An undertaking having an investment in plant and machinery of not more than Rs. 3 crores.”
- According to the Government of India 2000: “An undertaking having an investment in plant and machinery of not more than Rs. 1 crores.”
It is evident from the above definitions that there was an upward revision in the investment limit on plant and machinery in small scale sector from Rs. 5 lakhs to Rs. 3 crores over the years but this limit has been reduced from Rs. 3 crores to Rs. 1 crore in the year 1999- 2000.
The Small Scale Industrial Sector emerged as a dynamic and vibrant sector of the economy during the eighties. At the end of the Seventh Plan period, it accounted for nearly 35 percent of the gross value of output in the manufacturing sector and over 40 percent of the total exports from the country.
It also provided employment opportunities to around 12 million people. The primary objective of the Small Scale Industrial Policy during the nineties would be to impart more vitality and growth-impetus to the sector to enable it to contribute its mite fully to the economy, particularly in terms of growth of output, employment, and exports.
The sector has been substantially delicensed. Further efforts would be made to deregulate and bureaucratize the sector with a view to removing all fetters on its growth potential, reposing greater faith in small and young entrepreneurs. All statutes, regulations, and procedures would be reviewed and modified, wherever necessary, to ensure that their operations do not militate against the interests of the small and village enterprises.
Features of Small Scale Industries
The following are the features of small scale industries:
- Ownership
- Management and Control
- Gestation Period
- Area of Operation
- Technology
- Resources
- Dispersal of Units
- Flexibility
Ownership
Ownership of a small-scale unit is with one individual in sole proprietorship or it can be with a few individuals in partnership.
Management and Control
A small-scale unit is normally a one-man show and even in the case of a partnership the activities are mainly carried out by the active partner and the rest are generally sleeping partners. These units are managed in a personalized fashion. The owner is actively involved in all the decisions concerning business.
Gestation Period
The gestation period is the period after which teething problems are over and the return on investments starts. The gestation period of small-scale units is less as compared to large-scale units.
Area of Operation
The area of operation of small-scale units is generally localized catering to the local or regional demand. The overall resources at the disposal of small-scale units are limited and as a result of this, it is forced to confine its activities to the local level.
Technology
Small Industries are fairly labor intensive with comparatively smaller capital investment than large units. Therefore these units are more suited for economies where capital is scarce and there is an abundant supply of labor.
Resources
Small-scale units use local or indigenous resources and as such can be located anywhere subject to the availability of these resources like labor and raw materials.
Dispersal of Units
The development of small-scale units in rural and backward areas promotes more balanced regional development and can prevent the influx of job seekers.
Flexibility
Small-scale units as compared to large-scale units are more change-susceptible highly reactive and responsive to socio-economic conditions. They are more likely to adopt changes like new methods of production, introduction of new products, etc.
Objectives of Small Scale Industries
The small-scale sector can stimulate economic activity and is entrusted with the responsibility of realizing the following objectives of small scale industries:
- To create more employment opportunities with less investment.
- To remove the economic backwardness of rural and less developed regions of the economy.
- To reduce regional imbalances.
- To mobilize and ensure optimum utilization of unexploited resources of the country.
- To improve the standard of living of people.
- To ensure equitable distribution of income and wealth.
- To solve the unemployment problem.
- To attain self-reliance.
- To adopt the latest technology aimed at producing better quality products at lower costs.
FAQs Section
What is the definition of small scale industrial?
According to the Government of India 2000: “An undertaking having an investment in plant and machinery of not more than Rs. 1 crores.” called small scale industrial.
What are the features of small scale industries?
Ownership, Management and Control, Gestation Period, Area of Operation, Technology, Resources, Dispersal of Units, and Flexibility, are the features of small scale industries.
