Introduction
Ministry of Micro, Small & Medium Enterprises, Govt. of India has defined small scale industries as - An industrial undertaking in which the investment in fixed assets in plant and machinery whether held on ownership terms on lease or on hire purchase does not exceed Rs 10 million (Subject to the condition that the unit is not owned, controlled
or subsidiary of any other industrial undertaking).
There is also the concept of small scale service industries in it. And according to Ministry of Micro, Small & Medium Enterprises, Govt. of India - SSSBEs industry related service/ business enterprises with investment upto Rs 500,000 in fixed assets, excluding land and building, are called Small Scale Service/ Business Enterprises (SSSBEs). This limit has been raised to Rs.1 million w.e.f. September 2000.
Similarly ancillary industrial undertakings has been defined as - An industrial undertaking which is engaged or is proposed to be engaged in the manufacture or production of parts, components, sub-assemblies, tooling or intermediates, or the rendering of services and the undertaking supplies or renders or proposes to supply or render not less than 50 per cent of its production or services, as the case may be, to one or more other industrial undertakings and whose investment in fixed assets in plant and machinery whether held on ownership terms or on lease or on hire-purchase, does not exceed Rs 10 million.
Characteristic Features of Small Industries
· Less capital intensive.
· More labor intensive.
· Government support and protection.
· Exclusive manufacturing rights in case of reserved items.
· Do not provide full time employment in case of traditional village industries.
· Handicraft and handloom sector being the most productive and contributing in case of traditional village industries.
Role of Small Industries in Indian Economy
A significant feature of Indian economy since independence is the rapid growth of the small industry sector. The small-scale industrial sector plays a pivotal role in the Indian economy in terms of employment and growth. It has recorded a high rate of growth since independence in spite of the stiff competition from the large scale sector. This phenomenon becomes remarkable as this growth was possible even when it did not re
ceive proper encouragement and support from the Government. This can be substantiated by the fact that the number of registered units went up from mere 16,000 in 1950 to a gigantic 33, 70,000 units in 2001. Not just that. During the last few decades or so, the small industry sector has progressed from production of simple consumer goods to manufacturing sophisticated and technologically advanced products like electronics items.
Output and Employment Generation
The Ministry of Small Industries in Economic Survey (2004-05) recorded that the total number of SSI units has increased from 79.6 lakhs in 1994-95 to110.1 lakhs in 2002-03.
This shows an annual average growth rate of 4.1%.
Also their total production (at 1993-94 prices) increased from Rs. 1, 09,116 crores in 1994-95 to Rs. 2, 10,636 crores in 2002-03 clocking an average annual growth rate of 8.6%. Incidental to the increase in SSI units, employment figure rose from 191.4 lakhs in 1994-95 to 261.4 lakhs in 2002-03, recording an annual growth rate of 14.5%.
The value of exports skyrocketed from a mere Rs. 1,643 crores in 1980-81 to a record high figure of Rs. 86, 013 crores in 2002-03. Substantial increase in exports were observed in case of exports from non-traditional exports like ready made garments, tiles, food products, marine products etc.
From the above facts and figures it can be concluded that the growth rate of small industries has been faster in terms of output, employment and exports. This rapid growth of small industries has a great relevance in our national economic policies. The growth of small sector improves the production of non-durable consumer goods meant for mass consumption. Thankfully it acts as an anti-inflationary force. So, if a big push is given to the small sector, it can even become a stabilizing factor in our capital-deficient economy by greater output and more employment generation.
SWOT (Strength, Weakness, Opportunity, Threat) Analysis of Small Industries
Strengths
As we have observed that since independence Small Industry sector in India has grown by leaps and bounds which is remarkable given the plethora of constraints if faces. Following are some of the strengths which have been identified: -
· Low investment to start with.
· Lesser technical sophistication.
· Labor intensive as India has large man power.
· Support from Govt. agencies and other donor agencies.
Weaknesses
Small scale units are constantly marred by various bottlenecks in their way to prosperity in comparison to large units. Following are some of the reasons which have been identified: -
· Lack of provisions for credit and finance.
· Low technical and managerial know-how.
· Lack of marketing facilities.
· Underutilization of factors of production and plant capacity.
Opportunities
As we saw that Small Sector has high potential to flourish and grow further. The rapid growth in the past and promising future throws open the doors of prosperity in this sector also. Following are some of the reasons identified for the same: -
Ministry of Micro, Small & Medium Enterprises, Govt. of India has defined small scale industries as - An industrial undertaking in which the investment in fixed assets in plant and machinery whether held on ownership terms on lease or on hire purchase does not exceed Rs 10 million (Subject to the condition that the unit is not owned, controlled
or subsidiary of any other industrial undertaking).There is also the concept of small scale service industries in it. And according to Ministry of Micro, Small & Medium Enterprises, Govt. of India - SSSBEs industry related service/ business enterprises with investment upto Rs 500,000 in fixed assets, excluding land and building, are called Small Scale Service/ Business Enterprises (SSSBEs). This limit has been raised to Rs.1 million w.e.f. September 2000.
Similarly ancillary industrial undertakings has been defined as - An industrial undertaking which is engaged or is proposed to be engaged in the manufacture or production of parts, components, sub-assemblies, tooling or intermediates, or the rendering of services and the undertaking supplies or renders or proposes to supply or render not less than 50 per cent of its production or services, as the case may be, to one or more other industrial undertakings and whose investment in fixed assets in plant and machinery whether held on ownership terms or on lease or on hire-purchase, does not exceed Rs 10 million.
Characteristic Features of Small Industries
· Less capital intensive.
· More labor intensive.
· Government support and protection.
· Exclusive manufacturing rights in case of reserved items.
· Do not provide full time employment in case of traditional village industries.
· Handicraft and handloom sector being the most productive and contributing in case of traditional village industries.
Role of Small Industries in Indian Economy
A significant feature of Indian economy since independence is the rapid growth of the small industry sector. The small-scale industrial sector plays a pivotal role in the Indian economy in terms of employment and growth. It has recorded a high rate of growth since independence in spite of the stiff competition from the large scale sector. This phenomenon becomes remarkable as this growth was possible even when it did not re
ceive proper encouragement and support from the Government. This can be substantiated by the fact that the number of registered units went up from mere 16,000 in 1950 to a gigantic 33, 70,000 units in 2001. Not just that. During the last few decades or so, the small industry sector has progressed from production of simple consumer goods to manufacturing sophisticated and technologically advanced products like electronics items.Output and Employment Generation
The Ministry of Small Industries in Economic Survey (2004-05) recorded that the total number of SSI units has increased from 79.6 lakhs in 1994-95 to110.1 lakhs in 2002-03.
This shows an annual average growth rate of 4.1%.Also their total production (at 1993-94 prices) increased from Rs. 1, 09,116 crores in 1994-95 to Rs. 2, 10,636 crores in 2002-03 clocking an average annual growth rate of 8.6%. Incidental to the increase in SSI units, employment figure rose from 191.4 lakhs in 1994-95 to 261.4 lakhs in 2002-03, recording an annual growth rate of 14.5%.
The value of exports skyrocketed from a mere Rs. 1,643 crores in 1980-81 to a record high figure of Rs. 86, 013 crores in 2002-03. Substantial increase in exports were observed in case of exports from non-traditional exports like ready made garments, tiles, food products, marine products etc.
From the above facts and figures it can be concluded that the growth rate of small industries has been faster in terms of output, employment and exports. This rapid growth of small industries has a great relevance in our national economic policies. The growth of small sector improves the production of non-durable consumer goods meant for mass consumption. Thankfully it acts as an anti-inflationary force. So, if a big push is given to the small sector, it can even become a stabilizing factor in our capital-deficient economy by greater output and more employment generation.
SWOT (Strength, Weakness, Opportunity, Threat) Analysis of Small Industries
Strengths
As we have observed that since independence Small Industry sector in India has grown by leaps and bounds which is remarkable given the plethora of constraints if faces. Following are some of the strengths which have been identified: -
· Low investment to start with.
· Lesser technical sophistication.
· Labor intensive as India has large man power.
· Support from Govt. agencies and other donor agencies.
Weaknesses
Small scale units are constantly marred by various bottlenecks in their way to prosperity in comparison to large units. Following are some of the reasons which have been identified: -
· Lack of provisions for credit and finance.
· Low technical and managerial know-how.
· Lack of marketing facilities.
· Underutilization of factors of production and plant capacity.
Opportunities
As we saw that Small Sector has high potential to flourish and grow further. The rapid growth in the past and promising future throws open the doors of prosperity in this sector also. Following are some of the reasons identified for the same: -
· Utilization of IT revolution.
· Competitive loan market.
· Exploration of new markets and export zones.
· Policy of reserved items for SSI’s.
In order to maintain its growth and performance, the small industry sector needs to identify the threats which it can face in future and take care of threats it is facing currently.
· Competition from large sector in case of unreserved items.
· Market liberalization.
· Improper implementation of Govt. initiatives.
· Lack of awareness in small industry sector about negative impact of WTO implications.
Conclusion
As far as the comprehensive and equitable growth of economy is concerned it is clear that Small Industries have to play a major role. It will lead to trickle down effect benefiting people, which were hitherto untouched by the growth. It is also imperative from the perspective of rural economy as most of these industries are located in rural and backwar
d areas. Harnessing its inherent strengths and realizing opportunities it can become stronger also keeping in mind its inherent weaknesses and threats thereby contributing to national development. As these words of P.C.Mahalanobis, one of the great architects of development models of our country aptly underline the importance of Small Industries.“In view of the meagerness of capital resources there is no possibility, in the short run for creating much employment through the factory industries. Now consider the household or cottage industries. They require very little capital. About six or seven hundred rupees would get an artisan family started. With any given investment, employment possibilities would be ten or fifteen or even twenty times greater in comparison with corresponding factory industries.” – P.C.Mahalanobis
