TITLE OF THE STUDY

“A STUDY ON SMALL SCALE INDUSTRIES”

ABSTRACT
Small scale sector plays an important role in the development of every country. In a
developing country like India this sector is very essential. Since, independence small scale
units have made significant progress in India. After agriculture small scale sector provides
highest employment opportunities to people, mainly who are local residents. Most of the
small scale industries are present in local residential area. Small scale industry are the
industries in which the manufacturing, production and rendering of services are done on a
micro scale basis, this industry investment does not exceed RS.10crore and the annual
turnover will not be crossing 50 crores.
In this paper we will be looking briefly into the Small Scale Industry: Types & Importance,
Growth of the SSI, Financial Sources, Benefits of Small Scale Industries. Although we will
also be looking into the Drawbacks which the small scale industries mainly faces.

The New small-scale industrial policy which will be briefly looked into as per the facts and
its benefits till now, which also includes briefing of its progress and deficit.

Keywords: Introduction, Importance, Growth of SSI, Finance, Benefits & Drawbacks, New
small scale industrial policy.
 CHAPTER 1

INTRODUCTION
1.1. INTRODUCTION OF SMALL SCALE INDUSRIES

Small Scale industries are the industries which does its production, other services &
manufacturing in micro scale basis or tiny. Some of the examples for small scale industries
are:

Chocolate manufacturing Industry

Toys manufacturing Industry

Paper or Pen manufacturing industries.

Small Scale Industry play a very crucial role in social and economic development of most of
the Asian Country. These industries use their investment on their machinery mainly & most
probably their investment will not have any extra unnecessary things. Their investment does
not exceed 10 crore.

Now we will look into various types of Small Scale Industries,

There are 10 Small Scale Industries which carry out Goods and services business, they
are:

1. Small Scale Industry Before 2006:

According to the MSMED Act, micro or small scale industries are those whose investments
are fixed and don’t exceed one crore .The micro-enterprises were solely involved within the
manufacturing, export improvements, and modernization and used a complete amount of
about Rs.5 crore.

2. Ancillary Small Scale Industry:

Large enterprises manufacture finished products from the tools provided by the ancillary
industries. The ancillary small-scale industries (SSI) are the manufacturers for medium or
large sized enterprises producing machinery components and other standard products.
Ancillary Industries supply at least 50% of their products to other large or medium-sized
business or the parent unit.

3. Export Oriented Industrial Units:

The export oriented industrial unit is pretty almost like the ancillary industries. However
these export-oriented industries export over 50% of their products to other companies.These
industrial units get accessed to varied grants and bonuses from the Indian Government.

4. Small Scale Industries Run by Women:

The small-scale Industries owned by women with at least a share capital of 51% are eligible
to opt for several grants from the government like low interest loans other perks.

5. Village industries:

These are the industries located within the rural regions and don’t belong to the organized
sector. Also these produce goods and services without the consumption of electricity. The
fixed investments on workers laborers or the other equipment doesn’t exceed Rs.50000.

6. Micro Business Enterprises or industries:

The industries whose total expenditure or investment on equipment and plant doesn’t
exceed Rs.1 lakh are referred to as micro business industries.

7. Small Scale Services and Business:

The small-scale services and business unit Fixed investment doesn't exceed rupees 10.
Some examples of this unit include beauty parlour, dry cleaning, industrial testing
labs, marketing and ads agencies, auto repairs, xerox centre, photography and many
more.

8. Tiny Industrial Units:

These are the small-scale enterprises with a complete planned expenditure of but
rupees 25 lack.

9. Cottage Industries:

The cottage industries are also popularly referred to as traditional or rural industries
and don't cover the capital investment criteria. These are classified supported the set
of features as mentioned below.

 The cottage industries use private resources and employee laborers with the
locality or family.
 It has less capital investment and manufacture simple products.
  They use meagre and native technologies.

10. Trading Units:

The trading units are the small units of retailers or wholesaler, who receive in bulk
commodities and supply to the various other units.

1.2 THEORETICAL BACKGROUND OF THE STUDY

Marketing Promotion Schemes for Small Scale Industries

There are 7(seven) Marketing Promotion Schemes for SSI, these schemes are given or done
for the development of SSI. Those are as follows:

 International Cor-operation:
This scheme mainly focuses on the facilitation of delegations & upgradation
for buyer and seller, to which they can trade or do the business with the
foreign countries and states.
 Marketing Assistance Scheme:
This scheme mainly focuses on allowing for arranging overseas campaigns,
exhibitions & other promotional exertion.
 Procurement and Marketing Support Scheme:
This scheme is focused on aiming at perfecting the domestic requests and
promotion of new domestic request accessibility.
 Entrepreneurship & Skill Development Programme:
This scheme is focused on the youth of the nation or the generation who are
keen in establishing the small-scale industry. This scheme supports and guides
them on the particular interest they show.
 Assistance to Training Institutions:
This scheme is focused on supporting capital investment to the training
institutions to organise various training workshops, skill development classes
etc to the persons or people who are interested on the small-scale industries
and the present owners also to develop their SSI.
 Infrastructure Development Programme:
 This scheme also has one more sub scheme under this called as “Micro &
Small-Scale Enterprises Cluster Development”. Its main focus is to aid the SSI
with financial support for their development and helping them to structure up
the capital and infrastructure of the centres.

Administrative Bodies for Small-Scale Industries

To encourage the Small-Scale Industries establishment and help them develop and sustain
themselves in the market, there are may various administrative bodies came into function to
help them in the above category. With the help of Government there are some private bodies
also, but now we will look into some of the administrative bodies which are been established
by the government itself in support of SSI:

 Office of Development Commissioner (MSME)

 Coir Board
 National Small Industries Corporation Limited (NSIC)
 National Institute for Micro, Small and Medium Enterprises (NIMSME)
 Khadi Village Industries Commission (KVIC)

Role of Small-Scale Industries/Enterprises in the Indian Economy & Their

Objectives

Small scale enterprises play a big role within the nation’s development. It supports colossal
employment, high production rate, make in India scheme, and contributes to exports. One of
the many features of those small-scale industries is that it meets the wants of regional people
and contributes to public welfare.

• As these small-scale industries use minimal technology, it becomes the primary source of
employment. In a developing country like India, these industries are the first source of
employment.

• Do you know the small-scale industries’ products and services contribute almost 40% of the
entire nation’s goods production? Hence, these are the backbone of the Indian economy.
• As these small-scale enterprises use regional resources, they are a perfect example of the
Make in India initiative. They primarily specialize in the assembly using Indian goods and
export worldwide.

• The micro industries meet the necessity of the local public. Hence, these industries are the
first reason for social growth and development.

Small-scale industries (SSIs) play a crucial role in ensuring the progress of developing
countries like India. The following points highlight their contribution.

(1) Market share: SSIs make up 95 percent of the industrial units in India. They contribute
about 40 percent of the “gross industrial value added” and 45 percent of India’s total exports.

(2) Employment generation: As SSIs use labor-intensive production techniques, they need a
greater employment generation potential than large industries. Moreover, the talents required
to perform jobs in SSIs are usually not very specific, which further increases their scope for
generating employment.

(3) Wide selection of products: Small-scale units produce an outsized sort of consumer
products, like stationery items, safety matches, handicrafts, vegetables and processed food.
Besides, SSIs also produce a couple of items by using technology, like calculators, televisions
and engineering goods.

(4) Regional balance: SSIs produce simple products and use basic technology. In addition,
these industries don't require heavy capital investment, and thus, they will be found out by
anyone anywhere across a rustic. Small units not only benefit the actual region where it's
established but also help reduce the regional disparities in industrial development among
different regions of a rustic.

(5) Customized goods: Small industrial units adapt perfectly to specific needs of consumers.
As SSIs use simple and highly flexible production techniques, they will provide their
customers with goods best suited to the customers’ tastes and preferences.

IMPORTANCE

Importance of Small-Scale Enterprises:

In simple terms the importance of the study of Small-Scale Industries (SSI) can be listed in
the below following points:

 New Opportunities

 Increase in the Exports

 Increase in production and manufacturing units

 New opportunities invite increase in employment rate

 Advancement in Welfare.

Every small-scale, medium scale industries or enterprises plays a big part in the Indian
Country Economy Market. From providing opportunity for employment to crores of people,
it has the added benefit of minimal capital conditions. The government also offers several
duty/guided benefits to SSI for this purpose.

Likewise, they can establish their enterprise both in urban and rural area. Small Scale
Diligence have been suitable to contend with large-scale diligence and transnational pots
because of this. Due to reasons like these, they're of great significance.

The following are some specific places that SSIs play in the Indian Economy Marketplace

(1) Increase in production and manufacturing units:

India is one of the world’s fastest growing husbandry in the world. Accordingly, its
product affair is massive. It's material to note that SSIs contribute nearly 40 of India’s
gross artificial value. These produce goods and services worth overs. 40 lakhs for every
investment of Rs. 10 lakhs. Likewise, the value addition in this affair increases by over
10. Then another intriguing statistic about small scale enterprise. The number of Small-
Scale Diligence in India increased from around 8 lakhs in 1980 to over 30 lakhs in 2000.

This figure has grown indeed more in recent times owing to the government’s “Ease of
Doing Business” programs. As a result of this, the total artificial product affair rose
extensively in the last many times. SSIs are, thus, explosively responsible for the growth
of India’s frugality.
(2) Increase in the Exports:

Piecemeal from producing further goods and services, SSIs have been suitable to export
them in large figures as well. Nearly half of India’s total exports these days come from
small-scale businesses. 35 of the total exports regard for direct exports by SSIs, while
circular exports quantum to 15. Indeed, trading houses and merchandisers help SSIs export
their goods and services to foreign countries.

(3) New opportunities invite increase in employment rate:

It's important to note originally that Small Scale Diligence employs further people than all
diligence after husbandry. Nearly four persons can get full employment if Rs. 10 lakhs are
invested in fixed means of small-scale sectors. Likewise, SSIs employ people in civic as
well as pastoral areas. Accordingly, this distributes employment patterns in all corridors of
the country and prevents severance extremity.

(4) New Opportunities:

Small- scale diligence offer several advantages and openings for investments. For
illustration, they admit numerous duty benefits and rebates from the government. The
occasion to earn gains from SSIs are big due to numerous reasons.

Originally, SSIs are less capital ferocious. They indeed admit fiscal support and backing
fluently. Secondly, earning force and raw accoutrements is also easier for them. Indeed,
the government’s import programs favor them heavily.

(5) Advancement in Welfare:

Piecemeal from furnishing profitable openings, Small Scale Diligence play a large part
in advancing weal measures in the Indian frugality as well. Many poor and marginalized
sections of the population depend on them for their food.

These enterprises not only reduce poverty and income inequality, but they also raise
norms of living of poor people. Likewise, they enable people to make a living with
quality.
NEED TO STUDY THE TOPIC

Small scale diligence is important because it helps in adding employment and profitable
development of India. It improves the growth of the country by adding Rural & Urban
area/location growth. Part of Small and medium scale enterprises are to help the government in
adding architectures and manufacturing industries/firms, reducing issues like pollution, slums,
poverty, and numerous development acts. Small scale manufacturing diligence and cabin
enterprises play a veritably important part in the profitable development of India.

If any quantum of capital is invested in small scale (SSI)enterprise, it'll help in reducing
severance in India and adding tone- employment. The assiduity is a sector in which the product
of goods is a member of the frugality. Let us learn further about the significance of small-scale
diligence and how SSI helps in developing the country.
 CHAPTER – 2

REVIEW OF LITERATURE AND RESEARCH DESIGN

REVIEW OF LITERATURE AND GAPS:

Financial Gaps:

Findings Author & Year

Small and medium enterprises face the Murthy (1980) & Yadav Vinod Kumar
problem of lending, financing and (2013)
marketing problem. SMEs are not following
the definite capital structure. Enterprises are
not having the adequate finance. Enterprises
in rural are unable to access credit from
financial institutions. Owners of these
enterprises do not have financial leverage
knowledge. Micro enterprises rely on
external sources. Small scale enterprises are
not maintaining the adequate financial
records also.

Shortage of liquid assets, not satisfactory Gangwal & 1990

debt equity ratio, delayed payment to
suppliers, problems in payment of
instalments are some of the financial
problems of MSMEs.

During early growth stages micro, small and Siddiqui & 2018
medium enterprises need timely and
sufficient capital. MSMEs rely on various
sources of finance. Various financial
problems are inadequate and non-timely
credit, limited knowledge and capital,
collateral security requirement, not
sufficient working capital, recovery from
debtors, for availing loan from financial
institutions excessive paper work is
required.

Other Various Gaps Listed Below:

Findings Author and Topic

Sources of/Lack of finance, Scarcity of raw Veerappan, N. and Sathish Kumar, D.

material, Underutilization of capacity, (2016) Impact of industrial policy on small
Unawareness of technology, Insufficient scale industries (SSI)
infrastructure, not well
equipment/unequipped, Marketing
problems, Unskilled manpower/labor,
Production problem, borrowing capital,
changing government policies, Risk taking
factor is less in newcomers.

Small Enterprises play a vital part in the Singh, H., Singh, R. and Singh, T. (2015)
profitable and social development of the Small business management challenges and
country. It also plays a crucial part in the road of opportunities: an Indian prospective.
development of the frugality with its
effective, effective, flexible and innovative
entrepreneurial spirit. Small Enterprises
contribute nearly 8 of the country ‟ s GDP,45
of the manufacturing affair and 40 of the
exports. They give the largest share of
employment after husbandry. Its workers 60
million people, produce1.3 million jobs every
time. It produces further than quality products
for the Indian and transnational requests.

Finance is the key input for sustained growth Kadam, R. (2012) Financial management:
the key strategy for the Sustained growth of
of small scale sector and its accessibility be a
small scale industries in India.
matter of concern. The small scale industries
need both long run as well as short run credit.
The financial management plays a vital role
in the survival, growth and development of
these industries. In India, Small scale
industries account for 95 per cent of the
industrial units in the country. The
contribution of small industries to the
balanced regional development of India is
remarkable. SSIs can be extensively spread
 without any location and regional constraints.

STATEMENT OF PROBLEM:

Finance is the blood of organization without proper adequate funds and capital the
organization cannot function properly. Like wise finance is the main problem faced by the
most of the 90% SSI (Small-Scale Industries), Due to very bad and weak financial condition
the newcomers and the present entrepreneurs do not take up the risk & therefore thy lack in
the sufficient resources for the organization. So, they try to spend only on the raw materials
requirements.

Due to the financial condition the overall affected parts include employment rate, proper
management, administration, irregularity in supply of resources etc. As mentioned, finance is
the blood of any organization, we can hereby look that most of the problems arise due to this
& moreover no proper guidance given to function properly due to lack of knowledge is also a
problem.

SCOPE OF THE STUDY:

Small Scale Industries is an essential yield that represents countries economy

● The study implicates outside and the inborn factors and continues to help start-ups.

● It is an important area of research.

● The progress done on the small-scale industries in India will reveal all the factors of
small industries.

● This report will be useful to identify where the problem is arising in small scale
industries, so that prevention can be taken.

● We can also find the progress/positive results and the disadvantages/negative results
the small-scale industry is facing, including the facilities which the government is
providing them.
 ● It is also a very important fact that the small-scale industry should also implement the
facilities provided for them, we will have samples and examples of the following to
know the exact progress.

● This report is useful in the administration of the organization to know contentment

representatives’ levels and to take measures to develop effectiveness in particular
areas.

OBJECTIVES OF THE STUDY:

1. To understand practices of the small-scale industries in India

2. To know how small-scale industries work

3. To know the advantages and disadvantages of entrepreneur

To understand the correct scenario of small-scale industries

SAMPLING:

Sample Population: Persons are selected randomly.

Sample Size: Out of the total population, the sample taken among random people
from different areas across the countries.

Sampling Area: The research was conducted through online surveys using Google
forms.

Sample Method: The Sampling technique is chosen for this study is based on random
sampling. In a way that all the necessary aspects of the study are covered.

TOOLS FOR DATA COLLECTION:

1) Primary Data: The primary data was collected from the respondents by administering
an online structured questionnaire and also through observations, interviews and discussion
with the management team.

2) Secondary Data: Apart from primary data, the secondary data is being collected
through Textbooks, Journals from Library, Academic Reports, and Internet is used for the
study.

DATA ANALYSIS:

Data will be collected, organized and analysed with the help of tables, charts and other
relevant and required graphs. Interpretation will be from the data thus obtained and this will
then form the basis for inferences, and suggestions to better understand and conclude this
study.

LIMITATIONS OF STUDY:

 Lack of Internal information on functionality of small-scale industries.

 Most of Academic Resources are focused on one problem.