Monday, November 29, 2010

Entrepreneurship: Small Scale Industries ( SSI)

What is a small-scale industry?

An industrial unit in which the investment in fixed assets in plant and machinery does not exceed rupees one crore is said to be small scale industry. Such plant and machinery may be owned or obtained on lease – while calculating the investment in plant and machinery items like land, building and some equipments required for quality control, pollution control etc, Are excluded.

In ancient India there used to be several people who were producing varieties of goods and selling them.That profession was providing them the means of livelihood.Traditional small scale industries include Pot weaving,carpentry,knitting etc.Their lives were spent in a happy and smooth way.But with the on set of machines,all those professions have lost their value.Unemployment has grown in villages and towns.

Industries and factories are highly necessary in any country for producing goods on a large scale and make it economically prosperous.The surplus of goods can be exported to other countries and foreign exchange can be earned.The developed countries of foreign nations are enjoying foreign currency by making use of these industries.As majority of population in India are middle class and lower middle class people,these industries should be encouraged to increase in their standard of living.

Industries are of two types:
Large scale
Small scale
Large scale industries are the key industries of any country and they require large scale investment to the tune of crores of rupees,huge number of workers and higher facilities.Iron and steel,manufacturing of tools,medicines,chemicals,transport facilities like cars,trains,airplanes,ships come under large scale industries.
Small scale industries require less investment and small number of workers.Goods that are not produced by large scale industries can be manufactured by these small scale units.The state government have opened a separate wing for small scale industries unit.It is probing into the availability of raw materials at different places for the manufacture of such useful articles and is encouraging those persons who are interested in the respective fields to start such small scale industries.It is also providing Raw materials,loan facilities,electricity,water-supply,transport facilities,exemption from taxes,subsidies and opportunities for sale of goods.

  Small Scale and Ancillary Industries
Small scale industrial units are those engaged in the manufacture, processing or preservation of goods and whose investment in plant and machinery (original cost) does not exceed Rs.1 crore. These would, inter alia, include units engaged in mining or quarrying, servicing and repairing of machinery. In the case of ancillary units, the investment in plant and machinery (original cost) should also not exceed Rs. 1 crore to be classified under small-scale industry.
The investment limit of Rs. 1 crore for classification as SSI has been enhanced to Rs.5 crore in respect of certain specified items under hosiery, hand tools, drugs & pharmaceuticals, stationery items and sports goods by the Government of India.

Developing Country Entrepreneurs need small scale industries to drive their development.  The USA, the greatest industrial nation in the world, began its development with horse power, water power and low tech equipment, often made within the community at a blacksmith, woodworker, basket makers and other small scale industry.  These iron works, metal shops, led to industrial development.  
It was said of Americans with contempt by European royalty "They're just a nation of tinkerers". Tinkerers or people who often build their own small machinery.  When they purchased machinery, they immediately set out to improve them.  And that is why small scale machinery works in a developing country. Unlike high tech machinery, it is still reparable, upgradeable and modifiable by Third world entrepreneurs.
Small scale machinery and small scale industries have a wide variety of positives that lead them to be the needed mechanisms for sustainable development in Third World countries.  But small scale entrepreneurs need a source of knowhow they can afford.

Small scale industries are vital to economic development as they are more likely to become economically viable in a short time period & offer an incremental boost to the local economy.

They are also more likely to sustain operations over a longer time frame as they utilize a more community based sense of existence than some of the monolithic entities which will relocate causing unemployment & dissension.

Larger industries have become victims of their own largess in many cases & are unable to respond to changing times, & often don't have the ability to respond to the rapidly changing economic environment we now must adhere to.

Advantages of small scale industries

1.Self employment
2.Reduce the number of imports from other countries
3.Distribution of economic power.
4.Suitable especially for people in India
5.Improves the entrepreneur skill of people


1.No Technical awareness
Rural People cannot get the technical skills required to establish these industries
2.Unable to market the goods
3.Problem gathering raw materials

In my opinion,Small scale industries are one of the best ways of employment because establishment cost is less and profits are more.The most important thing is these industries are less affected by recession.

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