In Indian economy small-scale and cottage industries occupy an important place, because of their employment potential and their contribution to total industrial output and exports. The small-scale industries sector plays a vital role in the growth of the country. It contributes almost 40% of the gross industrial value added in the Indian economy. Small Scale Industries (SSI) facilitates the tapping of resources for productive purposes with minimum amount of capital investment, which in turn helps to strengthen the industrial structure of a nation. SSIs existed in India for a long time in various sectors and contributed significantly in bringing down regional imbalance; generating employment opportunities, output, and exports; fostering entrepreneurship; in accelerating economic development. In most of the developing countries like India, Small Scale Industries (SSI) constitutes an important and crucial segment of the industrial sector. They play an important role in employment creation, resource utilisation and income generation and helping to promote changes in a gradual and phased manner. They have been given an important place in the framework of Indian planning since beginning both for economic and ideological reasons. Defining small-scale industry is a difficult task because the definition of small-scale industry varies from country to country and from one time to another in the same country depending upon the pattern and stage of development, government policy and administrative set up of the particular country. 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. 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. It is also providing Raw materials, loan facilities, electricity, water-supply, transport facilities, exemption from taxes, subsidies and opportunities for sale of goods.
Few objectives or aims of Small Scale Industries:
Reduce the number of imports from other countries.
Create more employment opportunities with less investment.
Growth in demand in the domestic market size due to overall economic growth.
Remove economic backwardness of rural and less developed regions of the economy.
Increasing Export Potential for Indian products.
Mobilise and ensure optimum utilisation of unused resources of the capital and skill.
Improve standard of living of people.
Ensure more equitable distribution of national income and wealth.
Adopt latest technology aimed at producing better quality products at lower costs.
Work intensively for the starting of new Small Scale Industries in the District.
Help in obtaining the various types of assistance including technical and financial offered by State and Union Governments for the development of Small Scale Industries.
India has traditionally always had a very vibrant and competitive SSI. The small scale industries also play an important role in removing regional disparities. The industrial development in a backward area can only be achieved by the rapid development and promotion of small scale industries. Small Scale industry plays a major role in India’s present export performance. The biggest advantage of small scale industries is that they create less harm to the environment and generate less pollution. If they use effluents then its quantity is limited that can be easily disposed after every use. Just because of limited strength they manage things beautifully and generally follow all related rules and regulations meant by the Government for them. There are many kinds of benefits of the small scale industry, such as:
Self Employment: The small producer can himself supervise the minuets details of the business. Self employed is usually straightforward. If you run your own small business or work for a variety of clients and are able to choose when you work and who for, you are almost certainly self employed. Whether you're running your own business or working as an independent contractor, you'll soon realize that working for yourself isn't just another job, it's a way of life. Being your own boss means that you'll be in control of all of the decisions affecting your working life. You'll decide on your business plan, your quality assurance procedures, your pricing and marketing strategies--everything. You'll have job security; you can't be fired for doing things your way. As you perform a variety of tasks related to your work, you'll learn new skills and broaden your abilities.
Personal Attention to Customers: The small-scale producer has certain advantages over the large business. He can give personal attention to every detail. He can look after his customers and employees personally. His management is much more economical. The main advantage of Small Scale industries is that in this a company proprietor itself can make communication and contact with the employees of the company. Not only care but he can talk to them and try to find out about their problems.
Improves the entrepreneur skill of people: Entrepreneurial skills assist Small scale industries generate growth and development of new ventures in developing economies. At the entrepreneurship development level, a key role of the programme is to develop tools and programmes that deal with the long term effects of entrepreneurial culture. The best thing about entrepreneurship is the fact that it can’t be learned within the four walls of school. Real entrepreneurial skills are picked up on the streets. It’s a kind of practical thing.
Better industrial relations: The small scale industries are maintaining better industrial relations between employers and employees and thus can lessen the frequency of industrial disputes. There is hardly any strikes and lock out in these industries due to good employee-employer relationship. Of course, increase in number of units, production, employment and exports of small- scale industries over the years are considered essential for the economic growth and development of the country.
There are numerous opportunities in favour of the small-scale industries which justify the rationale of small-scale industry development. Small-scale industries have a great potential to create immediate large-scale employment opportunities which is essential for solving widespread unemployment problems of underdeveloped nations. If you would still want to go ahead with setting up your small scale business in India. This is not to say that India isn’t a favourable place for business. As a matter of fact, you can make loads of returns of investment in India.
Opportunities of Small Scale Industry:
Less Capital Intensive
Manufacturing, Servicing & repairing
Extensive Promotion & Support by Government
Reservation for Exclusive Manufacture by small scale sector
Project Profiles
Funding - Finance & Subsidies
Machinery Procurement
Raw Material Procurement
Manpower Training
Technical & Managerial skills
Tooling & Testing support
Reservation for Exclusive Purchase by Government
Export Promotion
Wholesale business
Growth in requirements for ancillary units due to the increase in number of greenfield units coming up in the large scale sector. Small industry sector has performed exceedingly well and enabled our country to achieve a wide measure of industrial growth and diversification.
Small scale industries have a large contribution in the growth of an economy. If we take example of India, the fastest growing economy in the world, the small scale ventures have gained a huge success quotient. Not only these enterprises produce export quality goods, they have also created thousands of job opportunities as well. A small entrepreneur has to follow certain procedure to set up his unit. A large number of environmental factors such as economic, political, legal, social factors, etc. The entrepreneur should have complete knowledge of men, material, machinery, market, and products. A number of formalities like approval and clearance from government departments are to be completed before setting up an enterprise. The process of starting a new business venture is embodied in the entrepreneurial development process.
The process can be classified into some steps:
1. Selection of Industry type: Selection of a suitable place for an industry is the key to success. Before beginning the process of starting a small scale industry, however, there is one important decision that must be made: where to start the business. Don’t choose an industry based on trends, statistics or some list of hot start-ups. The industry should be decided according to the proximity to sources of land, labour, raw materials, power transport, consumptions of centers, and availability of infrastructure, necessary skills and in surrounding areas and availability of incentives. This is extremely important. Usually, small-scale entrepreneurs are found to have a predetermined location.
2. Selection of the Product: After choosing the form of the business organisation the next start up problem is the choice of the particular product or service to be manufactured by the firm. In India, the present policy of encouraging growth of small scale industries is based on several promotional measures, one of which is reservation of products for exclusive manufacture in the small scale sector. Study similar products available in the market that can be probable competitors. Analyze them as regards their utility, quality and cost. Decide the product that you are going to manufacture, on the basis of:-
Financial implication involved
Technical knowhow available
Experience in the line, etc.
3. Market Survey: Markets in the developing countries are characterized to a large extent by the very limited purchasing power of the average consumer. A wide range of consumer goods vie for the buyer's money and preference, which is more often oriented to the cheapest. In turn, the enterprises compete to produce at the lowest cost in the market, sacrificing the quality aspect. Marketing strategies serve as the fundamental underpinning of marketing plans designed to fill market needs and reach marketing objectives. Plans and objectives are generally tested for measurable results. The aim of market survey is to find out all the relevant economic and social facts about the markets in which the manufacturers, goods will be sold. The following points are of utmost importance while making market survey:
Demand for products in the product.
Selling method to be adopted.
Possible new markets for the products.
Comments on consumers for the product.
To see that whether existing size, quality and design suit the customers or not.
4. Arrangement of Machinery and Technology: Once the firm has decided on the foremost issues of which product it wants to produce and the location of the industry, the next important step is to select appropriate technology and machinery to produce the same. In addition to this, the source of raw material has to be decided upon.
While choosing the process technology, the following considerations are essential:-
The level of skilled workers or complex machines required by the process.
The quantity of water and / or power required.
If any process or product patent is needed in order to utilize the selected process technology.
Any special Pollution or Environmental regulation is to be followed.
The appropriateness of the technology to the Indian environment and conditions.
5. Finance requirement: An entrepreneur requires a continuous flow of funds not only for setting up of his/ her business, but also for successful operation as well as regular up gradation/ modernisation of the industrial unit. One needs money to make money. Finance is the lifeline of business. A business firm requires finance to commence its operations, to continue its operations and for its expansion and growth. Sources of Finance for Small Scale Industries: Traditional and Modern Source!
Traditional source: An important traditional source of finance is the moneylender. He predominates in the rural areas, and is of some significance in urban areas also.
Modern source: As for modem sources are concerned, there are several institutions in the field. To begin, with one may mention those almost exclusively meant for small industries (and also medium Industries).
The financial plans of an enterprise should be formulated by taking into consideration the following factors:-
· The financial objectives of the company
· Nature and size of the business
· The image and credit-worthiness of the enterprise
· Growth and expansion plans
· Capital market trends
· Government regulations
6. Marketing: There is keen internal competition. Consumers have become entrepreneur export his products. Some of the factors which contribute to the marketing problems of the small scale industry in recent days have been identified.
Increasing competition from within the small scale sector as well as from large industries with established brand names and marketing setup.
Consumer awareness, even in rural and semi urban areas, for quality goods.
The need to set up distribution networks for reaching out widely dispersed markets.
Inability of the SSI units to exploit the export markets.
Thus, marketing is demanding greater attention not only from industrialists especially of the small scale sector but also from our planners and economists. The strength of the small scale industry sector lies in its improved ability to compete with quality products in the world market which in turn depends on the health of the industry in India.
