Small scale industries

At present the Small Scale Industry (SSI) constitutes a Very Important Segment of the Indian Economy & has emerged
as a Dynamic & Vibrant Sector of the Economy.
The Small Scale Industry Sector holds the Key to Economic Prosperity of the Indian Economy, Characterized by
abundant Labor Supply, Unemployment & Under Employment , Scarcity of Finance, Growing Modern Large Industries providing
scope for development of Ancillary Industries & so on. The Small Scale Industry has grown phenomenally during the last Six
Decades & has acquired a very prominent place in the Socio – Economic Development in the Country.

Objectives of Developing Small Enterprises :

Reasons for Developing Small Enterprises in India can be enumerated as follows :
1) To generate Large Scale Employment Opportunities for the Unemployed speedily with relatively Low Investment.
2) To Eradicate Unemployment Problem from the Country.
3) To encourage dispersal of enterprises to all over the country covering Rural Areas smaller towns & economically
backward regions.
4) To bring Backward Regions too in the mainstream of national development.
5) To promote balanced regional development in the Whole Country.
6) To ensure more equitable distribution of National Wealth & Income.
7) To encourage effective mobilization of Untapped Resources of the Country.
8) To improve Socio – Economic Conditions & Standard of Living of the people in the Country.
9) To seize the Vast Opportunities created for Small Enterprises due to Liberalization & Globalization policies of the
Govt of India.
10) To help earn Vital Foreign Exchange for the Country thro Exports of Goods / Services of Small Enterprises.
11) To bring more Revenue to the Central & State Govts by way of Taxes.

Various Policy Initiatives undertaken by the Central Govt & Various State Govts whether by way of Incentives or
protection, have helped the sector in acquiring the Status of a Major Contributor in the Growth Process .

The Process of Liberalization & Economic Reforms , since 1991, while creating Tremendous Opportunities for the
Growth of Small Scale Industrial Sector, have however thrown up new Challenges for the Sector. This changed
Industrial Scenario, has called for building Competitive Strengths, Improving Quality & Productivity, Introducing
Technology Up gradation, reducing Wastages & Rejections, Intelligent Use of Resources, Employing Modern Management
Techniques etc in order to withstand growing competition & for ensuring sustained growth.4

Concepts & Definitions of Small Scale Industry :

It Comprises a Variety of Undertakings.

These definitions generally relate to either the Capital Invested or people employed or both or any other relevant
criteria.
Classification & Definition of industries :
The earlier concept of Industries has been changed to Enterprises. Enterprises have been classified broadly into Two
Categories as Under :

1) Manufacturing Enterprises : Enterprises which are engaged in the Manufacture / Production of Goods pertaining
to any Industry are referred to as “Manufacturing Enterprises”.
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2) Service Enterprises : Enterprises which are engaged in providing /rendering of Services are referred to as
“Service Enterprises.”

I) Manufacturing Enterprises : They have been defined in terms of Investment on Plant & Machinery (Excluding Land &
Buildings) & further classified into 3 Categories as under :

a) Micro Enterprises : An Enterprise where the Investment on Plant & Machinery is upto Rs. 25 Lakh is referred
to as a “Micro Enterprise.”

b) small Enterprises : An Enterprise where the Investment on Plant & Machinery is above Rs. 25 Lakh upto Rs. 5
Crore is referred to as “Small Enterprise.”

c) Medium Enterprises : An Enterprise where the Investment on Plant & Machinery is above Rs. 5 Crore & upto Rs. 10
Crore is referred to as “Medium Enterprise.”

II) Service Enterprises : They have been defined in terms of their Investment in Equipment (excluding Land &
Building)

a)& further classified into 3 Categories as under :

1) Micro Enterprises : An Enterprise where the Investment in Equipment is upto Rs. 10 Lakh is referred to as “Micro
Enterprise.”

2) Small Enterprises : An Enterprise, where the Investment in equipment is above Rs. 10 Lakh & upto Rs. 2 Crore is
referred to as “Small Enterprise.”

3) Medium Enterprises : An Enterprise, where the Investment in Equipment is above Rs. 2 Crore & upto Rs. 5 Crore is
referred to as “Medium Enterprise.”

EmErgEncE OF SSI UnITS In india

Ssi pre independence:

Before Independence, the present small scale industry was meant to denote the village and the urban cottage
industry.
This group included a variety of industries ranging from manufacturing of Iron safes, locks, carpets, marble jigs,
baskets, hand-loom cloth and the like.

In fact, at that time the term „cottage and Small scale industries‟ was used in juxtaposition to large scale industries,
which were established under the British patronage.
E
They received encouragement and support during the freedom movement.

The small scale industries found a prominent place in the economic programme envisaged by the Indian National
Congress.

Ssi post independence:

After 1947
Jawaharlal Nehru maintained separate entities of small scale industries. He was of the view that a small industry was
the middle sector and it would overlap both the cottage and the large industries.

1977 industrial Policy

The basic policy support of SSI sector had its roots in the Industrial Policy Resolution 1977, laid emphasis on
reservation of items. The reservation economically viable and technologically feasible products to be exclusively
manufactured by small scale industry began with a list of 47 items which was gradually extended to too many products.
12fkhusidughLDG

WHY WE nEED SSI?

1 for employment generation
2 for balance regional growth
3 for mobilisation of local resourses
4 for export promotion
5 for consumer surplus
6 for development of enterprenurship
7 for large scale employment with law investment
8 for attaining self reliance and self dependence
9 for ensuring equal distributionof income and wealth

Need & Rationale of Small Scale Industry

Development in India :
As per the IPR (Industrial Policy Resolution),1956, it emphasizes the Need & Rationale as given below :

“They provide immediate large scale employment, they offer a method of ensuring a more equitable
distribution of the National Income & they facilitate an Effective Mobilization of Resources of Capital & Skill
which might otherwise remain unutilized. Some of the problems that unplanned urbanization tends to create
will be avoided by the establishment of Small Centers of Industrial Production all over the Country.”
SCOPE OF SSI IN DIFFERENT SECTORS
1 manufacturing industries
2 service industries
3 trading industries

1 manufacturing industries:
The branch of manufacture and trade based on the fabrication, processing, or preparation of products from raw
materials and commodities. This includes all foods, chemicals, textiles, machines, and equipment. This includes all
refined metals and minerals dirrived from extracted ores. This includes all lumber, wood, and pulp products.

a)Village and cottege industries=

A cottage industry is a small-scale, decentralized manufacturing business often operated out of a home
rather than a purpose-built facility. Cottage industries are defined by the amount of investment required to
start, as well as the number of people employed. They often focus on the production of labor-intensive goods
but face a significant disadvantage when competing with factory-based manufacturers that mass-produce
goods.
These are carried on in house of workers and these are carried out by the labours in their houses. They
use local service and local resources and the local skills
a) Handlooms and handicrafts=
These are the industries which include the artisans ans art and craft ehich come under the handicraft and it
also include the skilled craftsmenship and the hand made ietams are included in these type of industries

2 service industries
a) Professional services=
Law, medicine and accounting
b) Commission service=
Transport, wherhousing and the repair shope
c) Personal service=
Fashion shops, and dry cleaning

3 trading industries

a) Wholeseller
Person or firm that buys large quantity of goods from various producers or vendors, warehouses them, and
resells to retailers.

b)retailer
A business or person that sells goods to the consumer, as opposed to a wholesaler or supplier, who normally sell their
goods to another business

c)Commission agent=
Commission agents thrive in a variety of businesses. International agents work in the export/import arena. Insurance
and real estate agents also often work on a sales-based commission.

Role of small scale industries:

The Role of Small Enterprises in Economic Development of our Country can be discussed with reference to the
following parameters during the last four Decades :

1) Increase in the Number of Small Enterprises.

2) Increase in the Value of Production in Rupee Terms.
3) Increase in the Number of People Employed.
4) Increase in the Export Earnings in Rupee Terms.

The Small Enterprises have registered phenomenal growth in their Number, Production, Employment & Exports over the
Last Four Decades.

In 1950, there were 16,000 Registered Small Scale Industries & this has increased to 31.21 Lakh Registered SSI’s during
1998 – 1999.

During 1973 – 74, the Total Value of Production reported by SSI’s was Rs. 7200 Crores & this has grown phenomenally
by about 75 Times to Rs. 5,38,357 Crores during 1998 – 1999.

As regards Employment, about 40 Lakh People were employed in SSI Sector during 1973 – 1974 & there is a Four Fold
Increase in Employment during 1998 – 1999, that is 175.2 Lakh People were employed in SSI Sector during 1998 – 1999.

Production From Small Scale Industries

Characteristics of Small Enterprises :

“Small Enterprise is Beautiful” because of its following Important Characteristics :
1) A Small Enterprise is generally a “One Man Show”. Even Small Enterprises which run by a Partnership Firm or a
Private Limited Company, in most cases, the activities are mainly carried out by one of the Partners or Directors. In
Practice, the others mainly assist in providing Capital / Funds.

2) Owner himself / herself is also a Manager of the Enterprise. Thus, a Small

Enterprise is managed in a personalized manner. The Owner has First Hand Knowledge of all aspects of the
Enterprise & knows what is actually going on in the Business. He takes effective participation in all matters of Business
Decision Making.

3) A Small Enterprise has lesser Gestation Period compared to a Large Enterprise. i.e., the period after which the
return on Investment starts.

4) Small Enterprises generally carryout their operations so as to cater to the Local & Regional Markets.
5) Small Enterprises use indigenous resources & therefore can be located anywhere subject to the availability of these
resources like Raw Materials, Labor, Transport Facilities etc.

6) They are fairly Labor Intensive with comparatively smaller Capital Investment than the Larger Units. That is, for the
same Investment, a Small Enterprise provides more jobs to the people compared to a Large Enterprise.

7) Using Local Resources, Small Units are decentralized & dispersed to Rural Areas & Smaller Towns. Thus, the
development of Small Enterprises in Rural Areas & Smaller towns promotes more Balanced Regional Development &
thereby prevents influx of job seekers from rural areas & smaller towns to bigger cities & urbanizing centers.

8) Small Enterprises are more susceptible & highly reactive & receptive to Socio – Economic conditions compared to
larger enterprises. They are more flexible to adapt changes like Diversification to New Products, adopting to New
Production Techniques, substituting New Raw Materials, Changes in Organization Structure, New Market etc

Advantages of Small Enterprises :

They are the Back Bone of the Industrial Activity in the Country & are playing a very
important role in improving the Socio – Economic Conditions of the people. Advantages of these Enterprises are
as follows : (12 Points)

1) They create greater Employment Opportunities thro Labor Intensive processes & thereby help in tackling the
Unemployment Problem.

2) They have Low Gestation Period & thereby Expensive Financial Resources are not idled unproductively for long
periods.

3) They can be set up easily in Rural & Backward Areas.

4) They need Small / Local / Regional Market.

5) They encourage growth of Local Entrepreneurship.

6) They create Decentralized pattern of Ownership.

7) They foster Diversification of Economic Activities.

8) They Innovate & Introduce New Products particularly to cater to Local Needs.

9) They influence & improve Standard of Living of Local People .

10) They provide equitable dispersal of enterprises throughout Rural & Backward Areas
STEPS IN SETTING UP A SMALL SCALE INDUSTRIES:

1 PRILIMNARY STAGE=
Scanning of business environment

Selection of idea

Deciding organisational structure

Project appraisal

Selection of ilocation and site

2 IMPLIMENTATION STAGE=

Statutary licence

Arrangment of finance

Power and water connection

Recruitment of personal and training

Raw material precurment

Marketing and profit generation

PROBLEM FACED BY SMALL SCALE INDUSTRIES:

This sector can stimulate economic activity and is entrusted with the responsibility of realising various objectives

generation of more employment opportunities with less investment, reducing regional imbalances etc. Small scale

industries are not in a position to play their role effectively due to various constraints. The various constraints, the

various problems faced by small scale industries are as under:

(1) Finance:

Finance is one of the most important problem confronting small scale industries Finance is the life blood of an
organisation and no organisation can function proper у in the absence of adequate funds. The scarcity of capital and

inadequate availability of credit facilities are the major causes of this problem.

Firstly, adequate funds are not available and secondly, entrepreneurs due to weak economic base, have lower credit

worthiness. Neither they are having their own resources nov are others prepared to lend them. Entrepreneurs are
forced to borrow money from money lenders at exorbitant rate of interest and this upsets all their calculations.

After nationalisation, banks have started financing this sector. These enterprises are still struggling with the problem

of inadequate availability of high cost funds. These enterprises are promoting various social objectives and in order to
facilitate then working adequate credit on easier terms and conditions must be provided to them.

(2) Raw Material:

Small scale industries normally tap local sources for meeting raw material requirements. These units have to face

numerous problems like availability of inadequate quantity, poor quality and even supply of raw material is not on
regular basis. All these factors adversely affect t e functioning of these units.

Large scale units, because of more resources, normally corner whatever raw material that is available in the open

market. Small scale units are thus forced to purchase the same raw material from the open market at very high
prices. It will lead to increase in the cost of production thereby making their functioning unviable.

(3) Idle Capacity:

There is under utilisation of installed capacity to the extent of 40 to 50 percent in case of small scale industries.

Various causes of this under-utilisation are shortage of raw material problem associated with funds and even

availability of power. Small scale units are not fully equipped to overcome all these problems as is the case with the
rivals in the large scale sector.
(4) Technology:

Small scale entrepreneurs are not fully exposed to the latest technology. Moreover, they lack requisite resources to

update or modernise their plant and machinery Due to obsolete methods of production, they are confronted with the

problems of less production in inferior quality and that too at higher cost. They are in no position to compete with their
better equipped rivals operating modem large scale units.

(5) Marketing:

These small scale units are also exposed to marketing problems. They are not in a position to get first hand information
about the market i.e. about the competition, taste, liking, disliking of the consumers and prevalent fashion.

With the result they are not in a position to upgrade their products keeping in mind market requirements. They are

producing less of inferior quality and that too at higher costs. Therefore, in competition with better equipped large
scale units they are placed in a relatively disadvantageous position.

In order to safeguard the interests of small scale enterprises the Government of India has reserved certain items for

exclusive production in the small scale sector. Various government agencies like Trade Fair Authority of India, State

Trading Corporation and the National Small Industries Corporation are extending helping hand to small scale sector in
selling its products both in the domestic and export markets.

(6) Infrastructure:

Infrastructure aspects adversely affect the functioning of small scale units. There is inadequate availability of

transportation, communication, power and other facilities in the backward areas. Entrepreneurs are faced with the

problem of getting power connections and even when they are lucky enough to get these they are exposed to
unscheduled long power cuts.

Inadequate and inappropriate transportation and communication network will make the working of various units all the

more difficult. All these factors are going to adversely affect the quantity, quality and production schedule of the
enterprises operating in these areas. Thus their operations will become uneconomical and unviable.
(7) Under Utilisation of Capacity:

Most of the small-scale units are working below full potentials or there is gross underutilization of capacities. Large

scale units are working for 24 hours a day i.e. in three shifts of 8 hours each and are thus making best possible use of
their machinery and equipments.

On the other hand small scale units are making only 40 to 50 percent use of their installed capacities. Various reasons

attributed to this gross under- utilisation of capacities are problems of finance, raw material, power and
underdeveloped markets for their products.

(8) Project Planning:

Another important problem faced by small scale entrepreneurs is poor project planning. These entrepreneurs do not

attach much significance to viability studies i.e. both technical and economical and plunge into entrepreneurial activity
out of mere enthusiasm and excitement.

They do not bother to study the demand aspect, marketing problems, and sources of raw materials and even

availability of proper infrastructure before starting their enterprises. Project feasibility analysis covering all these
aspects in addition to technical and financial viability of the projects, is not at all given due weight-age.

Inexperienced and incomplete documents which invariably results in delays in completing promotional formalities.

Small entrepreneurs often submit unrealistic feasibility reports and incompetent entrepreneurs do not fully
understand project details.

Moreover, due to limited financial resources they cannot afford to avail services of project consultants. This result is
poor project planning and execution. There is both time interests of these small scale enterprises.

(9) Skilled Manpower:

A small scale unit located in a remote backward area may not have problem with respect to unskilled workers, but

skilled workers are not available there. The reason is Firstly, skilled workers may be reluctant to work in these areas
and secondly, the enterprise may not afford to pay the wages and other facilities demanded by these workers.

Besides non-availability entrepreneurs are confronted with various other problems like absenteeism, high labour
turnover indiscipline, strike etc. These labour related problems result in lower productivity, deterioration of quality,
increase in wastages, and rise in other overhead costs and finally adverse impact on the profitability of these small
scale units.

(10) Managerial:

Managerial inadequacies pose another serious problem for small scale units. Modern business demands vision,

knowledge, skill, aptitude and whole hearted devotion. Competence of the entrepreneur is vital for the success of any
venture. An entrepreneur is a pivot around whom the entire enterprise revolves.

Many small scale units have turned sick due to lack of managerial competence on the part of entrepreneurs. An

entrepreneur who is required to undergo training and counseling for developing his managerial skills will add to the
problems of entrepreneurs.

The small scale entrepreneurs have to encounter numerous problems relating to overdependence on institutional

agencies for funds and consultancy services, lack of credit-worthiness, education, training, lower profitability and host

of marketing and other problems. The Government of India has initiated various schemes aimed at improving the
overall functioning of these units.

GOVERNMENT POLICY TOWORDES SMALL SCALE INDUSTRIES:

Some of the Government Policies for development and promotion of Small-Scale Industries in India are: 1. Industrial

Policy Resolution (IPR) 1948, 2. Industrial Policy Resolution (IPR) 1956, 3. Industrial Policy Resolution (IPR) 1977, 4.
Industrial Policy Resolution (IPR) 1980 and 5. Industrial Policy Resolution (IPR) 1990.

Since Independence, India has several Industrial Policies to her credit. So much so that Lawrence A. Veit tempted to

say that “if India has as much industry as it has industrial policy, it would be a far well-to-do nation.” With this

background in view, in what follows is a review of India’s Industrial Policies for the development and promotion of
small-scale enterprises in the country.
1. Industrial Policy Resolution (IPR) 1948:

The IPR, 1948 for the first time, accepted the importance of small-scale industries in the overall industrial development

of the country. It was well realized that small-scale industries are particularly suited for the utilization of local
resources and for creation of employment opportunities.

However, they have to face acute problems of raw materials, capital, skilled labour, marketing, etc. since a long period

of time. Therefore, emphasis was laid in the IPR, 1948 that these problems of small-scale enterprises should be solved

by the Central Government with the cooperation of the State Governments. In nutshell, the main thrust of IPR 1948, as
far as small-scale enterprises were concerned, was ‘protection.’

2. Industrial Policy Resolution (IPR) 1956:

The main contribution of the IPR 1948 was that it set in the nature and pattern of industrial development in the country.

The post-IPR 1948 period was marked by significant developments taken place in the country. For example, planning

has proceeded on an organised manner and the First Five Year Plan 1951-56 had been completed. Industries
(Development and Regulation) Act, 1951 was also introduced to regulate and control industries in the country.

The parliament had also accepted ‘the socialist pattern of society’ as the basic aim of social and economic policy

during this period. It was this background that the declaration of a new industrial policy resolution seemed essential.
This came in the form of IPR 1956.

The IPR 1956 provided that along with continuing policy support to the small sector, it also aimed at to ensure that

decentralised sector acquires sufficient vitality to self-supporting and its development is integrated with that of large-

scale industry in the country. To mention, some 128 items were reserved for exclusive production in the small-scale
sector.

Besides, the Small-Scale Industries Board (SSIB) constituted a working group in 1959 to examine and formulate a

development plan for small-scale industries during the, Third Five Year Plan, 1961-66. In the Third Five Year Plan period,

specific developmental projects like ‘Rural Industries Projects’ and ‘Industrial Estates Projects’ were started to

strengthen the small-scale sector in the country. Thus, to the earlier emphasis of ‘protection’ was added

‘development.’ The IPR 1956 for small-scale industries aimed at “Protection plus Development.” In a way, the IPR 1956
initiated the modem SSI in India.
3. Industrial Policy Resolution (IPR) 1977:

During the two decades after the IPR 1956, the economy witnessed lopsided industrial development skewed in favour of

large and medium sector, on the one hand, and increase in unemployment, on the other. This situation led to a renewed
emphasis on industrial policy. This gave emergence to IPR 1977.

The Policy Statement categorically mentioned:

“The emphasis on industrial policy so far has been mainly on large industries, neglecting cottage industries completely,

relegating small industries to a minor role. The main thrust of the new industrial policy will be on effective promotion

of cottage and small-scale industries widely dispersed in rural areas and small towns. It is the policy of the
Government that whatever can be produced by small and cottage industries must only be so produced.”

The IPR 1977 accordingly classified small sector into three broad categories:
1. Cottage and Household Industries which provide self-employment on a large scale.

2. Tiny sector incorporating investment in industrial units in plant and machinery up to Rs. 1 lakh and situated in towns
with a population of less than 50,000 according to 1971 Census.

3. Small-scale industries comprising of industrial units with an investment of upto Rs. 10 lakhs and in case of ancillary
units with an investment up to Rs. 15 lakhs.

The measures suggested for the promotion of small-scale and cottage industries included:
(i) Reservation of 504 items for exclusive production in small-scale sector.

(ii) Proposal to set up in each district an agency called ‘District Industry Centre’ (DIC) to serve as a focal point of

development for small-scale and cottage industries. The scheme of DIC was introduced in May 1978. The main objective

of setting up DICs was to promote under a single roof all the services and support required by small and village
entrepreneurs.

What follows from above is that to the earlier thrust of protection (IPR 1948) and development (IPR 1956), the IPR 1977
added ‘promotion’. As per this resolution, the small sector was, thus, to be ‘protected, developed, and promoted.’

4. Industrial Policy Resolution (IPR) 1980:

The Government of India adopted a new Industrial Policy Resolution (IPR) on July 23, 1980. The main objective of IPR

1980 was defined as facilitating an increase in industrial production through optimum utilization of installed capacity
and expansion of industries.

As to the small sector, the resolution envisaged:

(i) Increase in investment ceilings from Rs. 1 lakh to Rs. 2 lakhs in case of tiny units, from Rs. 10 lakhs to Rs. 20 lakhs in
case of small-scale units and from Rs. 15 lakhs to Rs. 25 lakhs in case of ancillaries.

(ii) Introduction of the concept of nucleus plants to replace the earlier scheme of the District Industry Centres in each
industrially backward district to promote the maximum small-scale industries there.

(iii) Promotion of village and rural industries to generate economic viability in the villages well compatible with the
environment.

Thus, the IPR 1980 reimphasised the spirit of the IPR 1956. The small-scale sector still remained the best sector for
generating wage and self-employment based opportunities in the country.

5. Industrial Policy Resolution (IPR) 1990:

The IPR 1990 was announced during June 1990. As to the small-scale sector, the resolution continued to give
increasing importance to small-scale enterprises to serve the objective of employment generation.

The important elements included in the resolution to boost the development of small-scale sector were as

follows:

(i) The investment ceiling in plant and machinery for small-scale industries (fixed in 1985) was raised from Rs. 35 lakhs
to Rs. 60 lakhs and correspondingly, for ancillary units from Rs. 45 lakhs to Rs. 75 lakhs.

(ii) Investment ceiling for tiny units had been increased from Rs. 2 lakhs to Rs. 5 lakhs provided the unit is located in an
area having a population of 50,000 as per 1981 Census.

(iii) As many as 836 items were reserved for exclusive manufacture in small- scale sector.
(iv) A new scheme of Central Investment Subsidy exclusively for small-scale sector in rural and backward areas
capable of generating more employment at lower cost of capital had been mooted and implemented.

(iv) With a view, to improve the competitiveness of the products manufactured in the small-scale sector; programmes

of technology up gradation will be implemented under the umbrella of an apex Technology Development Centre in Small
Industries Development Organisation (SIDO).

(v) To ensure both adequate and timely flow of credit facilities for the small- scale industries, a new apex bank known
as ‘Small Industries Development Bank of India (SIDBI)’ was established in 1990.

(vi) Greater emphasis on training of women and youth under Entrepreneurship Development Programme (EDP) and to
establish a special cell in SIDO for this purpose.

(vii) Implementation of delicencing of all new units with investment of Rs. 25 crores in fixed assets in non-backward

areas and Rs. 75 crores in centrally notified backward areas. Similarly, delicensing shall be implemented in the case of
100% Export Oriented Units (EOU) set up in Export Processing Zones (EPZ) up to an investment ceiling of Rs. 75 lakhs.

Impact of Liberalization, Privatization &

Globalization of Small Enterprises :
The process of Liberalization & Economic Reforms , since 1991, have thrown up new challenges to the small enterprises
sector , simultaneously creating tremendous opportunities for the growth of this sector.

In this changed scenario, building Competitive Strengths, introducing Technology Up gradation & Quality Improvement
are important issues which need to be addressed in order to build the capacity to withstand emerging pressures &
ensure sustained growth. Also small enterprises sector needs to reposition itself if it has to meet the growing
demands for ancillary items , subcontracting etc from other Medium & Large Enterprises , requiring higher
standards of Quality, Economies of Scale & strict delivery schedules.

Even before introduction of the Economic Reforms in 1991, following the inevitable Globalization, the Small Enterprises
sector was somewhat overprotected. With Liberalization & Globalization, they are now more exposed to severe
competition from Large Domestic Private Enterprises & from Foreign & other MNC’s.

The problems of Small Enterprises in the Liberalized are many – Delay in Implementation of Projects, Lack of
Timely assistance of Finance & Credit from the Financial Institutions, Marketing Problems, Lack of Proper
Infrastructural Facilities, Delay in receiving payment against the goods sold, outdated technology, poor quality
of raw materials & consumables & lack of managerial skills etc .
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