ROLE OF SMALL SCALE

INDUSTRIES
 WHAT ARE SSIs?
As per the latest definition which is effective since
December 21, 1999, for any industrial unit to be
regarded as Small Scale Industrial unit the following
conditions are to be satisfied: -

• Investment in fixed assets like plants and

equipment's either held on ownership term on lease
or on hire purchase should not be more than Rs 10
million.
• Less than 150 employees in a unit.
• The policy reservation of items for manufacturing in SSIs was introduced in
1967. Initially only 47 items were reserved, but as of today about 675
items are reserved.
• SSIs are the second largest employers of Human resources after
agriculture in India.
• They generate more employment opportunities per unit of capital
invested than large-scale industries.
• Employment provided to more than 273. 97 lakh persons.
 Classification of SSIs
TRADITIONAL SSIs
• It includes khadi and
handloom, village
industries,handicrafts, seric
ulture, etc
MODERN SSIs
• Modern SSIs produce wide
range of goods from
comparatively simple items
to sophisticated products
such as television
sets, electronics, control
system, various engineering
products etc.
IMPORTANCE OF SMALL SCALE
INDUSTRIES
 1. EMPLOYMENT
• SSIs are labor intensive so there is a great employment potential.
• Large-scale industries are capital intensive, hence not in a position to solve
acute unemployment problems in India.
• SSI employed 129.80 lakh people in 1991-92 which increased to 239.09
lakh in 2000-01 and further to 294.91 lakh in 2005-06.

2. CAPITAL LIGHT
• India is a capital scarce country, which is why we need to make optimum
use of all the capital and resources available in terms of employment and
productivity.
• SSIs are capital light and hence more suitable to underdeveloped nations.
• Limited capital is needed to start an SSI, the returns are quick, and those
returns can again be reinvested.
 3. SKILL LIGHT AND IMPORT LIGHT
• No technological skill or managerial skill required.
• More suitable to underdeveloped countries where literacy rate is low and
skilled labor is scarce.
• Require less import of machinery, technical skill hence placing little or no
strain on the scarce foreign exchange reserves of developing nations.

4. MOBILIZATION OF CAPITAL RESOURCE AND

ENTREPRENEURIAL SKILL
• Easy mobilization of capital, entrepreneurial skill and other sources all
over the country.
• Savings in rural areas can be mobilized by SSIs more easily then large scale
industries.
• Idle resources can be put to effective use.
 5. SUPPORT TO AGRICULTURE AND LARGE-
SCALE INDUSTRIES
• They help supply inputs , processing facilities as well as consumer goods to
rural masses.
• Rural based SSIs help absorb all the surplus labor in villages and towns thus
improving the productivity in the agricultural sector.
• SSIs also help large scale industries by supplying spare parts, components etc.

6. REGIONAL DISPERSAL OF INDUSTRIES AND

BALANCED REGIONAL DEVELOPMENT
• Political, social and economic factors affect the development of all regions.
• Some regions are more developed while others continue to lag behind.
• Large scale industries are mostly centered in some big cities, while SSIs help
decentralize industries thus helping avoid, space crunch, slum development
problems etc.
• Since SSIs are easy to set up, they can be set up anywhere and hence contribute to
a balanced regional development.
 7. REDUCTION IN INCOME-INEQUALITIES AND
EQUITABLE DISTRIBUTION OF NATIONAL INCOME
• SSIs help equitable distribution of national income because of 2 reasons:
a) Ownership of SSI is more widespread than large-scale industries.
b) SSIs possess large employment potential.

8. CONTRIBUTION TO EXPORTS AND INDUSTRIAL

OUTPUT
• 45%-50% of the Indian Exports is being contributed by SSI Sector.
• Direct exports from the SSI Sector account for nearly 35% of total exports.
• It is estimated that small scale industrial units contribute around 15% to
exports indirectly.
• The exports from SSI sector has been clocking excellent growth rates mostly
fuelled by the performance of garment, leather and gems and jewellery units
from this sector.
• No. of industrial units has grown from 23.9L in ‘93-94 to 118. 59L in ‘04-05.
Output has increased from 241,648 cr in ‘93-94 to 4,18,263 cr in ‘04-05.
 9. LESS INDUSTRIAL DISPUTES

• Do not face problem of frequent strikes and lockouts. Hence no loss of

man-days and output in SSIs.
THANK YOU