Small Scale Industries (SSI) – Characteristics, Objectives,
1. Introduction of SSI
Small scale industries are referred to those industries in which the process of manufacturing, production and servicing are done on a small scale.
The investment on such industries is one time and these investments are mostly done on plant and machinery, the total investment on such industries do not exceed 1 crore.
In small scale industries, the manufacturing of goods and rendering of services are done with the help of smaller machines and very limited manpower.These enterprises must fall under the guidelines, set by the Government of India.
Small scale industries or SSIs are known as the lifeline of an economy, which is very important for a country like India. Being a labor intensive industry, it is very helpful in creating employment opportunities for the population of the country.
SSI’s are a crucial sector of the economy both from a financial and social point of view, as they help with the per capita income and resource utilisation in the economy.
Examples and Ideas of Small Scale Industries
2. Characteristics of SSI
Ownership: SSI ’s generally are under single ownership. So it can either be a sole proprietorship or sometimes a partnership.
Management: Generally both the management and the control is with the owner/owners. Hence the owner is actively involved in the day-to-day activities of the business.
Labor Intensive: SSI’s dependence on technology is pretty limited. Hence they tend to use labour and manpower for their production activities.
Flexibility: SSI’s are more adaptable to their changing business environment. So in case of amendments or unexpected developments, they are flexible enough to adapt and carry on, unlike large industries.
Limited Reach: Small scale industries have a restricted zone of operations. Hence, they can meet their local and regional demand.
Resources utilisation: They use local and readily available resources which helps the economy fully utilise natural resources with minimum wastage.
3. Role in the Indian economy
Employment: SSI’s are a major source of employment for developing countries like India. Because of the limited technology and resource availability, they tend to use labour and manpower for their production activities.
Total Production: These enterprises account for almost 40% of the total production of goods and services in India. They are one of the main reasons for the growth and strengthening of the economy.
Make in India: SSI’s are the best examples for the Make in India initiative. They focus on the mission to manufacture in India and sell the products worldwide. This also helps create more demands from all over the world.
Export contribution: India’s export industry majorly relies on these small industries for their growth and development. Nearly half of the goods that are exported from India are manufactured or produced by these industries.
Public Welfare: These industries have an opportunity to earn wealth and create employment. SSI’s are also important for the social growth and development of our country.
4. Objectives of SSI
The objectives of the small scale industries are:
To create more employment opportunities.
To help develop the rural and less developed regions of the economy.
To reduce regional imbalances.
To ensure optimum utilisation of unexploited resources of the country.
To improve the standard of living of people.
To ensure equal distribution of income and wealth.
To solve the unemployment problem.
To attain self-reliance.
To adopt the latest technology aimed at producing better quality products at lower costs.
Role of Banks & Financial institutions in development of small scale industriesFinance is one of the major areas enterprises usually give attention to as an essential part of an organization. It even becomes an important when the case of small and medium scale enterprises is considered. This is because even though they need money to finance their activities, the source of getting these fund are extremely limited, quite unlike the large scale enterprises that get their monetary needs from various, many are which reliable (especially equity and debt sources). The banking industry lays a unique role in the financing of small and medium scale enterprises in most countries (either developed or developing).The existence of effective banking industries is essential for small and medium scale enterprises (SMEs) because it creates the necessary environmental growth through its roles in intermediating fund from the surplus limits to the deficits units. The small and medium enterprises (SMEs) are considered to be one of the principal driving forces in economics development. They stimulate private ownership and entrepreneurial skills they are flexible and can adopt quickie to changing market demand and supply situation, they generate employment help diversify economic activity and make a significant contribution to export and trade. SMEs globally play critical roles in absorbing labour penetrating new market and generally expanding economics in creative and innovative ways.
Financial institutions and banks plays a vital role in developing medium and small businesses through offering of loan, training employees on effective management of the small businesses, advising small businesses on basic management and administration.These institutions extend term loans for the purchase of land, construction of factory premises and purchase of machinery and equipment for the setting up of new industries or for expansion and modernization of the existing ones. Commercial banks give long and short term loans to small businesses. For instance, financial institution such as industrial finance corporation of India (IFCI) and the Industrial Credit and Investment Corporation of India (ICICI) bank provides hire purchase and loans to the small scale businesses for the businesses to grow. SMEs play an important role in building the economy of the country since they are locally operated by different stakeholders. Sustainability and economic growth of a country depends on the roles of commercial banks to support the local enterprise so that they can flourish.
∆ Some of the financial institutions supporting small scale industries in India are:-
1. State Finance Corporations (SFCs)
2. Commercial Banks
3. Small Industries Development Bank of India (SIDBI)
4. Industrial Finance Corporation of India (IFCI)
5. Industrial Credit and Investment Corporation of India (ICICI Bank)
6. Industrial Development Bank of India (IDBI)
7. Small Industries Development Fund (SIDF)
8. National Small Industries Corporation
9. National Bank for Agriculture and Rural Development (NABARD)
ROLE OF DISTRICT INDUSTRIAL CENTERS IN ENTREPRENEURSHIP IN DEVELOPMENT OF MSMEs
The main objectives of DIC are:
●To make available the various assistance and clearness required under one roof;
●To promote rural industries;
●To develop small and cottage industries in the country and to generate greater employment opportunities, especially among the rural and backward areas in the country;
●To develop close linkage with the rural development blocks and development institutions which are involved in gross root activities and integrated their activities with DIC set up and
●To act as the nodal agency for providing support services to the village and small entrepreneurs.
● District Industries Centers (DICs) provide full assistance to the entrepreneurs who are going to start the business on their own and in their regional places.
● DICs arrange loans with financial institutions like banks, NBFCs, MFIs, etc. to provide funding assistance to entrepreneurs.
● They also monitor the flow of industrial credit, district-wise.
● DICs conduct training courses for the entrepreneurs of small and tiny units