Tag: ssi

Role of Small Scale Industries(SSI) in India.

In a developing country like India, the role and importance of small-scale industries is very significant towards poverty eradication, employment generation, rural development and creating regional balance in promotion and growth of various development activities.

It is estimated that this sector has been contributing about 40% of the gross value of output produced in the manufacturing sector and the generation of employment by the small-scale sector is more than five times to that of the large-scale sector.

This clearly shows the importance of small-scale industries in the economic development of the country. The small-scale industry have been playing an important role in the growth process of Indian economy since independence in spite of stiff competition from the large sector and not very encouraging support from the government.

The following are some of the important role played by small- scale industries in India.

Employment generation:

The basic problem that is confronting the Indian economy is increasing pressure of population on the land and the need to create massive employment opportunities. This problem is solved to larger extent by small-scale industries because small- scale industries are labour intensive in character. They generate huge number of employment opportunities. Employment generation by this sector has shown a phenomenal growth. It is a powerful tool of job creation.

Mobilisation of resources and entrepreneurial skill:

Small-scale industries can mobilize a good amount of savings and entrepreneurial skill from rural and semi-urban areas remain untouched from the clutches of large industries and put them into productive use by investing in small-scale units. Small entrepreneurs also improve social welfare of a country by harnessing dormant, previously overlooked talent.

Equitable distribution of income:

Small entrepreneurs stimulate a redistribution of wealth, income and political power within societies in ways that are economically positive and without being politically disruptive.

Thus small-scale industries ensures equitable distribution of income and wealth in the Indian society which is largely characterised by more concentration of income and wealth in the organised section keeping unorganised sector undeveloped. This is mainly due to the fact that small industries are widespread as compared to large industries and are having large employment potential.

Regional dispersal of industries:

There has been massive concentration of industries m a few large cities of different states of Indian union. People migrate from rural and semi urban areas to these highly developed centres in search of employment and sometimes to earn a better living which ultimately leads to many evil consequences of over-crowding, pollution, creation of slums, etc. This problem of Indian economy is better solved by small- scale industries which utilise local resources and brings about dispersion of industries in the various parts of the country thus promotes balanced regional development.

Promotes exports:

Small-scale industries have registered a phenomenal growth in export over the years. The value of exports of products of small-scale industries has increased to Rs. 393 crores in 1973-74 to Rs. 71, 244 crores in 2002-03. This contributes about 35% India’s total export. Thus they help in increasing the country’s foreign exchange reserves thereby reduces the pressure on country’s balance of payment.

Supports the growth of large industries:

The small-scale industries play an important role in assisting bigger industries and projects so that the planned activity of development work is timely attended. They support the growth of large industries by providing, components, accessories and semi finished goods required by them. In fact, small industries can breath vitality into the life of large industries.

Small Scale Industries: helping in a BIG way

Small Scale Industries (SSI) are those industries in which manufacturing, providing services, productions are done on a micro scale. Small scale industries play an important role in the social and economic development of India. These industries do a one-time investment in machinery, plants, and industries which could be on an ownership basis, hire purchase or lease basis.

The SSI sector produces a wide range of industrial products such as food products, beverage, tobacco and tobacco products, cotton textiles, wool, silk, synthetic products, jute, hemp & jute products, wood & wood products, furniture and fixtures, paper & paper products, printing publishing and allied industries, machinery, machines, appliances and electrical machinery. The SSI sector also has a large number of service industries.  The small-scale sector in India embracing of a diverse range of units from traditional crafts to high- tech industries.  The number of SSI working units (registered & unregistered) in India totalled 11.4 million in 2003-04-80.5 percent of which are proprietary concerns and 16.8 percent are partnership firms and private limited companies. They have always played an important role in the economies of all major industrial countries. The Report of the Working Group on Micro, Small and Medium Enterprises (MSMEs) growth for 12th 5-year Plan (2012–17), unveils that the sector accounts for 45% of the manufacturing output and 40% of the total exports of the country. Further the Ministry of MSME’s (2017) highlights that the MSMEs accounted for 30.74% of GDP in the year 2014–15. Current economic forecast or survey interprets that with the Indian Economy growing at an average of 7% per annum, it is likely to become a $5 trillion economy by the year 2025. Hence, the development of the MSME sector is essential and it is considered to be the backbone of the Indian economy. Small-scale industry is playing a paramount role in the industrial landscape of our country.

The growth in employment in this sector over years has been noteworthy. The small-scale industries have shown splendid progression in their quantity, production, employment and exports. The cumulative number of units has increased from 105.21 lakhs in 2001-02 to 115.22 Lakhs in 2003-04 to 630 lakhs as of 2020. The number of individuals employed in small scale units too, has gone up from 249.09 lakhs in 2001- 02 to 273.97 lakhs in 2003-04 to 11 crores in 2020. Exports from small scale sector account for nearly 35 percent of the gross value of exports from our country. Total value of exports of this sector has increased from Rs. 71,244 crores in 2001-02 to Rs. 86,013 crores in 2002-03 to a value of $14740 crore and by 2022 it is expected that MSMEs will contribute 60% to India’s total exports. The total value of production of small-scale units comes to nearly 40 percent of the total value of industrial output of the country. Over the years an inspiring trend in exports has been observed in the dimension of increase in exports of unconventional products from this sector.

The SSI has emerged as an ever-changing phenomenon of the Indian economy. At the national level, this sector has performed extremely well and enabled our country to attain industrial diversification. SSIs have made a portentous endeavour to increase in employment fortunes and productivity prospects. If its potential is properly harnessed, it can help in accentuating the pace of balanced regional progress apart from creating employment opportunities.