THE SMALL SCALE INDUSTRIESBACKBONE OF RURAL ECONOMY OF INDIA

Submitted by
Gaurav Arya (SM0113018)
4th semester

Faculty Incharge
Nayan Jyoti Pathak
(Asst. Prof. of Economics)

NATIONAL LAW UNIVERISTY AND JUDICIAL ACADEMY, ASSAM

GUWAHATI
28-05-2015

Table of content
Chapter 1 Introduction
1.1 Scope and Objective
1.2 Literature Review
1.3 Research Problem
1.4 Research methodology
Chapter 2- Meaning and concept of Small Scale Industries
Chapter 3- Role and relevance in economic development
3.1 Growth and performance of small scale industry in India
3.2 Employment generation
3.3 Equitable distribution of national income
Chapter 4- Development of SSIs
4.1 Organisation
4.2 State policy
4.3 Finance
4.4 Government programmes
Chapter 5- SWOT analysis
5.1 strength
5.2 weaknessess
5.3 opportunities
5.4 threats
Chapter 6- suggestions
Conclusion

Chapter 1
Introduction
The small scale industries play an essential role in the growth of the country. It contributes
around 40% of the gross industrial value added in the Indian economy. By less capital intensive
and high labour absorption nature, SSI sector has made significant contribution to employment
generation and also rural industrialization. Under the changing economic scenario, SSI has to
face number of diverse problems like vast population, large scale un-employment and
underemployment and scarcity of capital resources and the like. Hence, the government has been
providing some special facilities through different policies and programmes to overcome the
problems and for the growth and development of small scale industries. The efforts of the
government have resulted in the phenomenal increase in the number of units in the small scale
sector. The government also introduced various schemes and incentives for the promotion of
SSIs. Constant support to SSI sector by the Govt. in terms of infrastructure development, fiscal
and monetary policies have helped to emerge as dynamic and vibrant sector of Indian economy.
Over the past five decades, Government policies and schemes have been to protect the interests
of the SSIs and facilitate its rapid development from time to time.

1.1 Scope and Objective

A) Scope of this project is limited to the study of development and contribution of Small Scale
Industries in Indian Economy.
B) Objective of this project is to know the role of Small Scale industries in rural economy of
India.
1.2 Literature Review
Baljeet singh narang, Vinod sharma and Prashant gupta, The performance evaluation of SSIs
in India:-

The article beautifully depicts the performance of SSIs in India and also critically evaluate its
performance to give a clear and better understanding to the topic. The language of the article is
clear and simple and easy to comprehend.
Dr. P. Uma, Role of SMEs in Economic Development of India:The language of the article is simple and understandable, the article elaborately explains the role
of SMEs in economic development of India and gives a deep understanding of the topic.

1.3 Research Problem

If we look at Contribution made by SSI in national income is very low. Even with such low
income generation, The government tries to support this industries due to various other reasons
and foremost of it is the employment it generates. It is the most labour intensive market and there
is low level of capital investment. The employment generated through this industries help to over
come various other economic problems like that of poverty. Which is the most important
deterrant of the economic development other than population itself. The only problem faced by
SSI is that of demand for its products and a market of its production. After 1990s, various Indian
industries had to compete with the global players . Which had worst effected the SSI. They could
not keep up with such standards and hence many had to close down. For ex, main regional
Handicraft industries of South Inida which are world renouned for Certain class of Sarees. Now
in brief we have both seen the need as well as problem faced by SSI.
1.4 Research Methodology
The research methodology being used by us is doctrinal.
A doctrinal research method is such a kind of research method where research has been carried
out on a legal proposition or on legal propositions by analyzing the previously existing statutory
provisions and cases by applying the reasoning power.
Quality of doctrinal research depends much upon the source material on which the researcher
depends.

Chapter 2
Meaning and Concept of Cottage and Small Scale Industries

Cottage and small scale industries are defined in terms of investment in plant and machinery
under section II B of Industries (Development and Regulation) Act 1951. The limit is revised
from time to time to offset the impact of inflation and to meet the technological needs. Cottage
industry is the one which is run by an individual with the help of his family members with very
little capital. Most of the cottage industries do not use power. According to the Fiscal
Commission (1949-50) cottage industry is an industry which is run either as whole- time or
part-time occupation with the full or partial help of the members of the family. These industries
are mostly run by the artisans in their own homes. The use of power and machines in these
industries are very limited. The products produced in cottage industries are usually to satisfy the
local demands. Number of hired-labour in this sector is very limited and the capital investment is
also small. They are mostly located in villages and rural areas. According to the Economic
Commission of Asia and the Far East (ECAFE) cottage industries are those industries which are
run fully or partially with the help of family members. In the words of Dhar and Lydall
cottage industries are mainly traditional industries which produce traditional goods with the
traditional techniques. Examples of cottage industries are khadi industry, handicrafts,
handlooms, cane and bamboo base industries, pottery, black smithy etc. In India, the first official
criterion for small scale industry dates back to the second Five Year Plan when it was defined in
terms of gross investment in land, building, plant and machinery and the strength of the labour
force. In 1955 Small Scale Industries Board defined small scale industry as A unit employing
less than 50 persons, if using power and less than 100 persons without the use of power and with
capital assets not exceeding rupees five lakhs. The Ministry of Commerce and Industries
modified the above definition in 1960 on the recommendation of the Small Scale Industries
Board. According to it small industries will include all industrial units with a capital investment
of not more than rupees five lakhs, irrespective of the number of persons employed. Thus, this

revision has enlarged the scope of employment opportunities in small scale sector, but the
investment ceiling remains unchanged1.
In 1972, the Government of India constituted a Committee for drafting legislation for small-scale
industries, which suggested that the small-scale industries might be classified in to the following
three categories.
a. Tiny Industry
Tiny units are those in which the investments in fixed assets are less than Rs. 1 lakh or Rs. 4000/per worker and the annual turn-over does not exceed Rs. 5 lakh.
b. Small Industry
Small industry is one in which capital investment in fixed assets does not exceed Rs. 7.5 lakh
irrespective of the number of persons employed.
c. Ancillary Industry
An ancillary unit is the one rendering services and supplying or proposing to render 50 percent of
its production or total services, as the case may be, to other units for production of other articles.
Moreover, such a unit should not be owned or controlled by any undertaking. The limit for
investment in fixed assets of such an industry is fixed at Rs. 10 lakh. The Industrial Policy of
1980, announced on July, 23 has revised the ceiling limits of investment in plant and machinery
for small scale industries. According to the Industrial Policy resolution of 1980, the investment
limit in small scale industries has been increased with a view to develop these industries. In case
of small ancillary industries, the limit has been revised from Rs. 15 lakh to Rs. 25 lakh and for
tiny industries it has been raised to Rs. 12 lakh from Rs. 1 lakh. In March 1985, the Government
has again revised the investment limit of small scale undertakings to Rs. 35 lakh. As per the
Industrial Policy Resolution of 1990, the investment limit in plant and machinery for small scale
industries has been raised to Rs. 60 lakh and correspondingly for ancillary units from Rs 45 lakh
to Rs.75 lakh. In 1997, on the recommendation of Abid Hussain Committee, the Government has
Baljeet singh narang, Vinod sharma and Prashant gupta, The performance evaluation of SSIs in
India, Bauddhik, Volume 3, no.-1, 2012
1

raised the investment limit in plant and machinery for small units and ancillaries from Rs. 60/75
lakh to Rs.3 crore and that for tiny units from Rs.5 lakh to Rs. 25 lakh. In 2000, the Union
Government has reduced the investment limit in plant and machinery for small scale units from
Rs. 3 crore to Rs.1 crore. However the investment ceilings for tiny industries remain unchanged
to Rs. 25 lakh. In accordance with the provision of Micro, Small and Medium Enterprise
Development (MSMED) Act, 2006. the micro, small and medium enterprises are classified into
two classes2a. Manufacturing Enterprises - The enterprise engaged in the manufacture or production of goods
pertaining to any industry specified in the First Schedule to the Industries (Development and
Regulation) Act, 1951. The manufacturing enterprises are defined in terms of investment in plant
and machinery.
b. Service Sector The enterprises engaged in producing or rendering of services and defined in
terms of investment in plant and machinery.
The definition of small scale industries has undergone changes over the years in terms of
investment limits to boost up the development of this sector. At present small scale industry
(Micro, Small and Medium Manufacturing Enterprises) is defined as an industrial undertaking
which is engaged in manufacturing, preservation, processing, mining and quarrying or
assembling and in which the investment in fixed assets in plant and machinery whether held on
ownership terms, on lease or on hire purchase does not exceed Rs. 5 crore 6 subject to the
condition that the unit is not owned, controlled or subsidiary of any other industrial undertakings.
Small scale service sector enterprises (Micro, Small and Medium Enterprises) is defined as an
enterprises engaged in producing or rendering of services of which investment in plant and
machinery does not exceed Rs. 2crore.

2 ibid

Chapter 3
Role and relevance in economic development

Small and medium enterprises are the backbone of industrial development. It is very important
for both developed and developing country Small and medium enterprises always represented the
model of economic development, which emphasized high contribution to domestic production,
significant export earnings, low investment requirements, employment generation, effective
contribution to foreign exchange earning of the nation with low import-intensive operations. The
contribution of small scale industries (SSIs) has been remarkable in the industrial development
of the country. It has a share of 40% in the industrial production. 35% of the total manufactured
exports of the country are directly accounted for by this sector. In terms of employment
generated, this sector is next only to agriculture employing approximately 14 million people. .
Overall, the small industry sector has done quite well and has enabled the country to achieve
considerable industrial growth and diversification. Small scale industries are less capital
intensive and suit the Indian economic environment with scarce resources and large population
base. In addition, it is highly and has a scope for labor intensive for building upon the traditional
skill and knowledge. Small scale industries have remained high on the agenda of all political
parties, intelligentsia and policy makers since independence as a legacy of Gandhian
philosophy3.
3.1 Growth and performance of small scale industry in India
Pre- and Post-liberalization Periods4

3 Dr. P. Uma, Role of SMEs in Economic Development of India, Asia Pacific Journal Of
Marketing & Management Review, Vol.2 (6), 2013

4 ibid

The level of output by the SSIs went up from Rs 28,060crorein 1980-81 to Rs.5,78,470 crore by
the end of 1999-2000, showing an increase of nearly 20 times over a period of 20 years. Exports
have also gone up by nearly 40 times over a period of two decades. The contribution of SSI in
exports was high during the period, especially up to the year 1995. The trend reversed during the
period 1995-2000 when the growth rate recorded a declining trend.

Performance of SSIs, Year 1990-91 to 2011-125:-

5 ibid

Source- Economic Survey of India

Comparison of SSI Sector with the Overall Industrial Sector, Year 1993-94 to 2004-056 :-

6 ibid

Source- Economic Survey of India

The growth rate in employment in the 551 sector over the years had been on the decline. An all
time decrease was seen between 1995 and 2000. It would also be worthwhile to look at the
progress of the 551 sector in the post-liberalisation period compared to that of the 1980s. The
increase in production and exports was more impressive than that of the number of units and
employment. A stagnation or reversal of trend is noticeable in the performance of the SSI
industries after 1995 in creation of employment as well as in the number of units set up. A
comparison between the growth rates in the performance level of the SSIs between the two
periods indicates wide disparities. The pace of growth during the 1990s was relatively lower
compared to that of the pre-liberalisation period. The SSI sector continues to remain an important
sector of the economy with a noteworthy contribution to GDP, industrial production,
employment generation and exports. The performance of the small-scale sector based on the final
results of the third All India Census of SSIs, 2004. As per the Census of registered and
unregistered units held for the year 2001- 02, there were 105.2 lakh SSI units in the country, out
of which 13.75 lakh were registered working units and 91.46 lakh unregistered units. Their
contribution to production was Rs 2,82,270 crore and 249.09 lakh persons to employment. It is
estimated that during 2003-04, the number of SSI units has increased to 115.22 lakh from 110.10
lakh in the previous year, registering a growth of 4. 7 per cent. The value of production at current
prices by the SSI units also increased to Rs.3,48,059 crore from Rs 3,11,993 crore during 200203. The sector is estimated .to have grown at the rate of 7.5 per cent at constant prices over the
previous year. Employment is estimated to have increased to 273.97 lakh persons from

261.38lakh persons in the previous year. Small scale industries have registered phenomenal
growth in their number, production, employment and exports over the years. The government of
India has been attaching increasing importance to the development of small scale industries by
way of supportive measures adopted from time to time. A look at the group-wise classification of
SSI shows Hosiery and Readymade Garments units at the top list with 89,464 units accounting
for a little over 22.2% of the total number of units. Other Manufacturing industries are far behind
with 58,777 units which is around 15% of the total. Manufacturing sector is closely followed by
Food Products with 37,152 units which is close to 10%. Share of all other groups are of single
digit and the share of Jute, Hemp and Mesla Products and Beverages, Tobacco & Tobacco
Products together is below 1%.
3.1 Employment generation7
A Small Scale or a Cottage Industry is labour -oriented and labourintensive with relatively high
labour-investment ratio. A given amount of capital invested in this sector of industries is likely to
provide more employment, at least in short run, than the same amount invested in a large
industry. It is estimated that an investment of Rs.1.00 lakh, in fixed assets, in a large industry
may create, on an average, employment to 2-4 persons whereas the same amount of investment
made in a small-scale industry, for the same purpose, might do so for 10-12 persons. This is one
of the main considerations for an overpopulated and developing country, where millions of
people are either unemployed or underemployed, to utilize the possible potentiality of this sector
for providing employment opportunity not only to the educated and technical manpower but also
to the unlimited labour force which have been increasing, day by day, at a relatively low capital
cost and very short gestation period. Further, the encouragement to small scale and cottage sector
would, no doubt, serve to counter the seasonal un-employment of the agricultural labour force
and thus utilize it which otherwise would go waste. The small-scale industrial sector has
employed a total of 191.4 lakh people in 1994-95 (table-3.4) and this number has consistently
risen to 282.6 lakh people in 2004-05. Within the manufacturing sector itself, small and cottage
industrial sector contributes about four-fifths of manufacturing employment in India. Given the
Guy Prentice, Cottage Industries: Concepts And Implications, Midcontinental Journal of
Archaeology,Vol. 8, No. 1 (1983), pp. 17-48, Maney Publishing,
http://www.jstor.org/stable/20707899?seq=1&cid=pdf-reference#references_tab_contents
7

acute unemployment, underemployment and disguised unemployment problem in India, creation

of employment opportunities will depend crucially to the development of smallscale and cottage
industries. This would be clear from the fact that while employment in the industrial sector as a
whole including large scale, medium scale and small scale has increased by only 2.21 percent per
annum over the period from 1972 to 1987-88, employment in small-scale sector grew at the rate
of 5.45 percent per annum over the same period. As far as the future prospects of small-scale and
cottage industry is concerned, the rural non-farm sector accounting for about 22 percent of rural
employment can play a crucial role in the further expansion of employment opportunities in the
rural areas. An important constituent of this sector is the manufacturing activity consisting
mainly of textile based and agro-based products and units producing construction materials. In
urban areas employment potential seems to be the largest in the non-household and tiny units of
the manufacturing sector. Obviously, the growth rate of small scale industrial sector has been
faster both in terms of output and employment. In other words, the output employment ratio for
the small-scale sector is 1:1.4. The rapid growth of the small-scale industries has a great
relevance in our national economic policies. The growth of small-scale sector improves the
production of non-durable consumer goods of mass consumption. As such, it acts as an antiinflationary force. If a big push is given to the small sector, it can become a stabilizing factor in
a capital-scarce economy like India by providing a higher capital output ratio as well as a higher
capital employment ratio.

Equitable distribution of national income8:Removal of inequalities in income distribution is one of the main objectives of Indias successive
five year plans. Development of small scale and cottage industries has contributed a lot to
achieve the objective of our five year plans. Small scale and cottage industries are instrumental
in the equal distribution of wealth and income. The income generated in large number of small
scale and cottage industries are dispersed more widely in the community and also among
different geographical regions as compared to the income generated by few large industries. In
Baljeet singh narang, Vinod sharma and Prashant gupta, The performance evaluation of SSIs in
India, Bauddhik, Volume 3, no.-1, 2012
8

small scale industries the industrial capital is not concentrated in a few hands rather it is widely
distributed in small quantities among large number of people throughout the country. In other
words, the income benefit of small scale and cottage industry is derived by a large population
while large industries more concentration of economic power. In his way small enterprises bring
about greater equality in income distribution. Most of the small enterprises are either proprietary
or partnership concerned, hence the relationship between the workers or the employers are more
harmonious in small industry than in large industry.
Dhar and Lydall consider this argument as fallacious. Statistical evidence suggests that there is
a common tendency in all countries, for the average wage to be lower in small factories than in
large factories. Moreover, the virtual non-existence of trade unions in small factories enables
the employers to exploit the workers to the maximum. Thus, it is true that the workers in small
factories are 100 neither economically better off than in large industries, nor do they obtain more
benefits under social security schemes. There is no doubt that the argument of Dhar and lydall
does have some force on it. But on the contrary, it is also true that in a developing country like
India, where unemployment, under employment and disguised unemployment is rampant, the
low paid job is accepted under circumstances. In the absence of small enterprises, the workers
have to lose even the small wage which they hope to get. Moreover, by a more effective
implementation of the existing factory lows, the exploitation in small industry can be minimized.
Thus there is no denying fact that small scale and cottage industries encourage the distribution of
national income and wealth more equally among large number of population and
region of the country.

Chapter 4

Development of SSIs
Village industries have a central place in rural development programmes. Diminishing
opportunities for gainful employment account to some extent for the reduction in the standard of
life of. some sections of the rural population. Products of large-scale industries have increasingly
limited the market for several classes of artisans. Their occupations now give them only partial
employment, so that they tend to join the ranks of agricultural workers. Development outside the
rural sector has not been rapid enough to arrest the increasing pressure of population on the land.
The development of village industries should, therefore, be as much a matter of State action as
the increase of agricultural production. Indeed, one cannot be separated from the other, for,
increase in agricultural production presupposes fuller utilisation of the available manpower and
release of surplus workers for other occupations. Village industries, therefore, call for
programmes which will develop a great deal of lofcal initiative and co-operation, and an
economic environment in which they have a reasonable chance of succeeding. If the measures to
be undertaken are to be effective in dealing with so difficult a problem, it is essential that they
should be commensurate with its size and importance. Village industries are concerned, in the
main, with the processing of local raw materials for local markets and with simple techniques.
The scope for such industries depends, in part, on their relation to the corresponding large-scale
industry, in part, on the development of agriculture and the growth of rural amenities. As
agriculture becomes more intensive, there will be greater demand for certain articles of
consumption and tools and implements which could be met by village industries. Amenities in
rural life such as supply of pure drinking water, street lighting, sanitation, hospitals, recreation
grounds, community centres and roads increase the field for village industries. The possibility of
turning waste into wealth, for instance, production of gas from cow dung and other refuse of the
village through gas plants in so far as the operations prove economic, production of bone manure
through bone digesters, soap making out of non-edible oils, etc., will further provide scope for
the development of village industries.9 We may refer here also to rural arts and crafts which have
both social and economic signifiance. Village printing, embroidery and pottery and the crafts of
tribal people, for instance, have not only a long tradition but have also been essential-elements in
Dr.P.Uma, Role of SMEs in Economic Development of India, Asia Pacific Journal Of
Marketing & Management Review, Vol.2 (6), 2013
9

the organic unity and culture of the villages. In any programme for the revival of village
industries, these crafts which have suffered much from the economic development of the past
few decades, will deserve special attention. If village industries are to be developed, it is
necessary to deal with the deficiencies which have led to their decline. These relate to
organization, State policy, Finance, Supply of equipment, and Marketing.

Chapter 5
SWOT analysis10
A detailed SWOT analysis paves the foundation stone for taking strategic decisions. It helps to
identify the areas where proper care should immediately be taken and at the same time, identifies
the areas of competitive edge. The respective Strengths, Weaknesses, Opportunities and Threats
are identified for Indian SSIs which will form guidelines for the policy makers.
Strength11
Small Scale Industries are the backbone of the Indian Economy. By considering the employment
generation and export generation, the following are some of the strengths of Indian SSIs.:1.

Easy to start an SSI which requires very less capital.

2.

SSI contributes 45 per cent of manufacturing output.

3.

It creates nearly 6.5 crore employment.

4.

Employs local people, particularly illiterate and semi- literate and reduces the regional
imbalances.

5.

Produces goods for downtrodden people, especially for those below the poverty line.

Outlook towards the Small Scale Industries is very much important. The premises for such an
outlook is essential for Indian SSIs to combat the challenges ahead, are outlined as a) SSIs
continue to be the thrust area for Government policies. b) The growing economy and the
tremendous market potential of the country depend on the sustained growth of SSIs in the
country. c) Avenues for employment and decentralized industrial development. d) SIDBI as the
Baljeet singh narang, Vinod sharma and Prashant gupta, The performance evaluation of SSIs
in India, Bauddhik, Volume 3, no.-1, 2012, www.msme.gov.in
10

11 ibid

apex institution will continue to play its key role in facilitating timely and adequate credit
besides meeting the developmental needs of the sector.
Weaknesses12
The following are some of the weaknesses identified among Indian Small Scale Industries:1.

Encroachment of SSIs by Medium and Creamy layer industries.

2.

Infrastructural problems like high power tariff, insufficient export infrastructure.

3.

Inflexible labour markets.

4.

Regulatory hassles both at entry and exist stages.

5.

Insufficient finance at affordable terms.

6.

Demand for International Quality Standards in the WTO regime, Cost Reduction by
Customers and other barriers.

7.

Need of Fund for Modernisation and technology up gradation.

8.

Stringent Statutory laws of Government.

9.

Exploitation by major industries.

10. Increase of MNCs with Modern Technology & machines.

Opportunities13
After the introduction of trade liberalization and globalization, increased competitive pressures
and reduced direct subsidies and relaxed protectionism from the clutches of governments,
strengthening of SSIs for export competitiveness becomes the dire need in the developing
countries like India. No doubt, in India the SSIs with their dynamism, flexibility and innovative
12 ibid

13 ibid

drive increasingly focusing on improved production methods, penetrative marketing strategies

and management capabilities to sustain and strengthen their operations, their share is only 30.8
per cent of total exports as on 2007- 08 which are about 34.28 per cent of total exports as on
2000-01 and reduced by 3.48 per cent from 2000-01 to 2007-08. From the Table-4, it is evident
that the share SSIs exports to total exports have been constantly reduced over the years i.e., from
2000-01 to 2007-08. Their performance in items such as, readymade garments, leather goods,
processed food, and engineering items has been commendable both in terms of value and their
share within the SSI sector, than the other sectors. In view of this, export promotion from the
SSIs sector has been accorded high priority in Indias export promotion strategy, which includes
simplification of procedures, incentives for higher production of exports, preferential treatments
to SSIs in the market development fund and simplification of duty drawback rules. They are thus
poised for global partnership to absorb and more importantly to impart latest technologies in
diverse fields. Drawing from the experiences of countries that have successfully promoted the
export competitiveness of SSIs the points lay down the strategy for Indian SSIs to achieve their
export potential and make them increasingly export oriented. Promoting the export
competitiveness of SSIs needs the active involvement of various stakeholders like Government,
the private sector and the International community.
Threats14
The constraints for the SSIs in India for export competitive include product reservations,
regulatory hassles both at the entry and exit stages, insufficient finance at affordable terms,
inflexible labor markets and infrastructure related problems - like high power tariff, and
insufficient export infrastructure. The following were identified as the greatest obstacles to the
internationalization of SMEs by UNICEF:1.

Lack of entrepreneurial, managerial and marketing skills.

2.

Lack of accessibility to investment.

3.

Lack of government incentives for internationalization of SMEs.

4.

Lack of accessibility to information and knowledge.

14 ibid

5.

Competition of indigenous SMEs in foreign markets.

6.

Difficulties accessing financial resources/Lack of capital.

7.

Non-conformity of standardization, lack of quality awareness and lack of mutual

recognition schemes.

8.

Inadequate behaviors of multinational companies against domestic SMEs/Lack of

government supply-supporting programs.

9.

Product and service range and usage differences.

10. Risks in selling abroad.

11. Language barriers and cultural differences.
12. Complexity of trade documentation including packaging and labeling.
13. Inadequate intellectual property protection.

Chapter 6
Suggestions
The following suggestions and requirements are recommended for the growth of SSIs in
India:1.

Definition of SSIs based on the Turnover limit along with the fixed assets.

2.

Single Taxation Law each for all Direct and Indirect Taxes.

3.

Single Comprehensive Labour Policy.

4.

Reservation (Procurement) Policy Price Preference and Purchase Reservation should be

continued for SSIs.

5.

Compulsory Registration for SSIs and thereby creating authenticated data and statistics on
SSIs.

6.

Benchmarking of SSI Associations and compulsory registration of SSI units with such
associations.

7.

Quality Improvements - Testing Centers and Laboratories and availability of various

standards specifications.

8.

Infrastructure development like work sheds, etc. at affordable cost including practical rule.

9.

Updated Industrial Training Centers in all districts for industrial needs.

10. Maintaining Stability of Raw material prices.

11. Credit Flow and Awareness of schemes among SSIs.
12. Promotion of Clusters.

13. Sick Unit Rehabilitation Scheme.

14. Easy Exit Policy for SICK Units.
Conclusion
The small scale industries play 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 are
discussed all over the states and they satisfy local demand. Thus they play a critical role in the
development of regions. The government announced some policies and programs to support
entrepreneurs of handlooms to sustain employment in rural areas and to improve the quality of
life for handloom weavers. Various steps were taken to improve credit flow to SSIs, the
government has also introduced various schemes and incentives for the promotion of SSIs and
provide institutional infrastructure for SSIs through Small Industry Development Organisation
(SIDO), and National Small Industries Corporation (NSIC) Ltd. Technology Resource Centers
(TRC) provide latest and right technology for attaining global reach by SSI units. SSIs which
account for about 45 percent of the manufacturing output and form the backbone of industrial
development in India now are not export competitive and contribute only about 34.08 per cent of
exports as on 2007-08. Boosting the contribution of SSIs in total exports of India is vital to
Indias future economic growth, which can be promoted in the following manner. Policy
intervention for SSIs could be particularly export-effective when it is based on the Triple C
(Customer oriented, Collective and Cumulative) However, it is also essential to create and
sustain a business environment that reinforces the international competitiveness of the export
sector as a whole. This can be achieved by active collaboration between governments, the private
sector and international agencies with a view to reaping the significant potential benefits of
exports through SSIs.

Bibliography
Articles
Prentice Guy , Cottage Industries: Concepts And Implications, Midcontinental Journal of
Archaeology,Vol. 8, No. 1 (1983), pp. 17-48, Maney Publishing,
http://www.jstor.org/stable/20707899?seq=1&cid=pdf-reference#references_tab_contents

Narang Baljeet singh , Sharma Vinod and Gupta Prashant , The performance evaluation of
SSIs in India, Bauddhik, Volume 3, no.-1, 2012

Dr. Uma P., Role of SMEs in Economic Development of India, Asia Pacific Journal Of
Marketing & Management Review, Vol.2 (6), 2013

Websites
www.google.com
www.jstor.com
www.msme.gov.in