2 Origin and history of small s mall scale industries in India Before Before the Second Wor World ld War, War, it was established established as the office of
superinten superintendent dent of
Cottage Industries. In 1947, it was expended into as the office of irectorate of Industries and in 19!" it too# responsibilit$ for the de%elop&ent of pri%ate industries. In 197"' it was transferred to the (inistr$ of Industries, bearing with the na&e of Cottage Industries Corporation. )n "1*"*1974, it was shifted again to the (inistr$ of Co*operati%e. +he na&e was also changed into Cottage Industries epart&ent on -**197. )n "1*"*1974, it was shifted again to the (inistr$ of Co*operati%e. +he na&e was also changed into Cottage Industries epart&ent on -**197. In 19/", 14 wea%ing schools were referred fro& the epart&ent of Industr$, 0griculture 2ocation cational al +rain +raining ing under under the (inist (inistr$ r$ of 3ducati 3ducation on to the Cottag Cottagee Indust Industrie riess epart&ent. In 1997, the structure of the depart&ent was pro&oted fro& rade to rade 1. +he na&e of the depart&ent was changed again as the S&all*Scale Industries epart&ent on 1*4*"-11.
2.3 Meaning of small scale industry 0 s&all scale industr$ 5SSI6 is an industrial under ta#ing in which the in%est&ent in fixed assets in plant and &achiner$, whether held on ownership ter& or on lease or hire purchase, does not exceed s. 1 crore. In other words, 0 s&all scale industr$ is that industr$ in which &ost of the wor# is done b$ hand or %er$ s&all and si&ple &achines and the wor#ers ha%e lac# of technical #nowhow &eans the$ ha%e no degree for their wor#. S&all scale units are not defined in the central excise 0ct 1944 or rules &ade there under. +he s&all scale units are defined in Industries 0ct, 19!1 for the purpose of exe&pting then fro& registrati registration on under the 0ct. +he definition definition basicall$ basicall$ ta#en the in%est&ent in%est&ent &ade on the plant and &achiner$ b$ an$ industries as the basis for deter&ining the s&all scale industries.
2.4 Definition of small scale industries efining s&all*scale industr$ is a difficult tas# because the definition of s&all*scale industr$ %aries fro& countr$ to countr$ and fro& one ti&e to the in the sa&e countr$ depending upon the pattern and stage of de%elop&ent, go%ern&ent polic$ and ad&inistrati%e set up of the particular countr$. +he 8iscal Co&&ission, o%ern&ent of India, ew elhi, 19!-, for the first ti&e defined a s&all*scale industr$ as, one which is operated &ainl$ with hired labor usuall$ 1- to !hands. 8ixed capital in%est&ent in a unit has also been adopted as the other criteria to &a#e a distinction between s&all*scale and large*scale industries. +his li&it is being continuousl$ raised up wards b$ go%ern&ent. +he S&all Scale Industries Board in 19!! defined, :S&all*scale industr$ as a unit e&plo$ing less than !- e&plo$ees if using power and less than 1-- e&plo$ees if not using power and with a capital asset not exceeding s. ! la#hs:. +he definition for s&all*scale industrial underta#ings has changed o%er ti&e. Initiall$ the$ were classified into two categories* those using power with less than !- e&plo$ees and those not using power with the e&plo$ee strength being &ore than !- but less than 1--. ;owe%er the capital resources in%ested on plant and &achiner$ buildings ha%e been the pri&ar$ criteria to differentiate the s&all*scale industries fro& the large and &ediu& scale industries. 0n industrial unit can be categori
and con%entional techni=ues of production resulting in poor producti%it$ rate whereas the &odern s&all*scale units are &uch &ore producti%e with less &anpower and &ore sophisticated.
2.4 Growth: 0 s&all scale industr$ 5SSI6 is an industrial underta#ing in which the in%est&ent in fixed assets in plant &achiner$, whether held on ownership ter& or on lease or hire purchase, does not exceed s. 1Crore. ;owe%er, this in%est&ent li&it is %aried b$ the o%ern&ent fro& ti&e to ti&e. +he S&all Scale Industr$ is an enterprise whose e&plo$ee count and re%enue falls below certain le%els. S&all Scale Industries in India pro%ide >ob opportunit$ to &ore than ! &illion people. Internationall$ S(3s report for 9/? of business statistics and are accountable for triggering originalit$ and co&petition. 3ntrepreneurs in s&all scale sector are nor&all$ not re=uired to obtain a license either fro& the Central o%ern&ent or the State o%ern&ent for setting up units in an$ part of the countr$. egistration of a s&all scale unit is also not co&pulsor$. But, its registration with the State irectorate or Co&&issioner of Industries or IC@s &a#es the unit eligible for a%ailing different t$pes of o%ern&ent assistance li#e financial assistance fro& the epart&ent of Industries, &ediu& and long ter& loans fro& State 8inancial Corporations and other co&&ercial ban#s, &achiner$ on hire*purchase basis fro& the ational S&all Industries Corporation etc. egistration is also an essential re=uire&ent for getting benefits of special sche&es for pro&otion of SSI %i<. Credit guarantee Sche&e, Capital subsid$, reduced custo& dut$ on selected ite&s, IS)*9--- Certification rei&burse&ent se%eral other benefits pro%ided b$ the State o%ern&ent.
2.5 Features of small scale industries . !a"our intensi#e: S&all*scale industries are fairl$ labour*intensi%e. +he$ pro%ide an econo&ic
solution b$ creating e&plo$&ent opportunities in urban and rural areas at a relati%el$ low cost of capital in%est&ent. 2. Fle$i"ility:
S&all*scale industries are flexible in their operation. +he$ adapt =uic#l$ to %arious factors that pla$ a large part in dail$ &anage&ent. +heir flexibilit$ &a#es the& best suited to constantl$ changing en%iron&ent. 3. Management and control: 0 s&all scale unit is nor&all$ a one &an show and e%en in case of partnership the acti%ities are &ainl$ carried out b$ the acti%e partner and the rest are generall$ sleeping partners. +hese units are &anaged in a personali
in%est&ent than the large units. +herefore these units are &ore suited for econo&ies where capital is scarce and there is abundant suppl$ of labour. /. Dis'ersal of unit:
S&all scale units use local resources and can be dispersed o%er a wide territor$. +he de%elop&ent of s&all scale units in rural and bac#ward areas pro&otes &ore balanced regional de%elop&ent and can
