What is a Small Scale Industry (SSI)?
Small scale industries (SSIs) also known as MSMEs are defined & categorized by the Micro, Small & Medium Enterprises Development Act, 2006. The act categorizes different scale of industries on the basis of investment in plant & machinery in case of manufacturing industries and on the basis of investment in equipment in case of service sector industries.
1. Micro Scale Enterprise: Manufacturing enterprises in which investment in plant & machineries does not exceed Rs 25.00 lakhs and service sector industries in which investment in equipment does not exceed Rs 10.00 lakhs are termed as micro scale enterprises.
2. Small Scale Enterprise: Manufacturing enterprises in which investment in plant & machineries is more than Rs 25.00 lakhs but does not exceed Rs 5.00 crores and service sector industries in which investment in equipment is more than Rs 10.00 lakhs but does not exceed Rs 2.00 crores are termed as small-scale enterprises.
3. Medium Scale Enterprise: Manufacturing enterprises in which investment in plant & machineries is more than Rs 5.00 crores but does not exceed Rs 10.00 crores and service sector industries in which investment in equipment is more than Rs 2.00 crores but does not exceed Rs 5.00 crores are termed as medium scale enterprises.
Also read: Advantages and Disadvantages of Small Scale Industries
Importance of Small Scale Industries:
SSIs are the backbone of the world economy and this is the main reason why even governments are providing various sops and financial benefits for encouraging more and more MSMEs to flourish. Existence of small-scale industries is must as:
1. Partner in nation building: Education, good health, etc. are most important for a country to flourish exponentially. As SSIs provide numerous job opportunities to various classes of people, they are not only paying them their salaries but also enabling them to improve their lifestyle, sending their children to schools to gain education who will become partners in the nation building in time to come and providing them with good and hygienic food.
2. Customized Products: Instead of generic products already present in the market, you want to provide some sort of customized products to your customers, then small players can come to your rescue. Conglomerates and MNCs usually do not disturb their already continuing chain of products for any order, unless it is big enough to form part of company’s sizeable revenue. However, smaller players are always ready to surprise you with their latest products which can be customized at your will.
3. Employment to local people: MNCs and big corporates usually recruit highly effective and skilled manpower from all over the world as they want to achieve greater numbers. However, SSIs recruit more and more local people as they want to build relations instead of just generating numbers. If the relations are good, the employee remains loyal to the company and treats the company’s property, company’ profits & losses as his own. Employing local people instils confidence among the workers which ultimately increases their productivity in the long-term.
4. Creation of jobs: In the modern era where larger corporates and MNCs are moving more and more towards automation and mechanization, SSIs which still cannot afford such high-end technologies, seek to recruit more and more people into their labour intensive industries. Recently, a large IT company laid off 3000 employees due to increased level of automation and robots replacing humans. Whereas, even today myriads of SSIs are labour intensive and provide earning to many skilled, semi-skilled & unskilled workers.
5. Discipline into the industry: Nowadays there has been increased trend of big corporates taking care of their customers. Some big players have even setup an altogether different department just for the customer care. Even conglomerates are aware that if they start ignoring customers and merely focus on maximising profits, then those customers will ultimately shift to smaller players present in the industry. Due to existence of smaller players into the market, bigger companies conduct their businesses with required discipline.
Also read: Importance of Small Scale Industries in India
Small scale industries ideas
There are many districts within our country which are backward due to poor health, lack of education, lack of awareness, poor rate of growth & development, etc. Myriad of villagers, farmers & labourers are dying each year from the burden of debt, which they are unable to repay due to unavailability of work & jobs.
There are a number of small-scale industries ideas which if implemented throughout the nation, can provide work & jobs to farmers & villagers. Some of the them are as follows:
1. Primary Processing units: Let us say, there is a snacks manufacturing unit in a quite developed district and the unit procures all of its raw materials from the nearby dealers, as the promoters cannot afford to procure unprocessed raw crop directly from the, process the crop first and then use it. They want already processed, i.e. graded & sorted crops according to their needs.
In such cases, small farmers who cannot afford to set up a grading & sorting plant sell their crops at lower prices. Setting up of grading & sorting units by small-scale players will encourage farmers to grow crops as they are adding value to their produce and hence enabling them to sell their product into the market at competitive rates.
Therefore, by setting up small-scale primary processing units in the villages and backward districts, we can assure greater value of agricultural produce, better lifestyle of farmers, increased awareness among farmers & villagers, etc.
2. Job work for larger companies: Once a company reaches at a stage where it has pan-country customers, then the such companies start strategizing their production methods to reduce costs and increase overall returns on capital in the long-term. If a MNC keeps on building factories all over the country, then most of its liquid fund will be blocked in long-term assets and slow down its growth. Hence, such MNCs can provide work order to smaller players of different states, and especially at places where the demand of the products is not substantial, to reduce costs and keep the fund flowing. If a small player manufactures products for larger companies, one thing is assured that, the factory of such small player will never remain closed.
3. Organic products industry: With the increased use of fertilizers and pesticides all over the world, quality of products as well as quality of soil is eroding day by day. Many countries have started to abolish fruits & vegetables, clothes, etc. which aren’t organic. There are many opportunities for our small-scale industries to usher into this sector by setting up poly houses or engaging in hydroponic farming, hence increased organic cultivation in the long run.
Even bigger players of the country have started focusing more on the organic produce and hence it an opportunity that small-scale players should not miss as organic industry is the talk of the future.
Also read: Small-Scale Industries: Role, Importance, Types, Problems, and Solutions
Aditya Natani, edited.