Everything you need to know about small scale industries

CIOReview IndiaTeam | Tuesday, 11 January 2022, 10:23 IST

SSI stands for Small Scale Industries. A small scale industry (SSI) is one in which a product is manufactured or a service rendered on a small scale. Small scale industries or SSI are those industries/businesses which do not exceed the threshold limit of 10 crores in capital investment and 50 crores in turnover annually. Capital investment includes putting in the money in equipment, machinery etc. Companies are classified as part of the small scale industries in accordance with the guidelines issued by the government of India

Importance of small scale industries

Small-Scale Industries (SSI) form the lifeline of Indian economy. The number of SSI units and employment generation is said to have declined in recent years, and this complicates vital efforts to reduce poverty. However, it is a general opinion that SSI’s help not only in employment generation but also in some other significant ways. The sector has undergone a significant improvement over time with the use of new technology and new management practices. The recent developments of this sector have boosted its performance in making both social and economic contributions that have enabled India to grow at a faster pace.

Some of the common businesses that are a part of SSI include:

  • Small toys
  • Bakeries
  • School stationeries
  • Photography
  • Water bottles
  • Paper Bags
  • Leather belt
  • Beauty parlours
  • Franchise businesses

What are the characteristics of SSI?

Small scale industries (SSI’s) are crucial for a healthy economy. With the passage of time, they have become more competitive and efficient.

Note: The term ‘small industries’ is synonymous with ‘small scale industries.

The major characteristics of SSI’s are:

1. Ownership

Small scale industries can either be owned by individuals, partnerships or corporations. But they have to produce goods and services in an unorganized sector.

2. Production System

They do not use complex machinery but use simple machines and labour intensive techniques for production. For example - The production process of slippers and furniture involves simple machines like lathe, saw, polishing machine etc. Labour intensive techniques include human hand labour e.g., slipper making, leather tanning etc.

So it is called the informal sector because there is no formal management system involved in running these industries.

3. Flexibility

Small scale industries are more flexible than large scale industries in terms of changes and amendments in the business environment. They can easily adapt themselves to changes like changes in demand or supply, technological changes or even political changes. This quality helps them to survive in the long run because they can take decisions quickly without going through any bureaucratic formalities and hence with minimum losses. For instance, if you decide to get into the franchise business the patanjali franchise price will always be in your favour and affordable. See More.

4. Resource utilization

 Small suppliers often utilize local resources, which helps the community to get the most out of its natural resources.

5. Executive efficiency

Both the owners and managers of these businesses are actively involved in the day-to-day operations of their business.

6. Reach

An advantage of small-scale industries is that they can deal with the needs of the local market.