INTRODUCTION
Small Scale and Cottage Industriesare part of the MSMEs. Small-scale industries are those where production, manufacturing, and service delivery are carried out on a modest scale. Cottage Industries are typically extremely small businesses that are founded in homes or other modest structures. While family labour is used in the cottage industry, outside labour is used in small-scale industries.
Small Scale Industries and Cottage Industries are the backbones of the MSME. Through the article, we will be covering the basic aspects of both industries, along with their role, importance and problems faced. We will also be discussing the government initiatives taken up to benefit the small scale and cottage industries.
SMALL SCALE INDUSTRIES
Small-scale industries are those in which production, manufacturing, and servicing are carried out on a modest scale. The overall investment in such industries does not exceed one crore, and it is typically made as a one-time investment in plant and machinery.
Smaller machines and extremely constrained people are used in small-scale enterprises to produce items and provide services. Small scale industries, also known as SSIs, are considered the backbone of an economy, which is crucial for a nation like India. It greatly aids in providing work possibilities for the country's inhabitants because it is a labour-intensive business.
SOME EXAMPLES OF SMALL SCALE INDUSTRIES INCLUDE :
- Pickle manufacturing industries
- Incense stick manufacturing industries
- Paper plate manufacturing industries
- Water bottles manufacturing industries
- cosmetic salons
- school supplies
- Bakeries
- Small toys manufacturing industries
- Industries for paper bags
- Leather belt manufacturing industries
CHARACTERISTICS OF SMALL SCALE INDUSTRIES
The characteristics of Small scale industries in India are as follows :
- Small scale industries often only have one owner, which implies they are either partnerships or sole proprietorships.
- Owners of Small scale industries are responsible for managing them. Thus, they actively participate in the day-to-day operations of the company.
- Small scale industries operate in a constrained space, enabling them to satisfy local and regional needs.
- Small scale industries utilise locally sourced, easily accessible resources, allowing the economy to make the most use of existing natural resources with the least amount of waste.
- Due to their high labour requirements, Small scale industries rarely use technology.
- Unlike huge businesses, small scale industries are flexible and adaptable to a changing business environment.
ROLE OF SMALL SCALE INDUSTRIES IN INDIA
The small scale industries play a significant role in the Indian economy:
- They play a crucial role in creating employment in an economy because they are the main sources of employment for those who live in rural areas.
- Small scale industries in India contribute significantly to the nation's economy because they produce close to 40% of all goods and services.
- Small-scale businesses support the Make in India movement, which increases consumer demand for locally produced goods.
- Small scale industries supply the majority of the export materials to Indian businesses. According to estimates, these industries create almost 50% of all the material shipped.
CONTRIBUTION OF SMALL SCALE INDUSTRIES
The following lists the main contributions made by small-scale industries to economic development :
- According to the 73rd phase of the National Sample Survey (NSS), there are 633.88 lakh unincorporated MSMEs that are not in the agriculture sector operating across the nation in 2015–16. The MSME sector has been adding 11.10 crore jobs in terms of employment.
- Small-scale industries play a crucial role in eliminating income disparities.
- The surplus of these sectors is distributed among many individuals, and capital is widely dispersed in tiny amounts.
- Small-scale industries help to disperse industries throughout regions and balance out regional imbalances.
- Small-scale industries utilise local assets like capital and entrepreneurial skills that would have gone unused in the absence of such industries, among other things.
GOVERNMENT INITIATIVES TO BOOST SMALL SCALE INDUSTRIES
The following are the primary steps taken by the Indian government to boost the Small Scale :
- Various organizational measures, such as Industrial Estates, District Industries Centre (DIC), National Small Industries Corporation (NSIC), etc. have been set up at various locations.
- In financial measures, the Government of India has set up National Equity Fund (NEF), Single Window Scheme (SWS), Small Industries Development Fund (SIDF) and Small Industries Development Bank of India (SIDBI).
- Small businesses with a revenue of up to Rs 1 crore are completely exempt from excise duty. Products produced in the small-scale sector are given price and purchasing advantage in government procurement programmes.
- When specific types of raw materials and components used by SSIs are imported, they are subject to the concessional rate of customs duties.
- As far as technical assistance is concerned, the governemnt has set up for the technological upgradation and modernization models such as Small-scale Industries Development Organisation (SIDO), Technology Development and Modernisation Fund (TDMF) and Council for Advancement of Rural Technology (CART).
- For small scale industries, the governemnt has also launched a Reservation of Items scheme. By shielding them from competition with large-scale units, the policy to reserve specific items for the small-scale sector seeks to advance SSIs.
GOVERNMENT POLICIES FOR DEVELOPMENT AND PROMOTION OF SMALL-SCALE INDUSTRIES IN INDIA
In India, Small-scale enterprises have been given an important place for both ideological and economic reasons. It is well documented that the small scale industries have an important role in the development of the country. It contributes almost 40% of the gross industrial value added in the Indian economy. Government's approach and intention towards industries in general and SSIs in particular are revealed in Industrial policy Resolutions. There are many Government Policies for development and promotion of Small-Scale Industries in India.
These are mentioned as below:
- Industrial Policy Resolution (IPR) 1948
- Industrial Policy Resolution (IPR) 1956
- Industrial Policy Resolution (IPR) 1977
- Industrial Policy Resolution (IPR) 1980
- Industrial Policy Resolution (IPR) 1990
The Industrial Policy Resolution (IPR) is a set of guidelines and policies set forth by the Indian government for the development of the country's industry sector. Over the years, the Indian government has issued several Industrial Policy Resolutions (IPR) with the aim of promoting industrial growth and development. The following is a brief overview of each of the IPRs issued in India:
- INDUSTRIAL POLICY RESOLUTION (IPR) 1948: The first Industrial Policy Resolution was issued in 1948, just a year after India gained independence. This policy aimed to promote the development of small-scale industries and encourage the establishment of new industries in India. It also emphasized the need to develop infrastructure and create an environment conducive to industrial growth.
- INDUSTRIAL POLICY RESOLUTION (IPR) 1956: The 1956 IPR marked a major shift in India's industrial policy. It introduced the concept of mixed economy and allowed for both private and public sector participation in the industrial sector. The policy aimed to promote heavy industries, especially in the public sector, and encouraged the growth of exports.
- INDUSTRIAL POLICY RESOLUTION (IPR) 1977: The 1977 IPR was introduced during a period of economic crisis in India. The policy aimed to control the growth of large-scale industries and promote the development of small-scale industries. It also emphasized the need for self-reliance and the development of indigenous technology.
- INDUSTRIAL POLICY RESOLUTION (IPR) 1980: The 1980 IPR continued to promote the development of small-scale industries and encourage the use of indigenous technology. It also introduced the concept of "priority sector," which aimed to give priority to certain industries for development and promotion.
- INDUSTRIAL POLICY RESOLUTION (IPR) 1990: The 1990 IPR marked a major shift towards liberalization and globalization in India's industrial sector. The policy aimed to promote private sector investment, encourage foreign investment, and remove restrictions on the expansion of existing industries. This policy also aimed to create a more favorable environment for industrial growth and development.
Overall, these different Industrial Policy Resolutions have helped to shape the industrial sector in India and have played a significant role in the country's economic development.
POVERTY IN INDIA – Poverty can be defined as a situation when people are when people are unable to satisfy basic needs of life. The extent of poverty in India is measured by the number of people living below the poverty line. The term poverty line is defined on the basis of income and expenditure. India used to define poverty line based on the method defined by a task force in 1979.It is based on expenditure for buying food worth 2400 calories in rural areas and 2100 calories in urban areas. The current poverty line is 1,059.42 Indian Rupees per month in rural areas and 1,286 Indian rupees per month in urban areas.
CONCLUSION
Small Scale Industries (SSI) play a vital role in the Indian economy. They provide employment opportunities to millions of people, contribute to the country's Gross Domestic Product (GDP), and help in the overall economic development of the nation. SSI's are also known for their flexibility and adaptability to changing market conditions, making them an essential component of India's business landscape. However, SSI's in India still face several challenges, including access to credit, lack of technology, and limited marketing and distribution channels. The government has taken various measures to support and encourage the growth of SSI's, such as offering tax incentives and subsidies, setting up special economic zones, and providing easier access to finance. With the right support and policies in place, SSI's in India have the potential to grow and thrive, thereby contributing to the country's economic growth and development.