OTHER DEFINITION:A small scale industries are located in urban centers and produce goods with partially or wholly

mechanized equipment employing outside labour, small insize, having little capital resources and a small labour force Cottage Industries are mainly rural in character and are generally associated with agriculture involving operations mostly by hands and are carried on inthe home either as a whole time or as a part time occupation, primarily withthe help of members of the family

.IMPORTANCE OF SMALL SCALE INDUSTRIES IN INDIA

1.Employment:
The cottage and small scale industries have high employment capacity. They provide approximately 8-10 times more employment than large scaleindustries. Wi t h i n p e r i o d f r o m 1 9 9 5 2 0 0 4 s ma l l s c a l e s e c t o r c r e a t e d 8 2 . 5 7 l a k h employment opportunities

2 .Mo re ou tput with less in vestmen t:

These industries being labour intensive require less capital Thus more production can be obtained with less investment These industries can easily adapt to changing trends as they are small in size The average growth rate of these industries between 1994 -2004 year has been 9.62%

3.Export Earnings:
The product of these industries like handicrafts, embroidery, handloom, ivory product etc are in great demand in the foreign countries. These industries account for 30% of our export earning by appropriate policymeasures This share can be further increased Export earning from small scale industries increased from Rs.29068 crore-Rs. 86,013 crore between years 1994-2003

4.Labor Intensive:
These require less capital and more labour to produce a given output. These are suitable for developing countries like India where there is shortageof capital on one hand and abundance of labor on the other

5.Low Gestation Period:

The small units can be set up within a short period of time. Th e y c a n i n c r e a s e t h e p r o d u c t i o n f l o w o f c o n s u me r g o o d s i mme d i a t e l y because their method of production is simple and less time consuming. They can meet shortage of essential goods and commodities

6.Decentralized Economy and More Even Distribution of Income:

The ownership of these economy is distributed in a broad -based way whichhelp to achieve decentralized economy As it is labor intensive, it provides employment to a large number of peopleand helps in more even distribution of income

.7 . B a l a n c e d R e g i o n a l G r o w t h : T h e s e c a n b e s e t u p i n d i f f e r e n t p a r t s o f t h e c o u n t r y a s t h e y u s e l o c a l l y available raw materials, labor, skill and capital. Thus they bring about balanced regional development.

8.Saving in social Cost:

These industries discourage migration from rural areas to urban areas. T h i s r e s u l t i n s a v i n g o f s o c i a l c o s t i n t e r ms o f c r e a t i n g i n f r a s t r u c t u r e l i k e roads, power supply, sanitation, health care, educational facilities etc., in theurban areas is reduced

.9 .Use of locally av ailable inpu ts:

These make use of locally available man power and physical resources such asland, forest, mineral resources and also products of agriculture and animalwaste.

10.Ancillary Industries:
The small scale industries act as complementary to large scale industries Many of the product required by large scale industries can easily be produced by small units. Eg. Bolts and nuts, carriers for bicycle, cotton bobbins, starch etc