Small and medium business

DEFINITION OF SMALL INDUSTRIES

 Year 1950
 Size of Gross Investment in fixed assets in plant and
machinery, land, building etc. (not exceeding Rs. 5 lakhs
and strength of workforce (employment less than 50
workers / day using power or less than 100 workers / day
without use of power).
 “Eligibility criteria based on investment in Machinery and
Equipment only.”
INTRODUCTION
 Worldwide, the micro small and medium enterprises
(MSMEs) have been accepted as the engine of
economic growth and for promoting equitable
development.
 The major advantage of the sector is its employment
potential at low capital cost. The labor intensity of the
MSME sector is much higher than that of the large
enterprises.
 The MSMEs constitute over 90% of total enterprises in
most of the economies and are credited with
generating the highest rates of employment growth and
account for a major share of industrial production and
exports.
 In India too, the MSMEs play a pivotal role in the overall
industrial economy of the country. In recent years the MSME
sector has consistently registered higher growth rate compared
to the overall industrial sector.

 As per available statistics (4th Census of MSME Sector), this

sector employs an estimated 59.7 million persons spread over
26.1 million enterprises. It is estimated that in terms of value,
MSME sector accounts for about 45% of the manufacturing
output and around 40% of the total export of the country.
 Small scale sector is one of the success stories of the modern
India. Its success is written large over the face of the country
and is equally visible all around. This is a sector that has
emerged victorious in the face of rising threats from large
sector inside and from multi-nationals abroad.

 In India, the small-scale industrial (SSI) sector has acquired a

prominent place in the socio-economic development of the country
during the past 50 years.
Under the MSMED Act 2006,
 Micro enterprises have been defined for the first time
in this Act. Under the MSMED Act 2006,

 Enterprises have been classified broadly into two

categories,
Namely enterprises engaged in the
MANUFACTURE/PRODUCTION of goods
pertaining to any industry and enterprise engaged in
PROVIDING SERVICES.
 Investment in plant and machinery/equipment (excluding
land and building)
Manufacturing Service
Enterprises Enterprises

Micro Up to Rs. 25 lakhs Up to Rs. 10 lakhs

Small More than Rs. 25 More than Rs. 10

lakh and up to Rs. 5 lakh and up to Rs. 2
crore crore
Medium More than Rs. 5 More than Rs. 2
crore and crore and up to Rs.
up to Rs. 10 crore 5 crore
Objective of small business
 To generate immediate and large scale employment
opportunities with relative low investment
 To improve the level of living of people in the country
 To encourage dispersal of industries to all over the
country small towns, villages and economically lagging
regions.
 To promote balanced regional development in the whole
country
 To encourage effective mobilization of country's
untapped capital and human resources.
Scope and type of small business
 Small business covers a wide range of business activies
Classified into 5 main groups
1. Manufacturing industries
2. Feeder industries
3. Serving industries
4. Ancillary to large industries
5. Mining industries
Small Scale Industry highlights
The SSI sector accounts for :
 95 % of industrial units
 40 % of output in the manufacturing sector
 35 % of total export
 Employment of over 60million people
EXPORT
 35% of the Indian Exports is contributed by SSI Sector.
 mostly fuelled by the performance of garments, leather
and gems and jewellery units from this sector.
COMPARISON OF THE SSI SECTOR WITH THE
OVERALL INDUSTRIAL SECTOR
 The small-scale sector has maintained a higher rate of
growth vis-à-vis the overall industrial sector. The
comparative growth rates of production for both the
sectors during last five years
 Year Growth Rate Overall of SSI industrial
sector (%) sector (%)
2002-03 8.68 5.70
2003-04 9.64 6.90
2004-05 10.88 8.40
2005-06 12.32 8.10
Structure features
 This are classified under three broad categories
1. Some industries are started on a small-scale but they are likely
to develop into medium-sized unit within a short time
Ex-pens, engine oils, automobile spares etc..
2. Some industries are started on a small-scale but they are likely
to remain so for a long time in view of specialization nature of
demand for the product
Ex-bolts nuts agarbatties etc..
3. Some industries are started as cottage industries but later
developed into small scale industries or as feeder units to large-
scale industries
Ex-coil spring, producing toys etc..
Small vs large units
Small large

Local area of operation Wide area

Labor intensive Capital intensive

Small fixed investment Large

Decentralised location Centralised location

Small uneconomic size Large economic size

Limited scope of expansion Economices of scale and great for

expansion
Institutional Support
 There are many institutes by state and Central government
set ups some of them are:
 SIDBI(Small Industries Development Bank of India),
 SIDO(Small Industries development organization),
 SISs(Product-cum-process development organization),
 NSIC(national small industry corporation),
 SISI(Small industry service institute),
 SSIB(small scale industry board),
 SIDC(small industry development corporation),
Aims of institutions toward SSI
 To facilitate growth of this sector with changing economic
scenario
 To facilitate growth within the framework of social and
economic policy of the country
 To encourage technology modernization
 To promote entrepreneurship among technically qualified
persons
 To improve product standards
 To create opportunities for in house R&D
 To provide greater exports
Awards and incentives

Besides a Trophy and a

Certificate, the First,
Second & Third Award
carry a Cash Prize of
Rs.25,000/-,
Rs.20,000/- and 15,000/-
respectively

Shri Pranab Mukherjee, the then Hon’ble Defence Minister and Shri
Mahabir Prasad, Hon’ble Union Minister of SSI & ARI giving away prize
to a successful woman entrepreneur
Awards and incentives
 National awards for quality product in small scale
industry.
 National awards for outstanding ssi entrepreneur.
 National awards for research and development effort in
small scale sector.
 NATIONAL AWARD TO SMALL SCALE
ENTREPRENEURS
Thank you