Small Scale Industries: Characteristics and Economic Importance

Published On: Jun 17, 2020Last Updated: Oct 14, 20234.2 min read

Small-scale industries are industries where the processing, production, and delivery of services are undertaken on a micro or small scale. Such firms make a one-time investment in equipment, facilities, and factories, albeit not exceeding the Rs 20 Crore limit.

Introduction of SSI

In general, the small industries are those that manufacture and offer services with the aid of small machinery and less workforce. These companies will fall under the guidelines laid down by the Indian Government.

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The SSIs are an economic lifeline, especially in developing countries such as India. Also, these sectors are labor-intensive and thus play a significant role in generating jobs. SSIs are a critical economic field from both a financial and social perspective as they contribute to per-capita income and resource usage in the economy.

Small Scale Industries can operate in any of the following space;

  • Bakeries
  • Photography
  • Beauty parlors/ Salon
  • Leather belt
  • Small toys
  • Paper Bags
  • Boutiques
  • School stationeries
  • Water bottles

Characteristics of SSI

  • Ownership: SSI is typically owned by one company. It can either be a single company or a partnership at times.
  • Care and Management: Care and power usually remain with the owner/owner. The owner is also directly engaged in the everyday operations of the firm.
  • Intensive labor: SSI ‘s development dependence is very minimal. They, therefore, tend to use labor for their production.
  • Flexibility: SSIs are more adaptable to the changing business climate. And in the case of changes or sudden innovations, as opposed to big companies, they are versatile enough to adapt and to proceed.
  • Scope: Small-scale enterprises have a small geographic area. We will then meet their local and national requirements.
  • Usage of energy: Utilization of nearby, freely accessible resources, allowing the community to make maximum use of minimal waste natural resources.

Role in the Indian economy

  • Employment: for developing nations such as India, SSIs are a significant source of jobs. Due to the limited technology and availability of resources, the workforce and workforce tend to be used for their production.
  • Production: these companies account for close to 40% of the total Indian product and service production. They are one of the main reasons for economic growth and restructuring.
  • Make in India: SSI is the finest evidence of the program Make in India. They focus on the role of producing and distributing goods in India worldwide. This also contributes to increasing demands from around the world.
  • Export contribution: India’s export industry is primarily based on the growth and development of these small industries. About half of the products exported from India are produced or processed by the concerned sectors.
  • Public Welfare: These sectors have a chance of accumulating capital and creating jobs. SSIs are also crucial to our country’s social growth and development.

Objectives of SSI

A small scale industry will have the following purposes- 

  • To build more opportunities for jobs.
  • To support the development of the economy’s rural and less developed regions.
  • Reducing ethnic disparities.
  • To ensure optimal use of the country’s untapped resources.
  • Improving people’s living standards.
  • To achieve equal income and capital distribution.
  • To tackle the problem of unemployment.
  • To gain self-confidence.
  • Adopting the latest technology to produce better quality products at lower costs.

Registration of SSI

Request with SSI is an MSME Ministry request. To apply for a variety of schemes, grants, and other benefits, the Government offers these SSIs wherein any corporation may gain SSI registration. The SSI can also be registered online.

Eligibility Criteria for SSI registration

SSI registration can be obtained for:

  • Manufacturing enterprise; and
  • Service enterprise

If investment in plant and equipment (except land & buildings) are within the following limits for manufacturing and service provider enterprises:

  • Micro enterprises: investments in plants and gear up to Rs.1 crore.
  • Small Enterprises: spending on plants and equipment of up to Rs.10 crores.
  • Medium-sized enterprises: plant and equipment investment up to Rs.20 crores.

Benefits of obtaining SSI and MSME registration

  • Various tax exemptions are given to SSIs.
  • Minimum Alternative Tax Credit (MAT) can be applied for up to 15 years instead of 10 years.
  • Many government tenders are available only to the SSI.
  • You can easily access credit.
  • If the cost of securing a patent has been licensed or the industry’s set-up is minimized, then many discounts and compromises are possible.
  • Businesses classified as SSI receive higher government license and qualification choices.
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Ease to the businesses registered under SSI / MSME :

  • The SSI owner must fill out a single SSI registration form to allow the registration. It is also possible in offline mode.
  • If a person wishes to be registered for more than one industry, he or she can choose to disclose them individually for SSI.
  • To be licensed, a basic form that can be found on the website has to be completed.
  • SSI registration records are Aadhar number, sector name, address, banking information, and other specific information. Records are also needed.
  • The person may request certificates of his / her own here.
  • For registration, no registration fees are required.
  • When you complete and submit the SSI registration form, you get the SSI registration number very early.

Know more about MSME here.

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Labdhi Kochar
About the Author

Labdhi Kochar

Labdhi, associated with since 2016, is a Company Secretary, Business Manager and Consultant for the company. She helps startups by giving them consultations and insights on their business development and growth. Labdhi is a BCom-LLB and has 4 years of Industry experience.