BABU BANARASI DAS NORTHERN INDIA INSTITUTE OF TECHNOLOGY

A Project Report On Small Scale Industry

Submitted To:
Ms. Neha Tiwari

Submitted By:
Abhishek Gupta(0905610004) Abhijeet Srivastava (0905610004) Ahmad Naved (0905610010) Akshay Agarwal (0905610014) AmanDeep (0905610015) Arpit Srivastava (0905610026)
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INDEX
S.No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. Topic
Acknowledgement Introduction to SSI Definition of SSI Advantages of SSI Problems with SSI Steps taken by Government Inherent weakness Government policies for SSI Support from State government Small Industry Service Institutes (SISI) Small Industry Service Institutes (SISI) Census of Small Scale Industry Performance at Glance Opportunity In Small Scale Industry Conclusion References

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Acknowledgement
We convey our sincere gratitude to Ms.Neha Tiwari, (Faculty, Department of Humanities, BBDNIIT) for providing us an opportunity to undergo this project. I am very grateful to our faculties for their valuable guidelines, support and for providing us an opportunity to undertake this project. This project provide us a great opportunity to get a firsthand experience of managerial skills that exists in a real world. I cant forget expressing my thanks to all the respondents, because without their help our project will remain incomplete.

Small Scale Industry

Introduction:
In most of the developing countries like India, Small Scale Industries (SSI) constitute an important and crucial segment of the industrial sector. They play an important role in employment creation, resource utilisation and income generation and helping to promote changes in a gradual and phased manner. They have been given an important place in the framework of Indian planning since beginning both for economic and ideological reasons. The reasons are obvious. The scarcity of capital in India severely limits the number of non-farm jobs that can be created because investment costs per job are high in large and medium industries. An effective development policy has to attempt to increase the use of labour, relative to capital to the extent that it is economically efficient. Small scale enterprises are generally more labour intensive than larger organisations. As a matter of fact, small scale sector has now emerged as a dynamic and vibrant sector for the Indian economy in recent years. It has attracted so much attention not only from industrial planners and economists but also from sociologists, administrators and politicians. Defining small-scale industry is a difficult task because the definition of smallscale industry varies from country to country and from one time to the another in the same country depending upon the pattern and stage of development, government policy and administrative set up of the particular country. Every country has set its own parameters in defining small-scale sector. Generally, small-scale sector is defined in terms of investment ceilings on the original value of the installed plant and machinery.

Definition of Small Scale Industry:

The Fiscal Commission, Government of India, New Delhi, 1950, for the first time defined a small-scale industry as, one which is operated mainly with hired labour usually 10 to 50 hands. The Small Scale Industries Board in 1955 defined, "Small-scale industry as a unit employing less than 50 employees if using power and less than 100 employees if not using power and with a capital asset not exceeding Rs. 5 lakhs". 'The initial capital investment of Rs. 5 lakhs has been changed to Rs. 10 lakhs for sma industries and Rs. 15 lakhs for ancillaries in 1975. Again this fixed capital investment limit was raised to Rs. 15 lakhs for small units and Rs. 20 lakhs for ancillary units in 1980. The Government of India in 1985, has further increased the investment limit to Rs. 35 lakhs for small-scale units and 45 lakhs for ancillary units. Again the new Industrial Policy in 1991, raised the investment ceilings in plant an machinery to Rs. 60 lakhs for small-scale units and Rs. 75 lakhs for ancillary units. The new Policy Initiatives in 1999-2000 defined small-scale industry as a unit engage in manufacturing, repairing, processing and preservation of goods having investment in plant and machinery at an original cost not exceeding Rs. 100 lakhs. In case of tiny units, the cost limitation is up to Rs. 5 lakhs. Again, the Government of India in its budget for 2007-08 has raised the investment limit in plant and machinery of small-scale industries to 1.5 corers An ancillary unit is one which is engaged or proposed to be engaged in the manufacture c production of parts, components, sub-assemblies, tooling or intermediaries or rendering services and the undertaking supplies or renders or proposes to supply or render not less than 50% of its production or services, as the case may be, to one or more other Industries undertakings and whose investment in fixed assets in plant and machinery whether held on ownership terms or lease or on hire-purchase does not exceed Rs. 75 lakhs. For small-scale industries, the Planning Commission of India uses terms 'village an small-scale industries'. These include modern small-scale industry and the traditional cottage and household industry.

Advantage Of Small Scale Industry

There are numerous arguments in favour of the small-scale industries which justify the rationale of small-scale industry development. The Industrial Policy Resolution 1956 has put forward four arguments in favour of small-scale industries which emphasise the very rationale of small-scale industry in the Indian economy. The arguments are: 1. Employment Argument: Small-scale industries have a great potential to create immediate large-scale employment opportunities which is essential for solving widespread unemployment problems of underdeveloped nations. Small-scale industries are labor intensive i.e. they use more of labor per unit of output than investment. As India is a capital scarce and labor abundant country and the major problem of the economy refers to unemployment, it could have been addressed by small-scale units which sometimes even provide 15 to 20 times greater employment than corresponding large industries with any given investment. Because of this huge employment potential small industry are preferred over large ones. 2. Equality Argument: Another argument supporting the rationale of small-scale units refers to equality argument for even distribution of income and wealth. Small-scale units, because of its ownership pattern which is widespread and labor intensive in character provide millions of employment to the unemployed more particularly the rural poor who are in search of employment to eke-out their livelihood. 3. Decentralization Argument: Decentralization argument also supports the rational of small-scale units because it aims at regional dispersal of industries in the country. Decentralization of industries help tap local resources like raw materials, idle savings local talents etc. and make provision for self-employment and capital formation. 4. Latent Resource Argument: The latent resource argument for tapping hoarded and unutilized wealth strongly supports the case for small industries. Small enterprises provide an environment in which the latent talents of entrepreneurs find self-expression.
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Problems with Small Scale Industry:

Small-Scale and cottage industries are faced with the following problems at present: (1) Problem of Raw-material-Due to their limited resources, the owners of these industries cannot afford to purchase raw-material in bulk. That is why they get low quality materials at high rates. (2) Problem of finance - Cheap and easy finance is not available to these industries. The financing system of government institutions and banks is such that these industries have to complete many formalities and there are so many complications which can be followed by these less educated entrepreneurs. (3) Marketing problems-These industries mainly exist in villages and due to lack of transport and communication facilities they are handicapped in finding suitable markets for their products, (4) Lack of Managerial Talent Cottage and small scale industries are mostly run by the small businessmen having no training of management and organization. How these industries, therefore, can stand before the large seals industries which are managed and organized by the specialists of that field? (5) Competition with large-scale industries-The main problem before these industries is that they are unable to compete with large-scale industries. The economies of large-scale production are not available to them and therefore they fail to compete with large-scale industries.

Steps taken by Government and RBI for Small Scale Industry:

(a) The Union Government has set up a number of agencies to help the village and small industries. These include the Small Scale Industries Board the Khadi and Village Industries Commission, the All India Handicrafts Board, the AH IndiaHandloom Board and Central Silk Board,

(b) Credit facilities are made available to these industries through a number of institutions. Small scale sector is included m the priority sector for the supply of institutional credit. (c) Industrial estates and rural industrial projects have been set up and industrial co-operatives have been organized. (d) To encourage the small scale sector, the Central Government has reserved 807 items for exclusive production in the sector. (e) The District Industries Centers are being established at the district level to provide under one roof, all the services and support required by small and village entrepreneurs.

Inherent Weakness Of Small Scale Industry

Lacking basic infrastructure Old/outdated technology Poorly placed in market situation Promoters lack specialisation Weak capital base &lesser access to capital market Lacking managerial&professional skills Face resource crunch Poor accounting system No planning budgeting or monitoring Short term fund are deployed for long term uses Pre operative expenses are not considered in project appraisal

Government policies for Small Scale Industry

Over the past five decades, Government policies have been to protect the interests of the SSI sector and facilitate its rapid development, the Government, in pursuance of its policies, initiated various support measures from time to time which include policy of reservation, revision of investment ceilings, modernization, technological upgradation, marketing assistance, fiscal incentives etc. The Small Scale Sector owes its definition to the Industries (Development and Regulation) Act, 1951. The Sector is defined in terms of investment limits in plant and machinery (originalvalue), upto prescribed value. It comprises a wide divergent spectrum of industries, ranging from the micro and rural enterprises, using rudimentary technology on the one hand to the modern small scale industries using sophisticated technology on the other.

Support from State Government and Industry Association

At the State level, concerned Commissioners/Directors of Industries implement policies for the promotion and development of small scale, cottage, medium and large-scale industries. The Central policies for the SSI sector serve as the guidelines, but each State evolves its own policy and package of incentives. The State departments also oversee activities of the field offices, viz., District Industries Centers (DICs). In addition, State Financial Corporations, State Small Industrial Development Corporations, Technical Consultancy Organizations, operate at the State level to assist the promotion and development of SSIs. Other regional level agencies include State Infrastructure Development Corporations, State Cooperative Banks, Regional Rural Banks, State Export Corporations, Agro Industries Corporations and Handloom and Handicrafts Corporations. At the grass root level, NGOs play an important role for Industry Associations provide support to the SSI sector and offer a common platform to raise industry-related issues. Government policies, in recent years, have stressed the increasing role of Industry Associations in the setting up of common facilities and other ventures in the area of technology, marketing and other support services. Industry Associations also impart institutional support to the small scale sector. Some of the major associations like : Confederation of Indian Industry (CII) Federation of Indian Chamber of Commerce and Industry (FICCI PHD Chamber o Commerce and Industry (PHDCCI) Associated Chamber of Commerce & Industry of India (ASSOCHAM) Federation of Indian Exporters Organ isation (FIEO) World Association for Small & Medium Enterprises (WASME) Federation of Associations of Small Industries of India (FASII) Consortium of Women Entrepreneurs of India (CWEI)
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Small Industry Service Institutes (SISI)

There are 30 SISIs and 28 Branch SISIs set up in State capitals and other industrial cities all over the country. The main activities of these institutions are as follows : Assistance / Consultancy to Prospective Entrepreneurs Assistance/Consultancy rendered to existing units Preparation of State Industrial Profiles Preparation / Updating of District industrial Potential Surveys Project Profiles Entrepreneurship Development Programmers Motivational Campaigns Production Index Management Development Programmes Skill Development Programmes Energy Conservation Pollution Control Quality Control & Upgradation Export Promotion Ancillary Development Common Facility Workshop / Lab. Preparation of Directory of Specific Industry Intensive Technical Assistance Coordination with DICs Linkage with State Govt. Functionaries Market Surveys Other Action Plan Activities assigned by Headquarters

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Census of Small Scale Industry

The Third Census of Small Scale Industries has been launched all over India during October, 2002.The field operations of the Census were entrusted to the State/UT Directorate of Industries. About 15,000 enumerators have been engaged by the directorates for data collection work, which are going to be completed by March, 2003.

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Performance at Glance

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Opportunity In Small Scale Industry

Growth in Requirements for ancillary units due to the increase in number of greenfield units coming up in the large scale sector. Small industry sector has performed exceedingly well and enabled our country to achieve a wide measure of industrial growth and diversification. By its less capital intensive and high labour absorption nature, SSI sector has made significant contributions to employment generation and also to rural industrialisation. This sector is ideally suited to build on the strengths of our traditional skills and knowledge, by infusion of technologies, capital and innovative marketing practices. This is the opportune time to set up projects in the small-scale sector. It may be said that the outlook is positive, indeed promising, given some safeguards. This expectation is based on an essential feature of the Indian industry and the demand structures. The diversity in production systems and demand structures will ensure long term co-existence of many layers of demand for consumer products / technologies / processes. There will be flourishing and well grounded markets for the same product/process, differentiated by quality, value added and sophistication. This characteristic of the Indian economy will allow complementary existence for various diverse types of units.

Conclusion:
The Small-Scale Industries has acquired an important place in the socio-economic development of the country. The number of Small-Scale Industries stood at 28.03 lakhs in 1996-97 and increased to 34.64 lakhs in 2001-02. After the policy of liberalization and establishment of the WTO several challenges and new opportunities have grown for the Small-Scale Industries.

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References
www.google.com http://layman-blog.blogspot.in www.wikipedia.com http://www.slideshare.net

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