Small Scale Industries (SSI) are those which manufacture and offer services using a small workforce, little inventory, and limited investment. These industries must comply with the rules and regulations set by the Government of India. Some examples of these industries include bakery, candle making, incense stick manufacturing, etc.
What are Small Scale Industries (SSI)?
SSI are enterprises which are characterized by limited investments in manufacturing plants and machinery. The investment amount usually ranges from a few lakhs to a few crores.
- Generally, firms that are classified as SSI make investments of up to Rs. 10 crores in a plant, machinery, and equipment.
- The annual revenue of SSI is generally below Rs. 50 crores.
- SSI are an indispensable part of the Indian economy.
- They contribute significantly to employment generation and revenue growth in India.
- Generally, SSIs function on a smaller scale, catering to local markets with their products or services.
- The investment in materials and equipment varies considerably depending on the nature of the industry.
For example, a small-scale bakery may require inventory worth several lakhs than a beauty parlor which may need comparatively less investment.
Features of Small Scale Industries
According to the definition of small scale industries, they exhibit the following features:
| Feature | Description |
| Limited investments | SSIs require limited capital investments in infrastructure and machinery. |
| Flexibility | Due to their small size, SSIs are less vulnerable to unforeseen business changes.
Small enterprises can adapt quickly to the changing demands of the market and production needs. |
| Optimal utilization of resources | The focus of these enterprises is on effective utilization of resources.
Due to lack of surplus resources, SSIs try to make maximum use of whatever is available. |
| Ownership | Most small scale businesses are sole proprietorship firms, i.e. the entity is owned by a single individual.
In some cases, they may also be a partnership firm. |
| Focus on local markets | SSIs cater to the local (regional) markets within their vicinity.
They cater to the specific needs of customers. |
| Labor intensive | Since the capital investment in SSIs is smaller, they are highly labor intensive.
These industries are heavily reliant on human personnel to carry out manufacturing activities. |
| Management | The control and management of the business lies with the owner. The owner (proprietor) of the business is actively involved in everyday activities. |
Role Played By Small Scale Industries in Indian Economy
Small Scale Industries play a vital role in the Indian economy. These include:
| Role | Explanation |
| Employment generation | SSIs being labor intensive contribute significantly to employment generation.
They hire a significant workforce for manufacturing activities. |
| All-round growth | SSIs foster inclusive growth and development as they provide employment opportunities to people from underrepresented populations in the country. |
| Strengthening economic growth | SSIs account for more than 40 percent of India’s production of goods and services. They form the backbone of India’s industrial sector and minimize the dependency on imports. |
| Contribution to India’s GDP | Despite operating on a small scale, these enterprises contribute substantially to India’s Gross Domestic Product (GDP) by diversifying production and value addition. |
| Contribution in exports | Nearly 50 percent of the items which are exported globally are manufactured by SSIs. Through export promotion, these firms earn foreign exchange and contribute towards the trade balance of India. |
| Make in India | SSIs are a perfect representation of the Make in India initiative. These firms are committed towards manufacturing locally in India and selling their products to various countries across the globe. |
| Balanced wealth distribution | SSIs promote equitable distribution of wealth and income within the society.
The decentralization of economic activities makes this possible. |
Types of Small Scale Industries
Here are the different types of small scale industries.
| Type | Description / Examples |
| Manufacturing | Firms are engaged in the manufacturing of various goods such as food products, consumer goods, textiles, chocolates, etc. |
| Service-based | These firms offer services to individuals. These include beauty parlor, repair services, maintenance services, and consultancy. |
| Agro-based | These specialize in activities related to processing agricultural products such as dairy farming, fruit processing, poultry keeping, organic farming, etc. |
| Ancillary units | These provide support to large industries by manufacturing smaller components and spare parts for automobiles, machinery, and other equipment. |
| Cottage industries | These are home based businesses that focus on traditional crafts and artisan goods. These include bamboo crafts, pottery, ceramics, leather, weaving, etc. |
Also Read: Small Business Game-changer: Will MSME Global Mart Reshape the Indian Business Landscape?
Examples of Small Scale Industries
India is home to several profit-making small scale industries with high potential for revenue generation and growth. Some of these include:
- Candle manufacturing
- Small toys making
- Homemade chocolates
- Spices
- Organic soaps manufacturing
- Oils and soaps
- Incense sticks and camphor production
- Pickle and papad manufacturing
- Beauty products manufacturing
- Bakeries
- Handicrafts
- Clay products manufacturing
- Paper bags
Also Read: Steps to Start Lipstick Business
Small Scale Industries Registration Process
Small Scale Industries registration is a key aspect to beginning the operations. Here is the step-by-step registration process for small scale industries.
Step 1: Visit the Udyam registration portal
Visit the Udyam registration portal and choose ‘For New Entrepreneurs who are not Registered as MSME or those with EM-II’.
Step 2: Enter Aadhaar number and personal credentials
Enter Aadhaar number and Name of the Entrepreneur. Click ‘Validate and Generate OTP.’
Step 3: PAN Validation
Once you enter the OTP, the PAN validation screen will appear. Enter the PAN number and click the ‘Validate PAN’ button.
Step 4: Completion of registration form
The Udyam registration page will be launched. Fill in all the required details such as industry name, address, bank details, contact number. Click ‘Submit and Get Final OTP’.
Step 5: Confirmation of registration
Once the registration process is completed, you will receive a registration successful message along with a reference number. Once verification is completed, you will receive the MSME registration certificate.
From tax rebates to various government incentives and schemes, there are several benefits of SSI registration. The objective of SSI registration is to promote, facilitate, and build small scale industries by offering financial assistance, thus offering ample growth opportunities.
Also Read: MSME Registration in India: Procedure, Documents Required
Also Listen: GST Certificate Download: How to Download Without Login?
