Small Scale Industries – SSI – Entreperneurship

Small scale industries are generally industries which are more labour intensive than big organizations.

A small scale industry is defined as “a unit engaged in manufacturing, repairing, processing and presentation of goods having investment in plant and machinery at an original cost not exceeding Rs. 1 crore.”

Small scale industries consists of industrial projects setup on a small scale, which produce goods with the help of small machines, power, hired labour and have a capital investment of less than Rs 1 crore.

Characteristics of Small scale industries

Financial Aspects →

1. Capital requirement at the beginning is very low

2. Fixed assets form the biggest component of investment

3. Owners are profit conscious and try to keep high margins in their pricing

4. Due to cash flow problems workers tend to involve in corruption, financial irregularities and siphoning of funds by partners

5. Owners usually avoid paying taxes, P.F. And other statutory obligations

Human Resource Aspects →

1. Most of Small scale industries have less than 50 employees

2. Mostly owned by a single person, therefore, there is dictatorial tendency and employee welfare is neglected

3. Merit is not given importance and recruitment is done on the basis of suggestions from friends and relatives

4. Exploitation of human resources is very common

5. There is no scope for trade unions as workers are very poor, unorganized and worried about job security

General Aspects →

1. Very few SSI have good infrastructural facilities

2. Lack work load due to dependence on big industries for major work

3. They are negligent about pollutants and safety aspects

4. Training and development is not taken up

5. Lack of growth due to lack of motivation, innovation and financial management

6. Infant mortality of Small scale industries is very high

7. They lack skilled labour

8. Small scale industries have problems in marketing, loans, payments colection

9. Require local or indigenous resources

10. Ownership is generally with one person

11. They are generally setup in Rural and Semi-urban Areas

12. Generally use old age technology and traditional production methods

13. They have a Short Gestation period

Difference between Small Scale Industries and Large scale Industries

Small Scale Industries Large Scale Industries They are registered as SSI with the directors of industries, state or union territoryThey are subjected to licenses and registration according to IDRAGovernment intervention is less in SSI`sGovernment intervention is more than SSI`sCapital investment does not exceed 1 croreCapital investment generally exceeds 5 croreSole proprietary or partnershipThey are generally in form of a companyLess capital intensive and more labour intensiveMore capital intensive and have high input of technologyThey are set up in rural and semi urban areas and have poor infrastructural facilitiesMetropolitan and urban areasUse old age Management tools and techniquesThey have exposure to professional management tools and techniquesThey cater to the needs of local peopleThey are market oriented i.e. produce goods for massesGenerally an unskilled labour performs almost all the tasksAll tasks are performed by a chain in specialized and skilled peopleGestation period is shortGestation period is long

Advantages of Small Scale Industries

1. SSI require a small investment to start in terms of finance, space, manpower and production

2. It has a short gestation period of about 2-6 months

3. It generates employment with less investment

4. It utilizes of local and indigenous resources

5. It compliments big industries and new projects

6. It requires less paper work and only few regulatory procedures are to be followed

7. Small Scale Industries are eligible for subsidies and concessions from government

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