Small businesses play a significant role in India's economy. They account for 95% of industrial units, employ over 40% of the workforce, and contribute significantly to exports. Small businesses promote decentralized development, generate employment opportunities, and mobilize local resources. They optimize capital usage and help develop rural and backward regions of the country.
3. ROLE OF SMALL BUSINESS
IN INDIA
India has traditionally always had a very vibrant and competitive
SSI. Even after the industrialization, British producers of
textiles found handmade Indian textiles such a threat that they
lobbied hard to have its import banned, succeeding in the late
eighteenth century (Gupta & Sharma, 1996).
During pre-economic liberalization period a wide variety of
incentives, concessions and institutional facilities were extended
for the development of SSIs. But these socialistic promotional
policy measures, in many cases resulted in protection of weak
units rather than the independent growth of units under
competitive business environment (Nyati, 1988).
Such situation was continued up to the mid of 1991. Under the
regime of economic liberalization, the focus was shifted from
"protection" to "competitive promotion" (Raja & Rajashekar,
2002).
4. The public policy in India had been attaching lot of
importance to village and SSI on many grounds such as, SSI
being labor-intensive, helped to increase the volume of
employment, particularly in rural areas, it is estimated that
about 2 crore persons are engaged in India in these
industries. The handloom industry alone employs 50 lakh
people. They account for 6% of GDP, 95 % of all industrial
units, and 34% of total exports. Around 39 lakh SSIs in India
has emerged versatile producing over 8000 products, from
traditional handicrafts to high-end technical instruments.
5. Generalizations are also difficult because
though there are firms which are growing
rapidly, there also exists 138,000 sick units
within the sector in India. The contribution
of SSI in India to national development was
too little as compared to the contribution of
SSI in other countries of the world. India's
SSI shared 95 % of all establishments, 40 %
of output, 45% of employment and 35 % of
exports. But Taiwan ranked first with a
share of 97% of establishments, 81 % of
output, 7% of employment, 48 % of exports
followed by Japan contributing highly with 99
% of establishments, 52 % of output, 72 %
of employment and 13 % of exports (SIDBI
Report, 2000).
7. ROLE OF SMALL BUSINESS
IN RURAL INDIA
Small business units provide
multiple source of income, in
wide range of non agricultural
activities.
It provide employment
opportunities in rural areas,
especially for the traditional
artisan and weaker sections of
the society.
9. ROLE OF SMALL SCALE BUSINESS
EMPLOYMENT REGIONAL DEVELOPMENT
OPTIMISATION OF CAPITAL MOBILIZATION OF RESOURCES
EXCHANGE OF EARNINGS FEEDER TO OTHER INDUSTRIES
SOCIAL ADVANTAGE EGALITARIAN SOCIETY
13. EMPLOYMENT
Small scale firms use labour-intensive techniques and,
therefore, they have high potential to provide
employment to a larger number of people. For every
worker employed in large scale industries about three
workers are engaged in small scale industries.
Next to agriculture small business constitutes the most
popular occupation of people in India. Small firms
promote self-employment among the educated and
professional class. They also provide employment to
agriculturists who remain idle during a part of the year.
In fact, the healthy growth of small scale industries
can be an effective approach to the problem of
unemployment in the country. The employment
generating capacity of small scale industries is more
than that of the large scale industries.
15. BALANCED REGIONAL
DEVELOPMENT AVOIDS
CONCENTRATION OF
INDUSTRIES IN HANDFUL AND
PARTICULAR AREAS.
16. REGIONAL
DEVELOPMENT
SSIs promote decentralized development
and help to remove regional disparities in
industrialization. Decentralized
development contributes to the process of
self-sustained growth.
By providing employment in rural areas
they help to check migration and
overcrowding in urban areas. Small scale
firms can be a useful means of rural
reconstruction and development.
Development of decentralized sector also
improves the standard of living of people in
backward regions.
19. THE ANNUAL SURVEYS OF INDUSTRIES
REVEAL THAT FIXED CAPITAL PER
EMPLOYEE IN CASE OF SMALL SCALE
INDUSTRY WAS Rs. 3,706 AS
COMPARED TO Rs. 27,757 IN CASE OF
LARGE SCALE INDUSTRIES.
20. OPTIMIZATION
OF CAPITAL
Small scale firms require less
capital per unit of output
and, therefore, greater
output can be obtained with
small investment.
Small firms also provide
quick returns after their
establishment on account of
short gestation period. In
India where the rate of
capital formation is low,
small scale industries are
very suitable.
23. MOBILIZATION OF
RESOURCES
Small scale industries facilitate Mobilization and
utilization of local resources and family skills
which might otherwise remain talent or utilized.
Small business promotes a new cadre of small
entrepreneurs and self-employed and
encourages local talent. The growth of small
enterprises helps in tapping talent resources like
entrepreneurial skills and small savings
specially in rural areas. Small business helps to
protect handicrafts.
26. THE EXPORTS OF SMALL SCALE INDUSTRIES
INCREASED FROM Rs. 637 CRORES IN 1975-76
TO Rs. 2785 CRORES IN 1985-86
27. EXCHANGE EARNINGS
Small scale industries help in reducing pressure
on the country's balance of payments in two
ways. First, they do not require imports of
sophisticated machinery and equipment.
Secondly, they earn valuable foreign exchange
through exports of their products. The exports of
small scale industries increased from Rs. 637
crores in 1975-76 to Rs. 2785 crores in 1985-86.
Small scale sector accounts for 40 percent of the
exports of non-traditional items and about 25 per
cent of the country's total exports. About 90 per
cent of its exports are of non-traditional items.
30. EGALITARIAN SOCIETY
Small scale industries help in reducing
concentration of economic power in a few
hands.They promote a more equitable
distribution of national income and
wealth.Development of small scale
industries helps to reduce monopolies and
exploitation of consumer.Benefits of
small scale firms are derived by a wider
population.A large part of the earnings is
distributed among workers.
33. SMALL SCALE INDUSTRY MANUFACTURES
MANY PRODUCTS WHICH ARE USEFUL TO
LARGE INDUSTRIES.
34. FEEDER TO LARGER
INDUSTRIES
Small scale sector is
complementary to the large scale
industries. Small scale industries
manufacture various types of
components, spare parts, tools and
accessories which are required by
the large scale sector.
36. AT PRESENT THERE ARE ABOUT
16 LAKHS SMALL SCALE UNITS
IN INDIA PRODUCING 500
TIMES.
37. SOCIAL ADVANTAGE
Small scale units offer opportunity for an
independent way of life to people with small
means. They offer savings in social overheads
like education, housing and medical facilities
by taking industry nearer to the people. They
help to raise per capita income an standard of
living in the country. A system of widely
diffused ownership permits wider
participation of people in the process of
economic development. Small scale sector
provides a base for self-government.
38. At present there are
about 16 lakh small scale
units in India producing
more than 500 times. The
Seventh Fiver Year Plan
envisages a growth rate of
10 per cent in the small
scale sector. By the end
of 1990 the production of
small scale sector is
expected to be Rs. 8,000
crores and employment
1.19 crore persons.
At current prices the
total output of small scale
sector in 198-87
amounted to Rs. 72,250
crores.
41. SSIs ARE THE SECOND
LARGEST EMPLOYERS OF
HUMAN RESOURCES,
AFTER AGRICULTURE
AND PRODUCE A
VARIETY OF PRODUCTS
FOR THE ECONOMY.
42. CONCLUSION
Small Scale Industries play a very important role in the
socio economic development of the country. These
industries account for 95 per cent of industrial units,
contributing up to 40 per cent of the gross industrial
value added and 45 per cent of the total exports.
These units contribute to the balanced regional
development of the country by using locally available
material and indigenous technology.
These provide ample scope for entrepreneurship enjoy
the advantage of low cost of production quick decision
making, and have quick adaptability and are best suited
to customized production.
