Small Business and Role of Small Business in Indian Economy


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Small Business and Role of Small Business in Indian Economy

  1. 1. SMALL BUSINESS The concept of small business has been defined by different countries in different ways. The two main criteria used to define small business are as follows
  2. 2. SIZE OF THE BUSINESS Size refers to the scale of operations. Size may be measured in the following ways : - a.Total capital investment b.The value of total assets or fixed assets. c.Total investment in plant and machinery d.The total number of persons employed e.Volume/value of production f.Volume/value of sales turnover g.A combination of above
  3. 3. Table 5.1 Bases of Defining small business in various countries Criterion Countries 1. Investment in plant and machinery 2. Employment 3. Investment and employment 4. Production/sales turnover 5. Employment and sales turnover 6. Investment and sales turnover India, Pakistan, Indonesia USA and UK Japan, Korea and Phillipines China, UK (commercial) Korea (commerce) Malayasia
  4. 4. What is MSME ? Micro, Small or Medium Enterprise? The earlier concept of ‘Industries’ has been changed to ‘Enterprises’ • Enterprises have been classified broadly into: (i) Enterprises engaged in the Manufacture / production of Goods pertaining to any industry; & (ii) Enterprises engaged in providing / Rendering of services.
  5. 5. Manufacturing enterprises have been defined in terms of investment in plant and machinery (excluding land & buildings) and further classified into : - Micro Enterprises - investment up to Rs.25 lakh. - Small Enterprises - investment above Rs.25 lakh & up to Rs. 5 crore - Medium Enterprises - investment above Rs. 5 crore & up to Rs.10 crore.
  6. 6.  Service   enterprises  have been   defined     in     terms   of   their  investment   in equipment (excluding   land & buildings) and further classified into:          -   Micro Enterprises –  investment up to         Rs.10 lakh.         -   Small Enterprises –  investment above       Rs.10 lakh & up to Rs.2 crore.         -   Medium Enterprises– investment  above Rs.  2 crore  & up  to Rs.  5 crore 
  7. 7. Qualitative Criteria : Size does not always reflect the true nature of an  enterprise. Its characteristics differentiate between  big and small business. These characteristics are :- a.Ownership b.Nature of management c.Technology d.Geographical area of operations
  8. 8. Definition of small business in India 1. “An undertaking having an investment in plant and machinery of not more than Rs. 5 crores.” Now the government of India has raised the limit of Rs. 3 crores .In 1996, the official definition of small business was as follows: i. Small Scale Industries ii. Ancillary Industries iii. Tint Units iv. Small Scale Service Establishments v. Household Industries
  9. 9. Role Of Small Business In Indian Economy 1. Employment 2. Optimisation Of Capital 3. Balanced Regional Development 4. Mobilisation Of Local Resources 5. Export Promotion 6. Consumer Surplus 7. Feeder To Large Scale Industries 8. Social Advantage 9. Share In Industrial Production 10. Development Of Entrepreneurship
  10. 10. IMPORTANCE OF SMALL BUSINESS The small scale industries are playing an important role in the GDP of India. The small scale industries have nearly 40% share in the total industrial output and 35% share in exports To increase employment. To prevent unequal distribution of income. To develop capital investment.
  11. 11. THANK YOU