What is Small Scale Industry? | Small Scale Industries in India

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Hi friends, in today’s article we are going to know about small scale industry meaning, role, problems and the measure for improving these units. So let’s discuss in details.

Define Small Scale Industry

These industries which are mostly located in urban and semi urban areas where invention is more than Rs.60 lakh and less than Rs.6 crore, are known as small scale industries.

Role of Small Scale Industry

Small scale industry in India are playing an important role various respects. Some of the important roles can be stated as follows –

Demand for Labour – The small scale industries in India are demanding huge volume of labour as they are adopting labour intensive techniques. Thus, it play a great role for solving the problem of unemployment to a greater extent.

Increase in Investment – The industries are playing significant role for continuous increase in invention of a faster rate. Consequently, higher rate of capital formation has achieved which accentuates the growth path of the economy.

Equal income Distribution – The small scale and cottage industries in India has been resulting a more equitable distinction of national income and wealth. It is mainly due to the ownership of these industries is quite wide spread as compared to large scale industries.

Remove regional Imbalances – The small scale industries are highly effective for reducing the industrial differences between different reasons. Consequently, the balance economic development is expected to achieve by the economy.

Income in Export – The small scale industries are playing another significant role for increase in total volume of exports in India. With the continuous increase in mobilization of capital, total output production has increased which leads to increase in contribution to export sectors.

What are the major problems of small scale industry in India?

The small scale industrial units in India are suffering a lots of problems because of which its growth rate is in efficient. Some of the major weaknesses of small scale units can be stated as follows –

(i) Inefficient human Factors – The small scale industrial units in India are suffering the problem of inefficient human factor. Due to lack of effective invention on human resources the per unit productivity of human factor has declined.

(ii) In availability of raw Materials – The small scale industrial units are suffering the problem of in availability of raw materials. The raw materials which are available to these units are also much poorest quality related.

(iii) Lack of Equipment’s – The small scale industrial units are suffering the problem of in availability of machineries as well as equipment. Consequently, the rate of growth of these units are completely ineffective.

(iv) Poor marketing Facilities – The marketing facilities that are provided to small scale units by the govt. are inorganized. As a result of it the industrialist are deprived for receiving their actual price of the products.

(v) Ineffective Competition – The small scale and cottage industries are facing unfavourable competition with the large scale units. In this competition the small scale industries can not show their best because of which income level of these units have come down.

(vi) Lack of credit Facilities – The credit facilities that are provided to small scale units are totally ineffective. There exists huge gap between demand and supply of credit which results decrease in growth rate of these industrial units.

What should be the measure for improving Small Scale Industry?

As small scale and cottage industries are occupying very important place of Indian economy. Therefore, suitable steps should be taken for removing their weaknesses. Some of the important steps should be –

  • The govt. should conduct detailed survey of the existing small scale industries and should adopt productive programmes for them.
  • Available credit facilities should also be provided seasonally at a lower interest rate.
  • For effective growth of these units modern techniques of production should be adopted so that its products can to the products of large scale units.
  • Proper training and free education programmes should be provided to the small scale units.
  • The govt. should take effective step for regular supply of inputs at a cheaper rate to the small scale units.

Thus, it all these steps are taken in proper time, the small scale sector will prove it self as one of the most dynamic and vilerant sector of the economy.


So friends, this was the concept of small scale industry. Hope you get the full details about it and hope you like this article.

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