CHAPTER- III

INDUSTRY PROFILE

3.1 Introduction

3.2 Definition of Small Scale Industries

3.3 Growth and Performance of Small

Scale Sector

3.4 Performance of Small Scale

Industries

3.5 Promotional Agencies

3.6 Problems of Small Scale Industries

48
CHAPTER THREE: INDUSTRY PROFILE

3.1 INTRODUCTION
Small Scale Industries play an important role in Indian Economy. Small Scale
Industries are trust worthy because of its decentralization, its small size, use of mainly
indigenous technology, employment intensity and its suitability for rural areas with
limited capital investment. Small Scale Industries provide large employment
opportunities in most of the developing countries. Small Scale Industries are required
lower capital investment than Large Scale Industries but also it helps in
industrialization of rural and backward areas. Balanced Industrial Growth is one of
the most important characteristics of Small Scale Industrial Sector.
3.1.1 Objectives of the Chapter
To study about Small Scale Industries in India.
To study progress and performance of Small Scale Industries in India.
To study the role of government in the growth ofSmall Scale Industries.
To find out contribution of Small Scale Industries in development of Indian
Economy.

3.2DEFINITION OF SMALL SCALE INDUSTRIES

Small Scale Industrial Unit (SSI): Small Scale Industries are defined on the basis of
investment in Plant and Machinery.

Manufacturing Enterprises-The enterprises engaged in the manufacture or

production of goods pertaining to any industry specified in the first schedule to the
industries (Development and regulation Act, 1951). The Manufacturing Enterprise are
defined in terms of investment in Plant & Machinery.89
For manufacturing sector, an enterprise is classified as:
a) Micro enterprise, if investment in plant and machinery does not exceed
twenty five lakh rupees;
b) Small enterprise, if investment in plant and machinery is more than twenty
five lakh rupees but does not exceed five crore rupees;
_____________________________
89
Industrial Registration Consultants for Gujarat & Maharashtra. http://ssi-registration.ekdant.co.in
Industrial Registration Consultants retrieved on 4/10/2014.

49
 (c) Medium enterprise, if investment in plant and machinery is more than five
crore rupees but does not exceed ten crore rupees.

Service Industry- The enterprises engaged in providing or rendering of services and

are defined in terms of investment in equipment,90 it is classified as:
a) Micro enterprise, if investment in equipment does not exceed ten lakh
rupees;
b) Small enterprise, if investment in equipment is more than ten lakh rupees
but does not exceed two crore rupees;
c) Medium enterprise, if investment in equipment is more than two crore
rupees but does not exceed five crore rupees.

Table No. 3.1 Investment Limit of MSMEs

No. Type of Manufacturing Enterprises Service Industry

Enterprise (Investment in Plant and (Investment in equipment)
Machinery)
1. Micro Does not exceed Rs. 25 Lakh Does not exceed Rs. 10 Lakh

2. Small Exceeds Rs. 25 Lakh but does Exceeds Rs. 10 Lakh but does
not exceed Rs. 5 Crore not exceed Rs. 2 Crore

3. Medium Exceeds Rs. 5 Crore but does Exceeds Rs. 2 Crore but
not exceed Rs. 10 Crore does not exceed Rs. 5 Crore

(Source:http://ssi-registration.ekdant.co.in Industrial Registration Consultants)

____________________________
90
Industrial Registration Consultants for Gujarat & Maharashtra. http://ssi-registration.ekdant.co.in
Industrial Registration Consultants retrieved on 4/10/2014.

50
3.3GROWTH AND PERFORMANCE OF SMALL SCALE INDUSTRIES

3.3.1Growth opportunities for SSI

Government of India support Small Scale Industries for their growth and to improve
performance. Small Scale Sector is very large opportunities to grow because of the
following factors:
Less Capital Intensive91: compare to Large Scale Sector it‟s required less
capital investment. Therefore, with a limited amount of money Small Scale
Industry can start. Small industries have lower overheads. This translates to
lower cost of production, at least up to limited volumes.

Extensive Promotion & Support by Government92: Government policies

always support Small Scale Sector. After Independence it has been seen that in
each and every Five Year Plan and Yearly Planning Government has
sanctioned specific defined quota, subsidies, Tax holydays to promote Small
Scale Sector. Government support Small Scale Industries in different areas
like; Credit support, Technology support, Marketing support, etc. Scheme for
Providing Support for “Entrepreneurial and Managerial Development of SMEs
through Incubators”.

Reservation for Exclusive Manufacture by small scale sector93:

Government of India had reserved some specific industries for small scale
sector and under these industries some products have been reserved for Small
Scale Sector. This reservation policy expected self-employment ventures,
these ventures should provide employment generation and increased
productivity. 20 products are reserved for small and micro sector.

_________________________________
91
Govt. of India Development Commissioner (MSME) Ministry of Micro, Small & Medium
Enterprises Retrieved on 5/9/2014 from http://www.dcmsme.gov.in/ssiindia/performance.htm
92
Retrieved on 14/9/2014 from http://www.dcmsme.gov.in/schemes/Incubators10.pdf
93
Annual Report of MSME 2012-13 Chapter III Policy Initiatives p. 39, 40.

51
 Funding - Finance & Subsidies94: The Ministry of MSME is implementing
scheme of Fund for Registration of Traditional Industries. Financial support
by giving subsidy for Technological Up-gradation, modernization of
production equipment (plant andmachinery) and Export promotion. This
Scheme is called the Credit Linked Capital Subsidy Scheme (CLCSS). The
scheme provided 12 to 15 per cent capital subsidy to Small Scale Industries.
The Small Industries Development Bank of India (SIDBI) and the National
Bank for Agriculture and Rural Development (NABARD) implemented on
this scheme.

Employment Generation95: SSI Sector in India creates largest employment

opportunities for the Indian population, next only to Agriculture. It has been
estimated that 100,000 rupees of investment in fixed assets in the small-scale
sector generates employment for four persons. In India most of the people
depend on agriculture, its increases pressure on the land so it‟s needed to
create employment opportunities. Small Scale Industries solve this problem
because Small Scale Industries are labor intensive.

Raw Material Procurement96: National Small Industries Corporation (NSIC)

Ltd. aims to help SSI units by financing purchase of raw material (both
indigenous and imported), thus allowing them to focus on manufacturing
quality products. State Small Industries Development Corporations have set up
workshops for distribution of raw materials to SSIs. The Central Government
has introduced a buffer stock scheme to ensure availability of scarce raw
materials to this sector. Under this Scheme financial Assistance for
procurement of Raw Material is available upto 90 days. MSMEs help for bulk
purchases and cash discount. In case of imports NSIC take care of all the
procedures, documentation & issue of letter of credit etc.
___________________________________
94
Govt. of India MSME http://dcmsme.gov.in/schemes/sccredit.htm)
95
http://www.preservearticles.com/201101153373/role-and-importance-of-small-scale-industry-in-
india.html
96
National Small Industries Corporation (NSIC) Ltd. Facilitating the Growth of Small Enterprise Since
1955 http://www.nsic.co.in/rma.asp

52
 Marketing Support97: Marketing is a strategy for business development.
National Small Industries Corporation (NSIC) Limited assists the Small Scale
Sector in their marketing efforts by providing support services. Provide
adequate, good quality infrastructure support at a reasonable cost for efficient
functioning of the SSI sector.

Technical Support98: National Small Industries Corporation (NSIC) Limited

provide technical support for modernization and access to R&D facilities.
Material testing, product designing and machining etc. facilities are provided
by NSIC.

Tooling & Testing support99: MSME Testing Centers provide testing and
calibration facilities to MSMEs. The four MSME Testing Centers, located in
Chennai, Delhi, Kolkata and Mumbai have facilities for quality up-gradation,
training/consultancy in testing, quality control, quality management, process
quality control systems, etc. The Institute provides common facility services to
small scale units, undertakes Performance test, Acceptance test for finished
and semi-finished products, to maintain international standards for Measuring
Instrument and Equipment Testing Centers take care of it.

Government Purchase Programme100: The micro and small enterprises

registered under this Scheme get the following facilities:-
Issue of tenders free of cost.
Exemption from payment of Earnest Money;
Waiver of Security Deposit up-to the monetary limit for which at the unit is
registered; and
Price preference up-to 15% over the quotation of large-scale units.
_______________________________
97
Annual Report of MSME 2012-13 Chapter VIII National Small Industries p. 125.
98
Annual Report of MSME 2012-13 Chapter VIII National Small Industries p. 125.
99
Annual Report of MSME 2013-14 Chapter IV Role and Functions of O/o DC (MSME) p. 50.
100
Government of India Ministry of MSME 29/7/2003 Retrieved from
http://www.dcmsme.gov.in/schemes/StoresPurchaseProgramme.pdf

53
 Export of Small Scale Industries101: SSI Sector plays a major role in India's
present export performance. 45%-50% of the Indian Exports is being
contributed by SSI Sector. Direct exports from the SSI Sector account for
nearly 35% of total exports. The number of small scale units that undertake
direct exports would be more than 5000. Besides direct exports, it is estimated
that small scale industrial units contribute around 15% to exports indirectly.
This takes place through merchant exporters, trading houses and export
houses. They may also be in the form of export orders from large units or the
production of parts and components which use for finished exportable goods.
It would surprise many to know that non-traditional products account for more
than 95% of the SSI exports.

Export Promotion Programmes102: The office of Development

Commissioner (Small Scale Industries) provide the financial support to the
exporters of small scale sector for the International Exhibitions. Packing for
Exports, Barcoding for Exports, National Awards for Quality Products and
Technical & Managerial Consultancy Services are provided to the export
oriented small scale industries. Promotional Schemes are implemented to
accept challenges of international competition like; Small Scale Industries
Development Bank of India (SIDBI) has been implementing a scheme of
technology development and modernization of SSI units with effect from
April, 1995. SIDBI help export oriented units to purchase capital equipment
and technology under this scheme. Quality Awareness Scheme provides the
subsidy for obtaining ISO-9000 quality Certification. Pre and post shipment
finance shall also be provided to such units at usual terms & conditions.

Growth in Requirements for ancillary units103: Due to the increase in

number of Greenfield units coming up in the large scale sector. Project
profiles of 3 products suitable in the ancillary sector were prepared. A
directory of ancillary units in the State was prepared.
_____________________________
101
Retrieved on 12/09/2014 from http://www.dcmsme.gov.in/ssiindia/performance.htm
102
Retrieved on 12/09/2014 fromhttp://www.dcmsme.gov.in/ssiindia/performance.htm
103
Retrieved on 12/09/2014 fromhttp://www.dcmsme.gov.in/ssiindia/performance.htm

54
 Reduced Regional Imbalance104:Small Scale Industries are less capital
intensive than large Scale Industries. Small Scale Industries provide large
employment opportunities because of high labor absorption nature of SSI.
Small industry sector has performed exceedingly well and enabled our country
to achieve a wide measure of industrial growth and diversification and also
help in industrialization of rural and backward areas. Since it reduce regional
imbalance and help to do more equitable distribution of national income and
wealth.

3.3.2MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT

(MSMED) ACT, 2006
After implementation of Micro, Small and Medium Enterprises
Development(MSMED) Act, 2006105,Fourth All India Census of MSME was
conducted with reference year 2006-07, wherein the data was collected till 2009and
results published in 2011-12.The scope and coverage of the MSME sector were
broadened significantly under the MSMED Act, 2006, which recognized the concept
of “enterprise” and to include both manufacturing and services sector, besides
defining the medium enterprises under the MSME sector. Thus, the entire non-
agricultural sector of the economy was brought under the coverage of MSME sector
subject to the revised criteria prescribed for defining Micro, Small and Medium
Enterprises separately for manufacturing and services sectors.

3.4 PERFORMANCE OF SMALL SCALE INDUSTRIES

As per the results of Fourth All India Census of Micro, Small & Medium Enterprises
(MSME), the sector contributes significantly to the number of enterprises,
employment and output of the country. Based on the data sets of Third, Fourth, Fifth
and Sixth Economic Census and Annual Report of MSMEs 2010-11, 2011-12, 2012-
13, and 2013-14 the performance of SSI/MSME Sector is summarized as below.

_______________________________
104
Interim Report of the Study Group on Development of Small Enterprises Retrieved from
http://www.dcmsme.gov.in/publications/comitterep/gupta.html
105
Annual Report of MSME 2012-13 Chapter II Growth and Performance of MSME Sector p. 13

55
Table No. 3.4.1Performance of SSI/MSME Sector: Total Working Enterprises
Sr. No. Year Total working Enterprises (in Lakh)
1 2001-2002 105.21
2 2002-2003 109.49
3 2003-2004 113.95
4 2004-2005 118.59
5 2005-2006 123.42
6 2006-2007 361.76
7 2007-2008 377.36
8 2008-2009 393.7
9 2009-2010 410.8
10 2010-2011 428.73
11 2011-2012 447.66
12 2012-2013 467.56
(Source: MSME Annual Report 2013-14 Chapter II Growth and Performance of
MSME Sector p. 15)
Fig. No. 3.4.1

Total working Enterprises (in Lakh) III

500
450
400
350
300
250
200
150 Total working Enterprises
100 (in Lakh) III
50
0
2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013

1 2 3 4 5 6 7 8 9 10 11 12

(Source: MSME Annual Report 2013-14 Chapter II Growth and Performance of

MSME Sector p. 15)
Above Table and Graph shows that the performance of MSME Sector is increasing
every year. 2006-2007 year shows remarkable growth in working enterprises. Annual
Report of MSME 2013-14 collected this information from economic census.

56
Table No. 3..4.2 Performance of SSI/MSME Sector: Market Value of fixed assets
Sr. No. Year Market Value of fixed assets (in Crore)
1 2001-2002 154,349.00
2 2002-2003 162,317.00
3 2003-2004 170,219.00
4 2004-2005 178,699.00
5 2005-2006 188,113.00
6 2006-2007 868,543.79
7 2007-2008 920,459.84
8 2008-2009 977,114.72
9 2009-2010 1,038,546.08
10 2010-2011 1,105,934.09
11 2011-2012 1,183,332.00
12 2012-2013 1,269,338.02
(Source: MSME Annual Report 2013-14 Chapter II Growth and Performance of
MSME Sector p. 15)
Fig. No. 3.4.2

Market Value of fixed assets (in Crore) V

1,400,000.00
1,200,000.00
1,000,000.00
800,000.00
600,000.00
400,000.00 Market Value of fixed assets
(in Crore) V
200,000.00
0.00
2007-2008
2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007

2008-2009
2009-2010
2010-2011
2011-2012
2012-2013

1 2 3 4 5 6 7 8 9 10 11 12

(Source: MSME Annual Report 2013-14 Chapter II Growth and Performance of

MSME Sector p. 15)
Above Chart and Table shows that Market Value of Fixed Assets are increasing.
2006-2007 year shows a drastic change in fixed assets.

57
Table No. 3.4.3Performance of SSI/MSME Sector: Employment
Sr. No. Year Employment (in Lakh)
1 2001-2002 249.33
2 2002-2003 260.21
3 2003-2004 271.42
4 2004-2005 282.57
5 2005-2006 294.91
6 2006-2007 805.23
7 2007-2008 842
8 2008-2009 880.84
9 2009-2010 921.79
10 2010-2011 965.15
11 2011-2012 1,011.80
12 2012-2013 1,061.52
(Source: MSME Annual Report 2013-14 Chapter II Growth and Performance of
MSME Sector p. 15)
Fig. No. 3.4.3

Employment (in Lakh) IV

1200

1000

800

600

400
Employment (in Lakh) IV
200

0
2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013

1 2 3 4 5 6 7 8 9 10 11 12

(Source: MSME Annual Report 2013-14 Chapter II Growth and Performance of

MSME Sector p. 15)
Above table and chart shows that employment of Small Scale Industries were
increased every year. 2006-07 shows a remarkable growth in employment.

58
Table No. 3.4.4 Performance of SSI/MSME Sector: Gross Output
Sr. No. Year Gross Output (in Crore)
1 2001-2002 282270.00
2 2002-2003 314850.00
3 2003-2004 364547.00
4 2004-2005 429796.00
5 2005-2006 497842.00
6 2006-2007 1351383.45
7 2007-2008 1435179.26
8 2008-2009 1524234.83
9 2009-2010 1619355.53
10 2010-2011 1721553.42
11 2011-2012 1834332.05
(Source: MSME Annual Report 2012-13.Chapter- II, Growth and Performance of
MSME Sector. P. 15,16)
Fig. No. 3.4.4

Gross Output (in Crore) VI

2000000
1800000
1600000
1400000
1200000
1000000
800000
600000
400000 Gross Output (in Crore) VI
200000
0
2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012

1 2 3 4 5 6 7 8 9 10 11

(Source: MSME Annual Report 2012-13. Chapter- II, Growth and Performance of
MSME Sector. P. 15,16)
Above table and chart shows that Gross Output of Small Scale Industries were
increased every year. 2006-07 shows a remarkable growth in Gross Output.

59
Table No. 3.4.5 Performance of SSI/MSME Sector: Percentage Share of MSME in
Total Manufacturing Output and Gross Domestic Product
Sr. No. Year Percentage Share of MSME
Total Manufacturing Gross Domestic
Output Product (GDP)
1 2006-2007 42.02 7.73
2 2007-2008 41.98 7.81
3 2008-2009 40.79 7.52
4 2009-2010 39.63 7.49
5 2010-2011 38.48 7.42
6 2011-2012 37.52 7.28
(Source: MSME Annual Report 2013-14. Chapter- II,Growth and Performance of
MSME Sector. P.16)
Fig. No. 3.4.5
45
40
35
30
25
Percentage Share of MSME
20 Total Manufacturing Output
15
10 Percentage Share of MSME
Gross Domestic Product
5 (GDP)
0
2006-2007

2007-2008

2008-2009

2009-2010

2010-2011

2011-2012

1 2 3 4 5 6

(Source: MSME Annual Report 2013-14. Chapter- II, Growth and Performance of
MSME Sector. P.16)
MSME sector contributes large share in manufacturing output and GDP. Based on the
results of Third and Fourth All India Census of Small Scale Industries/ Micro, Small
& Medium Enterprises, the estimated value of manufacturing output of MSME sector
and its share in total manufacturing output &GDP.

60
Table No. 3.4.6 Performance of SSI/MSME Sector: Export

Sr. No. Year Export (in Crore)

1 2001-2002 71244

2 2002-2003 86013

3 2003-2004 97644

4 2004-2005 124417

5 2005-2006 150242

6 2006-2007 182538

7 2007-2008 202017
(Source: MSME Annual Report 2009-10. Chapter II, Growth & Performance p. 13,
14.)
Fig. No. 3.4.6

EXPORT OF SSI/MSME INDUSTRIES of INDIA Export

(in Crore)
250000

200000

150000

100000 EXPORT OF SSI/MSME

INDUSTRIES of INDIA Export
(in Crore)
50000

0
2001-2002

2002-2003

2003-2004

2004-2005

2005-2006

2006-2007

2007-2008

1 2 3 4 5 6 7

(Source: MSME Annual Report 2009-10. Chapter II, Growth & Performance p. 13,
14.)
(Note: Performance of SSI/ MSME Sector: Export; 2009-2010, 2010- 2011 is not
available. This is the period of great slack.)
Above Table and Graph shows the performance of SSI in Indian Export.

61
Table No. 3.4.7 Export Performance of SSI in Various Export Sub Sectors (2007-
2008)
India`s Total Export from Share of SSIs
Sr. Export (in SSIs (in in Total Export
No. Export Sector Crore) Crore) (%)
Agricultural & Processed
1 Food Products 31,870.60 22,309.41 70
Basic Chemicals,
Pharmaceuticals and
2 Cosmetic products 25,869.00 7,221.60 27.92
3 Cashew & Cashew nut Shell 2,300.87 2,300.87 100
Chemical and Allied
4 Products 54,778.75 21,911.50 40
Electronics & Computer
5 Software 188,200.00 35,626.26 18.93
6 Engineering Goods 141,534.44 46,613.00 32.93
7 Lac Based Products 124.87 124.87 100
Leather and Leather
8 Products 14,937.85 10,390.57 69.56
9 Marine Products 7,620.92 7620.92 100
10 Plastic Products 14,032.60 4,099.83 29.22
Processed Tobacco, Bidi&
11 Snuff 2,022.78 1,188.09 58.74
12 Readymade Garments 39,027.68 35,124.91 90
13 Spices & Spice Products 4,435.50 2,005.75 45.22
14 Sports Goods 519.26 519.26 100
Synthetic and Rayon
15 Textiles 13,413.00 2,682.60 20
Wool & Wool Blended
16 products 1,800.62 1,800.62 100
17 Forest Products 5,033.46 477.4 9.48
(Source: Report of Export Import Bank of India)

62
63
50,000.00
100,000.00
150,000.00
200,000.00
250,000.00

0.00
Agricultural & Processed Food Products
Basic Chemicals, Pharmaceuticals and Cosmetic products
Cashew & Cashew nut Shell
Chemical and Allied Products
Electronics & Computer Software
Engineering Goods
Lac Based Products
Leather and Leather Products
Marine Products
Plastic Products
Processed Tobacco, Bidi & Snuff
Readymade Garments

(Source: Report of Export Import Bank of India)

Spices & Spice Products
Sports Goods
Synthetic and Rayon Textiles
Wool & Wool Blended products

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Forest Products

Above Table and Graph shows Total export of India and export from SSI units.
Fig. No. 3.4.7 Export Performance of SSI in Various Export Sub Sectors (2007-2008)

Export from SSIs (in Crore)

India`s Total Export (in Crore)
Fig. No. 3.4.8

Share of SSIs in Total Export (%)

Share of SSIs in Total Export (%)

Agricultural & Processed Food Products 70

1

Basic Chemicals, Pharmaceuticals and Cosmetic… 27.92

2

Cashew & Cashew nut Shell 100

3

Chemical and Allied Products 40

4

Electronics & Computer Software 18.93

5

Engineering Goods 32.93

6

Lac Based Products 100

7

Leather and Leather Products 69.56

8

Marine Products 100

9
10

Plastic Products 29.22

11

Processed Tobacco, Bidi & Snuff 58.74

12

Readymade Garments 90
13

Spices & Spice Products 45.22

14

Sports Goods 100

15

Synthetic and Rayon Textiles 20

16

Wool & Wool Blended products 100

17

Forest Products 9.48

(Source: Report of Export Import Bank of India)

Above Chart shows percentage share of SSI in total export of India. For some specific
products even it is 100%. It means only SSI units produces and export it.
Indian Small Scale Industries are capable to engaged people in rural areas and support
to highest possible employment generation. A very large portion of Indian Export is
covered by Small Scale Industries.

64
3.5 PROMOTIONAL AGENCIES

3.5.1 Small Industries Development Bank of India (SIDBI)

Small Industries Development Bank of IndiaSIDBI106 was established on April 2,
1990 by an Act of Parliament, as an apex institution for promotion, financing and
development of industries in small scale sector and for coordinating the functions of
other institutions engaged in similar activities. SIDBI extends direct/indirect financial
assistance to SSIs, assisting the entire spectrum of small and tiny sector industries on
all India bases. The range of assistance comprising financing, extension support and
promotional, are made available through appropriate schemes of direct and indirect
assistance for the following purposes:-
Expansion, diversification, modernization, technology up-gradation, quality
improvement, rehabilitation of existing units
Strengthening of marketing capabilities of SSI units.
Development of infrastructure for SSIs and
Export promotion.

3.5.2 National Small Industries Corporation (NSIC) Ltd

The National Small Industries Corporation (NSIC) Ltd.107was established in 1955 by
the Government of India with a view to promote, aid and foster the growth of small
scale industries in the country. NSIC continues to remain at the forefront of industrial
development throughout the country with its various programmes and projects to
assist the MSMEs. The main functions of the Corporation are to promote aid and
foster the growth of micro and small enterprises in the country, generally on a
commercial basis. It provides a variety of support services to micro and small units by
catering to their different requirements in the areas of raw material procurement;
product marketing; credit rating; acquisition of technologies; adoption of modern
management practices, etc.
The NSIC is directly operating different programmes by a dedicated team of
professionals at all levels and operates through157 offices located all over India and
one office located at Johannesburg (South Africa).
____________________________
106
SIDBI Retrieved on 9/10/2014 from http://www.sidbi.com/?q=about-sidbi
107
Annual Report MSME 2013-14. Chapter- VIII, NSIC. p. 11, 120

65
3.5.3 National Institute for Micro, Small and Medium Enterprises (NIMSME)
Enterprise promotion and entrepreneurship development being the central focus of
NIMSME‟s108 functions, the Hydrabad Institute‟s competencies converge on the
following aspects:-i) Enabling enterprise creation;
ii) Capacity building for enterprise growth and sustainability;
iii) Creation, development and dissemination of enterprise knowledge;
iv) Diagnostic and development studies for policy formulation; and
v) Empowering the under-privileged through enterprises.

3.5.4 Prime Minister’s Employment Generation Programme (PMEGP)

Prime Minister‟s Employment Generation Programme (PMEGP) 109 has been started
from 2008-09. Previously it was known as Prime Minister Rojgar Yojana. Under this
programme employment opportunities generated for rural and urban areas. Self
employment opportunities are given to the unemployed youth. This scheme helps to
increase earning capacity of artisans.

3.5.5 Scheme of Fund for Regeneration of Traditional Industries (SFURTI) 110

In India some traditional industries are required financial support for development.
This scheme was started to help traditional industries to become more productive and
competitive. These traditional industries have a capacity to increase employment
opportunities in rural areas.

3.5.6 Mahatma Gandhi Institute for Rural Industrialization (MGIRI) 111

Jamnalal Bajaj Central Research Institute (JBCRI), Wardha was revamped with the
help of IIT, Delhi as a national level institute under the M/o MSME in October 2008
called Mahatma Gandhi Institute for Rural Industrialization (MGIRI). Rural
industrialization is the main purpose of the MGIRI. It helps traditional craftsmen and
artisans by giving them training and encouraging for innovation and creativity.
Development of “Gram Swaraj” MGIRI encourages professional and experts.
_____________________________________
108
Annual Report MSME 2013-14. Chapter- IX, Training. p. 135
109
Annual Report MSME 2013-14. Chapter- X, PMEGP & SFURTI. p. 153
110
Annual Report MSME 2013-14. Chapter- X, PMEGP & SFURTI. p. 156
111
Annual Report MSME 2012-13. Chapter- VI Mahatma Gandhi Institute. p. 100

66
3.5.7 Khadi and Village Industries Commission (KVIC)
112
Khadi and Village Industries Commission (KVIC) established in 1956. In the
decentralized sector KVIC is one of the major organizations for generating
sustainable non-agricultural employment opportunities in rural areas. Khadi and
Village Industries Commission undertake activities like skill improvement, transfer of
technology, research & development marketing etc. KVIC help in generating
employment and self-employment opportunities in rural areas.

3.5.8 Coir Board

Coir Board113 was established in 1953 for the development of Coir industry. India
produced 80 per cent of the total production of coir fibre. The coir workers produced
very beautiful artifacts and handicrafts from coconut husks. The coir sector in India is
very diverse because it involves households, co-operatives, NGOs, manufacturers and
exporters. In the coir sector mostly Women workers are engaged. Coir Board help to
the Coir industry for research and development activities, development of new
products and designs, marketing of coir products in India and abroad.

3.5.9 Small Industries Development Organization (SIDO)

Small Industries Development Organization (SIDO)114 is a national SME
development agency of India. SIDO provide some services to small scale industries
like, Entrepreneurship development, Tool Room services, Testing Centres, Extension
services, Research & Development services Consultancy services and Policy
development. All over India 100 service centres are established.

3.5.10 National Institute for Entrepreneurship and Small Business Development

National Institute for Entrepreneurship and Small Business Development115 is a
premier organization of the Ministry of Micro, Small and Medium Enterprises. To
promote entrepreneurship NIESBUD provide training and consultancy and help for
research and development. It helps for developing Training Aids, Manual and Tools.
_____________________________
112
Annual Report MSME 2013-14. Chapter- V, KVIC. p. 75
113
Annual Report MSME 2013-14. Chapter- VII, Coir Board. p.99
114
Retrieved on 15/ 02/2015 from http://www.wipo.int/sme/en/best_practices/india.htm
115
Retrieved on 23/06/2014 from http://niesbud.nic.in

67
3.6 PROBLEMS OF SMALL SCALE INDUSTRIES
Small Scale Industries faced many problems in different areas, like: Financial
problems, Marketing problems, Management Problem, etc.116

3.6.1 Financial Problem: Small Scale Industries are facing the problem of finance
because of inadequate credit facilities. Small Scale industries are less capital
worthiness. Because of weak economic base they have a less bargaining power
compare to large scale industries. They don‟t have their own resources and they are
not able to prepare other sources to lend them. Government of India gives credit
support to SSI units but it is not sufficient. Promotional agencies like SIDBI, NSIC
and SFURTI try to improve the economic condition of SSI, but steel there is a
loophole.

3.6.2 Marketing Problem: Small Scale Industries are facing marketing problems.
SSI units are not in a position to upgrade the quality of their product as per the
requirement of consumers. Lack of information about the competitors is a major
problem of SSI. Government of India reserved some products for SSI. National Small
Industries Corporation, State Trading Corporation, Trade Fair Authority of India helps
Small Scale industries for selling their product in domestic as well as international
market. To support export of SSI Government agencies gives training for Packaging,
quality improvement etc.

3.6.3 Management Problem: 3 Small Scale Industries have a poor management; they
are far away from professional management. Most of the SSI runs by family
members, in fact it is responsible for internal problems.

3.6.4 Irregular supply of Raw Material: Small Scale Industries purchase raw
material from local sources. Sometimes sources are not adequate, quality of the raw
material is not good and increasing rate of raw material creates a problem for SSI
units.

______________________________________
116
http://www.yourarticlelibrary.com/industries/10-major-problems-faced-by-the-small-scale-
industries-of-india/23457/

68
3.6.5 Infrastructural Problem: Small Scale Industries face the problem of
insufficient infrastructure. Inadequate availability of transportation, communication,
power supply makes the work difficult of SSI units. Underutilization of capacity is
found in most of the SSI units because of infrastructural problem.

Concluding Remark: Small and medium enterprises (SMEs) contribute significantly

to the GDP of India. SMEs produce 45% of the manufactured output of the country
and contribute 40% of its exports. The role of SSI in employment generation is next
only to the agriculture, which is the highest employment generator. While some of the
common challenges faced by SSI include lack of adequate finance when required;
little awareness of necessary statutory compliances, accounting procedures and
financial management; lack of financial planning and financial discipline etc.
Government of India started many Promotional agencies to help SSI Units.

69