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Small Scale Industries in India : Definition and Small Scale Business Ideas

What is a small-scale industry? Some of the Best Small Scale Business Ideas.

A small-scale industry is a project or firm created on a small budget or for a small group of people. A small-scale industry produces its goods using small machines, less power, and hired labor. It is located in a single place and produces goods meant for few people. Small scale industries are easy to start and manage given the minimal scale of production. They are set up to cater for the basic needs of the people within their locality.

An example of a small-scale industry is a laundry or small kiosk created to cater to the individual needs of the people in the area in which it is located. These businesses require little starting and operating capital. Small-scale industry requires cheap labor that is easily found and their target market is the host community. Such companies also realize a small annual turnover and, as a result, pay fewer taxes. The classification of the industry as large or small scale depends on the rate of production and the number of employees.

Characteristics of Small-Scale Industries

(i) Ownership:

Ownership of small scale unit is one individual in sole-proprietorship or it can be with a few individuals in partnership.

 (ii) Management and control:

A small-scale unit is normally a one-man show and even in the case of a partnership the activities are mainly carried out by the active partner and the rest are generally sleeping, partners. These units are managed in a personalized fashion. The owner is actively involved in all the decisions concerning business.

(iii) Area of operation:

The area of operation of small units is generally localized catering to the local or regional demand. The overall resources at the disposal of small scale units are limited and as a result of this, it is forced to confine its activities to the local level.

(iv) Technology:

Small industries are fairly labor intensive with comparatively smaller capital investment than the larger units. Therefore, these units are more suited for economies where capital is scarce and there is an abundant supply of labor.

(v) Gestation period:

The gestation period is that period after which teething problems are over and return on investment starts. The gestation period of small scale unit is less as compared to large scale unit.

(vi) Flexibility:

Small scale units as compared to large scale units are more change susceptible and highly reactive and responsive to socioeconomic conditions.

They are more flexible to adopt changes like the new method of production, the introduction of new products etc.

(vii) Resources:

Small scale units use local or indigenous resources and as such can be located anywhere subject to the availability of these resources like labor and raw materials.

(viii) Dispersal of units:

Small scale units use local resources and can be dispersed over a wide territory. The development of small scale units in rural and backward areas promotes more balanced regional development and can prevent the influx of job seekers from rural areas to cities.

Business Profile of small-scale industries

  • 95 % of industrial units in the country.
  • 39.92 % of value added in the manufacturing sector.
  • 34.29 % of national exports.
  • 6.86 % of Gross Domestic Product (GDP).
  • Employment to 193 lakh persons.
  • Over 7500 items are produced in the small-scale industrial sector.
  • 749 items have been reserved for exclusive manufacture in the small-scale industrial sector.
  • 358 Items have been reserved for exclusive purchase from the small-scale industrial sector.

Small-Scale Business Ideas with Investment up to 50,000/-

  • Coaching Class
  • Food Supply
  • Marriage Bureau
  • Hobby Centre
  • Baby Sitting.
  • Real-estate Agency.
  • Beauty Parlor.

Small-Scale Business Ideas with Investment up to 1 Lac

  • Wedding Planner
  • Stationery Store
  • Courier shop
  • Seasonal Business
  • Placement Services
  • Chocolate Making.

Small-Scale Business Ideas with Investment up to 5 Lac

  • Toy Shop
  • Mobile Shop
  • Bakery
  • Tour Travel Agency
  • Advertising Agency
  • Medical Stores. etc.

Hope this article will help you to understand what is small scale industry and its characteristics. Share this article “Small Scale Industries in India : Definition and Small Scale Business Ideas” to your friends.

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