Small-scale industries play an important role in most economies, especially in developing countries. They are a major contributor to the GDP figure and employ numerous people. The government of India believes that the small-scale industries in India have immense potential and are a huge pillar of India’s growth journey.
To define small-scale industries, we first need to know the definition of industry. Industry is a group of companies engaged in the manufacture of same products which is their primary business activity.
What are small-scale industries?
Small-scale industries are industries where manufacturing, production and servicing are done on a very low scale. In small scale industries, manufacturing of products and rendering of services are completed using smaller machines and limited manpower.
As per the new classification of MSMEs in India (i.e., micro, small, and medium enterprises), a small business is one whose investment in plant and machinery/equipment is up to ₹10 crores, and turnover up to ₹50 crores.
Given below are a few examples of small-scale industries:
- Spices manufacturing
- Pickles and papad making
- Bakery and chocolate making
- Incense stick and camphor manufacturing
- Candle and wax product making
- Soap production
- Beauty parlours
- Small toys manufacturing
- Leather product manufacturing
- Handloom and handicrafts
- Paper packaging
- Vehicle servicing units
- Tissue manufacturers
Characteristics of small-scale industries
Companies belonging to the category of small-scale industries can be identified by a few characteristics:
- Companies belonging to small scale industries are usually sole proprietors or family businesses.
- Since ownership lies with a single person or a family, all business decisions solely rest on the owner or the family.
- These industries use more manpower and very limited technology.
- They tend to source labor from the rural areas or migrants.
- Business activities are generally localized and they cater to local and regional demands.
Objectives of small-scale industries
Small-scale industries being a major contributor to the economy have a few objectives to fulfill:
- To build environment-friendly businesses that require only low investment
- To generate employment especially in the rural areas
- To encourage development of rural areas thereby promoting balanced regional development
- To help mobilisation of human capital of the rural and regional areas
- To bring backward regions to the arena of development
Small-scale industries of India
In India small scale industries come under the classification of MSME or Micro, Small and Medium Enterprises. The Government of India has defined businesses according to their turnover and classified them into three main categories:
|Micro enterprise||Small enterprise||Medium enterprise|
|Investment and annual turnover respectively||< ₹ 1 Crore & < ₹5 Crore||< ₹10 Crore & < ₹50 Crore||< ₹50 Crore & < ₹250 Crore|
As a small business owner, it is recommended that you register on the Udyam portal for MSME benefits such as low-interest business loans, subsidies and exemptions, EMD exemption in government tendering and more.
Advantages of getting a small-scale industry registration in India
If your business comes under any of the classes in the table above your business is eligible to be registered as an MSME. Small-scale industry registration in India also known as the MSME registration can be obtained by signing up on the Udyam portal and completing the registration. Once you have an Udyam registration, you can enjoy the following benefits:
- MSMEs are eligible for priority sector lending from banks
- They can enjoy MSME specific schemes introduced by the Ministry of MSME
- MSMEs can participate in government e-Tenders and take advantage of the 20% quota for MSMEs on public procurement
- Udyam registered businesses get tariff subsidies, and tax and capital subsidies
- Small businesses have access to collateral free bank loans with cheaper interest rates
Small scale manufacturing entities and other small businesses in India benefit from the several government policies tailored for their growth. Getting an MSME registration can open many doors including government tenders, cheaper bank loans and international trade fairs.
Platforms like Tata nexarc can help MSMEs explore opportunities like government tenders and small business loans to boost business growth.