ROLE AND PROBLEMS OF SMALL SCALE INDUTRIES

• MICRO.SMALL AND MEDIUM ENTERPRISES
• PROJECT MANAGEMENT/ENTREPRENEURSHIP/BUSINESS ENVIRONMENT
• DR SHASHI AGAGRWAL

• MICRO,SMALL AND MEDIUM ENTERPRISES

1. AN SMALL SCALE ENTERPRISES AS PRIVATELY OWNED AND OPERATED BUSINESS UNIT THAT IS COMPOSED OF SMALL NUMBER OF EMPLOYEES AND HAS RELATIVELY LOW TURNOVER.
2. IN INDIA MSME ARE THE BACKBONE OF THE ECONOMY
3. THE MSME SECTOR CONTRIBUTES TO 45% OF INDIA’S TOTAL INDUSTRIAL EMPLOYMENT
4. 50% OF INDIA’S TOTAL EXPORTS
5. 95% OF ALL INDUSTRIAL UNITS
6. AS PER MSME .GOV.IN MORE THAN 6000 TYPES OF PRODUCTS ARE MANUFACTURED IN THESE INDUSTRIES
7. THESE INDUSTRIES ARE ALSO KNOWN AS SMALL SCALE INDUSTRIES

• AS PER MSME ACT 2006 : CLASSIFICATION

• THE MANUFACTURING ENTERPRISES: ENGAGED IN THE MANUFACTURE OF PRODUCTION OF GOODS (AS PER DEVELOPMENT AND REGULATION ACT, 1951) OR EMPLOYING PLANT AND MACHINERY IN THE PROCESS OF VALUE ADDITION TO THE FINAL PRODUCT HAVING A DISTINCT NAME OR CHARACTER OR USE.
• SERVICE ENTERPRISE: INVOLVED IN PROVIDING OR RENDERING OF SERVICES SUCH AS TAILORING, DRY CLEANING AND BEAUTY PRODUCTS.
• FURTHER CLASSIFIED ON THE BASIS OF AMOUNT INVESTED ON PLANT AND MACHINERY IN THE MANUFACTURING SECTOR AND ON EQUIPMENT ( IN THE SERVICE SECTOR )

• INVESTMENT CEILING FOR MSMES

• NEW CLASSIFICATION OF MSME FOR BOTH THE GOODS AND SERVICES ON  THE BASIS OF TURNOVER
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• FEATURES OF SMALL SCALE INDUSTRY

1. LABOUR INTENSIVE : EMPLOYMENT OPPORTUNITIES TO INDIVIDUALS IN URBAN AND RURAL AREAS
2. FLEXIBILITY
    ADAPT THEMSELVES AS PER THE DYNAMIC INDUSTRIAL ENVIRONMENT
3. ONE MAN SHOW: MOSTLY SET UP BY INDIVIDUALS. SOME ARE RUN BY PARTNERSHIP FIRM OR COMPANY. DECISION MAKING PROCESS IS FAST
4. USE OF INDIGENOUS RAW MATERIALS: PROMOTE INTERMEDIATE AND CAPITAL GOODS. FACILITATES BALANCED ECONOMIC GROWTH.
5. LOCALIZED OPERATIONS: GENERALLY RESTRICT THEIR OPERATION TO LOCAL AREAS IN ORDER TO MEET REGIONAL DEMAND OF THE PEOPLE.
6. FEATURES OF SMALL SCALE INDUSTRY
7. LESSER GESTATION PERIOD:-GESTATION IS THE PERIOD AFTER WHICH THE RETURN OR INVESTMENT STARTS. IT IS THE TIME PERIOD BETWEEN SETTING THE UNITS AND COMMENCEMENT OF PRODUCTION. HELP THE ENTREPRENEUR TO EARN AFTER SHORT PERIOD
8. EDUCATIONAL LEVEL: EDUCATIONAL LEVEL OF THE EMPLOYEES IS MODERATE OR LOW.
9. PROFIT MOTIVE :

• OBJECTIVES OF SMALL SCALE INDUSTRY

1. TO CREATE MORE EMPLOYMENT
2. HELP IN DEVELOPING RURAL AREAS AND BALANCED DEVELOPMENT
3. TO REDUCE REGIONAL IMBALANCES
4. TO ENSURE OPTIMUM UTILIZATION OF UNEXPLOITED RESOURCES OF THE COUNTRY
5. TO IMPROVE THE STANDARD OF LIVING
6. TO ENSURE EQUAL DISTRIBUTION OF INCOME AND WEALTH
7. TO SOLVE THE PROBLEM OF UNEMPLOYMENT
8. TO ADAPT THE LASTES TECHNOLOGY

• REGISTRATION PROCESS
• IS AN OPTIONAL
• REGISTRATION IS PROVIDED BY MICRO,SMALL AND MEDIUM ENTERPRISES THROUGH THE STATE GOVERNMENT DIRECTORATE INDUSTRIES IN ORDER TO PROMOTE THE SMALL BUSINESS IN INDIA
• OBJECTIVES OF SSI REGISTRATION :
• AIMS TO MAINTAIN THE ROLL OF SMALL SCALE INDUSTRIES
• AIMS TO OFFER STATUTORY BENEFITS
• APART FROM CREATING  NODAL CENTRES AT THE DISTRICT,STATE AND CENTRAL LEVEL TO PROMOTE SSI
• TO COLLECT ACCURATE STATISTICS

• STEPS
• APPLY FOR PROVISIONAL SSI REGISTRATION CERTIFICATES. THE TERM PROVISIONAL IS USED AS THE UNIT IS YET TO COME INTO EXISTENCE. THIS CERTIFICATE IS GIVEN WHEN THE SSI UNIT BEING TALKED ABOUT IN PREOPERATIVE PERIOD. THE PRC WILL HELP  THE UNITS TO OBTAIN WORKING CAPITAL AND TERM LOANS FROM BANKS OR FINANCIAL INSTITUTIONS UNDER PRIORITY SECTOR LENDING
• COMMENCE THE BUSINESS WITH THE PROVISIONS SSI REGISTRATION CERTIFICATE AND START THE MANUFACTURING PROCESSES
• THE SSI UNIT ONCE SUCCESSFULLY COMMENCED GRANTED A PERMANENT REGISTRATION CERTIFICATE. AFTER PROPER DUE SCRUTINIZING OF THE INVOLVED DOCUMENTS,SSI CAN APPLY AND OBTAIN PERMANENT REGISTRATION VALID FOR LIFE TIME
• FORMALITIES LIKE APPROVALS AND CLEARANCES OF NOC FROM THE MUNICIPAL CORPORATION, STATE AND CENTRAL POLLUTION CONTROL BOARD, ELECTRICITY BOARDS. ARE REQUIRED TO BE COMPLETES BY AN SSI TO OBTAIN PERMANENT REGISTRATION
• REGISTRATION
• ONLINE SSI REGISTRATION CAN ALSO BE OBTAINED THROUGH VARIOUS PORTALS THROUGHOUT THE NATION
• RE BRANDED AS UDYOG AADHAR REGISTRATION ( UAM)
• IS FREE OF COST AND IS ACCESSED EASILY
• FILL A SINGLE FORM

• DOCUMENT REQUIRED : AADHAR NUMBER,INDUSTRY NAME,ADDRESS AND BANK ACCOUNT AND SOME COMMON INFORMATION

1. DOCUMENTS REQUIRED FOR REGISTRATION
2. MEMORANDUM AND AOA/PARTNER SHIP DEED
3. CONSENT OF POLLUTION CONTROL BOARD
4. A POWER LOAD INSTALLED AS PROOF
5. COPY OF PURCHASE BILL
6. COPY OF SALE BILL
7. COPY OF THE PURCHASE BILL OF ALL THE MACHINES
8. AN AFFIDAVIT IN PRESCRIBED FORM

• BENEFITS OF OBTAINING SSI REGISTRATION

1. VARIOUS TAX REBATES ARE  OFFERED TO SSI
2. A CREIDT FOR MAT IS ALLOWED TO BE FORWARDED  FOR UP TO 15 YEARS INSTEAD OF 10 YEARS
3.  MANY GOVERNMENT TENDERS OPEN ONLY TO SSI
4. GET EASY TO ACCESS CREDIT
5. REGISTER SSI ARE GIVEN HIGHER PREFERENCE FOR GOVERNMENT LICENCE AND CERTIFICATION

• ROLE OF SMALL SCALE ENTERPRISES IN ECONOMIC DEVELOPMENT

1. EMPLOYMENT GENERATION: EMPLOY LABOUR INTENSIVE, THEY GENERATE HUGE NUMBER OF EMPLOYMENT. POWERFUL TOOL OF JOB CREATION.
2. HIGHER PRODUCTIVITY: - WITH LOW INVESTMENT TEND TO ACHIEVE HIGHER PRODUCTIVITY OF CAPITAL. GENERALLY IT IS SAID THAT INVESTMENT OF ONE LACS INVESTMENT IN SMALL SECTOR PRODUCES 4.62 LACS WORTH OF GOODS AND SERVICES
3. POVERTY ALLEVIATION : MITIGATING POVERTY ALLEVIATION BY PROVIDING EMPLOYMENT OPPORTUNITIES IN RURAL AND URBAN AREAS
4. BETTER UTILIZATION OF RESOURCES :- MAKE THE EFFICIENT USE OF LOCALLY AVAIL ABE RESOURCES AND FOCUSED ON FULFILLING THE NEEDS OF DOMESTIC MARKET

5. TAPPING OF SAVING: - HAVE POTENTIAL FOR SAVING A LARGE PORTION OF THEIR INCOME. THE ENTREPRENEUR MOTIVATED TO SAVE FOR FUTURE INVESTMENTS. THIS ALSO HELPS IN REDUCING THEIR DEPENDENCE ON INSTITUTIONAL SOURCES OF FINANCING
6. UTILIZATION OF DOMESTIC TECHNOLOGY :- USE SIMPLE,GENERAL PURPOSE MACHINERY THAT IS OFTEN OBSOLETE AS PER STANDARDS OF DEVELOPED COUNTRIES
7. REGIONAL BALANCE AND RURAL DEVELOPMENT: DUE TO THEIR LOCATIONAL FLEXIBILITY REQUIRES LESS INFRASTRUCTURE AND SERVE NARROW GEOGRAPHICALLY AREA.
8. EXPORT CONTRIBUTION: - THE OVERALL CONTRIBUTION IS ESTIMATED TO BE 35%. SSI INCLUDES MERCHANT EXPORTERS, TRADING AND EXPORT HOUSES. THE MAJOR ITEMS OF EXPORT BY SSI ARE LOW SKILLED LABOUR INTENSIVE GOODS SUCH AS READY GARMENTS,LEATHER PRODUCTS,GEMS AND JEWELLERY ETC
9. EQUITABLE DISTRIBUTION OF INCOME: PREVENT THE CONCENTRATION OF POWER IN FEW HANDS AND ENSURE EQUAL DISTRIBUTION OF WEALTH.
10. COMPLEMENTARY TO LARGE SCALE INDUSTRIES: PRODUCES VARIOUS COMPONENTS AS SPARE PARTS, TOOLS AND ACCESSORIES WHICH ARE REQUIRED BY LARGE SCALE INDUSTRIES.
11. PROVIDES OPPORTUNITIES FOR DEVELOPMENT OF TECHNOLOGY : TREMENDOUS CAPACITY TO GENERATE OR ABSORB INNOVATIONS.AMPLE OPPORTUNITIES  FOR THE DEVELOPMENT OF TECHNOLOGY AND CREATES CONDUCIVE ENVIRONMENT FOR DEVELOPMENT OF SMALL SCALE INDUSTRY,

• PROBLEMS

1. POOR CAPACITY UTILIZATION: NOT EVEN 50%. CAPITAL IS NECESSARY BLOCKED AND MACHINERY IS IDLE
2. INCOMPETENT MANAGEMENT : RUN BY POORLY QUALIFIED ENTREPRENEUR
3. INADEQUATE FINANCE : FACE THE PROBLEM OF SCARCITY
4. RAW MATERIALS SHORTAGE :: NOT AVAILABLE AND IF AVAILABLE AT HIGH PRICES
5. LACK OF MARKETING SUPPORT
6. PROBLEM OF WORKING CAPITAL
7. PROBLEM IN EXPORT
8. LACK OF TECHNOLOGY UPGRADING
9. MULTIPLICITY OF LABOUR LAWS
10. WIDESPREAD SICKNESS
11. GOVERNMENT INTERFERENCE
12. STRAIN ON GOVERNMENT FINANCES
13. POOR INDUSTRIAL RELATION