Small Scale Industries List, Definition, & Examples

Small Scale Industries hold an important position in India, in terms of contributing to the country’s economy. As per the Ministry of Statistics and Programme Implementation, Government of India,

• The small-scale industry sector constitutes ~95% of the country’s industrial units
• It employs more than 175 lakh individuals.
• SSIs contribute around 33.4% of manufacturing output in India and contribute over 30% of the GDP. They have become the backbone of the Indian economy.

For developing countries like India, such industries play an important role due to their trade contributions and look after public welfare. Several initiatives such as Make in India have been launched by the Central Government to support the industrial sector in managing the demands and exploring growth opportunities.

What are Small Scale Industries?

As per the guidelines issued by the Government of India, small scale industries are those industries where the production, manufacturing, and rendering of services is done on a small scale. As per the Micro, Small and Medium Enterprises Act of 2006, the eligibility criteria to identify small industries are:

• The investment in the plant, machinery, and equipment should not exceed INR 10 crore; and
• The annual turnover should not be above INR 50 crore.

The main characteristics of small-scale industries include sole ownership or a small partnership, concentrated management with control resting in the hands of the owner, more flexibility towards changing demands of businesses, labour-intensive industry and limited operation reach, thereby fulfilling the local demands.

Also Read: Need Money Fast? 4 Options For Small Business Owners

Types of Small-Scale Industries in India

There are 6 types of small-scale industries in India –

Manufacturing Industries:

These industries specialize in producing finished goods for human consumption or are used further in processing industries. Usually, such industries have a single ownership structure.

Ancillary Industries:

These industries act as feeder units to the bigger manufacturing industries. Large or medium-scale industries generally do not produce all the parts of their products. They buy the required parts from such small scale industries.

Service Industries:

Such industries are not involved in any type of manufacturing or production, rather are only involved in offering repair and maintenance services.

Village Industries:

A village industry is a modest-scale enterprise established in rural regions with constrained resources. These industries rely entirely on human labor for their production processes.

Also Read:- 8 Profitable Rural Business Ideas for Village Areas in India

Cottage Industries:

Cottage units are classified as Small Scale Industries (SSIs) when they operate without a dedicated facility and are conducted within the living spaces or residences of their owners.

Export Units:

An Small Scale Industry (SSI) is recognized as an export unit when over 50% of its production is directed towards exports.

Apart from these major types of industries, other small scale industries examples include village industries, cottage units, export units, mining or quarries, etc.

Small Scale Industries Example In India

Here are list of small-scale industries given below:-

Products include rice mills, agarbatti production, sugar candy manufacturing, toys, detergent powder, spices, chocolates, honey processing, biodiesel production, etc are also covered under small scale industries list

Characteristics of Small Scale Industries in India

Management

Typically, the owner or owners hold both management and control responsibilities, resulting in their active engagement in the daily operations of the business.

Flexibility

Small scale industries (SSIs) exhibit greater adaptability to fluctuations in their business environment. Consequently, they possess the flexibility to adjust and persist in the face of alterations or unforeseen circumstances, distinguishing them from larger industrial counterparts.

Resources Utilization

They utilize local resources that are easily accessible, thereby aiding the economy in efficiently utilizing natural resources while minimizing waste.

Limited Reach

Small scale industries operate within limited geographical boundaries, enabling them to fulfill local and regional market needs efficiently.

Ownership

Generally, SSIs are typically owned by a single entity, which may take the form of a sole proprietorship or occasionally a partnership firm.

Objectives of Small Scale Industries (SSI)

The Small Scale Industries mainly strive to achieve the following objectives:

• Attain self-reliance
• Provide more employment opportunities to the working class
• Balance out the regional economic and employment disparities
• Improve the standard of living of the people
•  Ensure optimum utilization of the resources with minimal wastage
• Produce better quality products at affordable prices by adopting the latest technologies.

Features of Small-Scale Industries

Here are some of the features of SSI –

Modest Scale: Operate with limited capital and workforce.

Local Focus: Serve local markets with tailored products.

Flexibility: Quickly adapt to market trends and consumer demands.

Labour-Intensive: Rely more on manual labour than automation.

Government Support: Benefit from incentives, subsidies, and support programs.

Community Engagement: Actively participate in and support local communities.

Role of Small Scale Industry in Indian Economy

Public Welfare

Apart from economic factors, these sectors play a crucial role in fostering the social advancement and development of our nation. Typically initiated by individuals from the lower or middle-class segments of society, these industries offer avenues for wealth creation and employment generation. This, in turn, facilitates equitable income distribution and bolsters social advancement.

Contribution in Export

Roughly 45-55% of India’s exported goods originate from small enterprises. Specifically, small-scale industries contribute approximately 35% to direct exports and 15% to indirect exports. Therefore, the growth and progress of India’s export sector heavily hinge on the performance of these small industries.

Employment Opportunities

Small-scale industries play a significant role in generating employment nationwide. With the formal sector unable to accommodate the entire workforce, labour-intensive industries serve as a vital source of livelihood for a substantial portion of workers.

How to Register for Small Scale Industries

The Government of India offers different schemes, incentives and subsidies to registered small-scale industries. Though such registrations are voluntary. The registration process falls under the purview of the Ministry of Micro, Small and Medium Enterprises through the Directorate of Industries of the State Government.

Follow the guide below to register your Small Scale industry through the official government portal ‘UDYAM’. Any registration through a private body shall not be recognized as a Small Scale Industry.

• Visit the official government registration portal – UDYAM.
• On the given page, select the tab ‘For New Entrepreneurs who are not registered yet as MSME or those with EM-II”.
• On the following page, enter your Aadhaar number and your name for verification. You will receive OTP on your registered mobile number.
• After verification, the PAN Verification page opens up. Enter your PAN details and click on the “Validate PAN” tab.
• Next, the UDYAM Registration page opens up. Proceed to fill in all the required details and then select the option of “Submit and Get Final OTP” tab.
• Now, after successfully registering yourself on the MSME portal, you will receive a notification acknowledging the receipt of your application with a reference number. Once your registration is verified, you will receive your MSME registration certificate.

You can also register for more than one industry on the platform using the same Aadhaar and PAN details. No registration fees are levied for such registration.

Benefits of Small-Scale Industry’s Registration

The Government of India offers various incentives to Small-scale industries to promote the Make in India scheme and entrepreneurship among the citizens. Some benefits are:

• Tax rebates
• Easy access to credit under specific government tenders
• A credit for Minimum Alternate Tax is allowed to be carried forward up to 15 years
• Concessions on cost of acquiring patent, setting up plants and offices
•  Higher preferences to registered industries for government licenses and certification.

Also Read: Factors That Affect The Eligibility For Small Business Loans.

 Government Schemes for Small Scale Industries

Collateral-Free Loans: loans up to ₹3 lakh under the ‘Atmanirbhar Bharat’ scheme to support MSMEs.

Global Tender Restrictions: Disallowing global tenders to create better opportunities for Indian MSMEs.

Timely Payments: Ensuring Public Sector Units (PSUs) clear MSME dues within 45 days to improve cash flow.

Focus on Self-Reliance: Aimed at boosting the MSME sector as part of the ‘Atmanirbhar Bharat’ initiative.

FAQs

1 What is the meaning of Small Scale Industry (SSI) in India?

SSIs are defined based on their investment in plant and machinery, with specific limits varying across sectors. As of 2022, micro-enterprises have investment limits up to Rs. 1 crore, small enterprises up to Rs. 10 crores, and medium enterprises up to Rs. 50 crores.

2 Which of these is the small scale industry in India?

Small scale industries in India cover a wide range of sectors including textiles, food processing, leather, handicrafts, electronics, chemicals, and more. Popular businesses include garment manufacturing, food products, IT services, and handicrafts.

3 Are there any special incentives for women entrepreneurs in small scale industries?

Yes there are many special schemes available solely for women. Some of them are mentioned below –

• Reduced Interest Rates: Women entrepreneurs can avail loans at lower interest rates to ease financial burdens.

• MSME Development Programs: The government offers dedicated support, including training and mentoring, to help women grow their businesses.

• Sector Reservations: Certain sectors offer reserved opportunities to promote women-led businesses.

• Encouraging Women Participation: These initiatives aim to empower women and increase their involvement in Small Scale Industries (SSIs).

4 What is the present status of entrepreneurship in small-scale industries in India?

It is projected that the whole SSI sector includes 1,05,21,190 units scattered across the country. Approximately 55% of these units were located in rural India. Over 44 lakhs (42.26%) of the entire SSI sector were SSIs, while the remainder 61 lakhs (57.74%) were SMEs.

5 Give some examples of small scale industries?

Examples of small-scale industries:

1. Food processing (e.g., pickle making, bakeries).
2. Handicrafts (e.g., pottery, wooden toys).
3. Textile (e.g., handlooms, tailoring).
4. Agro-based industries (e.g., spice grinding).
5. Leather products (e.g., belts, wallets).
6. Paper products (e.g., envelopes, paper bags).
7. Service-based (e.g., beauty parlors, repair shops).
8. Metalwork (e.g., utensils, small tools).