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Small Scale Industries-For Increasing Economical Growth


In India, National Small Industries Corporation Limited (NSIC) was established in 1955. Basically, NSIC was developed to promote small scale industries in the country.

Small Scale industries not only plays a major role but also equally important for the growth of our country. It helps countries in its development as well as also generates many opportunities for the people of the countries.

In this blog, we will learn in detailed about the Small Industries. We will also learn about the role played by these industries for the growth of the country.

Table of Contents

1. Definition
2. Objectives of Small Scale Industries
3. Characteristics of Small Scale Industries
4. Types of Small Scale Industries
5. Role of Small Scale Industries in Indian economy
6. Importance of Small Scale Industries
7. Problem of Small Scale Industries
8. Government support on Small Scale Industries
9. Conclusion
10. FAQ


Those industries which manufacture their products and services in a small scale are called as small scale industries.

For example, some of small industries are restaurants, bakeries, dairy, rice mill, toys, pens, water bottle, tissues, etc.,.

Small industries are especially considered as the lifeline of economy of developing countries. Some of the developing countries are Afghanistan, Colombia, India, Bangladesh, Nepal, and furthermore.

Objectives of Small Scale Industries

Worker working in Small Scale industry

Given below are the following objectives of SSI:

  1. To develop further more employment opportunities in country.
  2. To decrease regional imbalances certainly.
  3. Surely providing the better standard of living.
  4. Ensuring overall equal distribution of income and wealth.
  5. For certainly adaptation of new technologies so that to produce better quality products at low prices.
  6. Chiefly solving the problem of unemployment in the country.
  7. To further develop rural areas of economy.

Characteristics of Small Scale Industries

Given below are the following characteristics of SSI:


Basically, there is only single/ individual overall ownership in small industries. It can either be sole proprietorship or can me a partnership.

Management and Control

The management as well as the control of small industries are specifically in the hand of the owners of the industry.


The small industries are very flexible, since they easily adopt the changes of the overall industrial environment.


Generally, small industries are considered as one of the biggest source of employment. In fact, there are large number of small industries in India which requires large number of employees.

Low bargaining power

As we all know generally, employees of small industries do not form any strong trade union. Due to which they can’t represent their point of views to the owner resulting in low bargaining power.

Local operations

The operations of small industries chiefly are based on the local demands and needs. Since SSI manufacture products as per the need of local public its clear that it mainly focuses on local operations.

Types of Small Scale Industries

Types of SSI

There are basically 3 types of SSI which are described below:

Manufacturing Industries

Manufacturing industries are those industries which are particularly involved in the manufacturing of products or goods. These industries also supply their products to other industries for making furthermore new goods/products.

To clarify above given information, some of the examples of manufacturing industries are given below:

Iron and steel industry, electronics equipment’s industries, chemical industries, and furthermore.

Ancillary Industries

Ancillary industries are those industries which specifically produce those parts as well as other components which are used by the larger industries.

To clarify above given information, some of the examples of ancillary industries are given below:

Brakes India Limited, Aditya Gears Limited, GE Company, and furthermore.

Service Industries

Service industries are those industries which basically provides service to the customers instead of producing anything.

For example, some of service industries are transportation, retail trade, communications, and furthermore.

Role of Small Scale Industries in Indian Economy

Role of SSI

Given below are the following roles of SSI:

Promotes export

Small industries evidently increases the export of goods and services. Specifically in India, the half of total exports comes from small industries.

Of course about 35% of exports are directly done by small scale industries and meanwhile 15% of exports are indirectly done by small industries.

Increases employment

Small industries large number of people from rural as well as urban areas. It not only improves employment rates but also prevents unemployment crises too.

Opens new opportunities

Undoubtedly, small industries opens new opportunities for investments. In fact, government export policies also supports small industries. In short, small industries easily gets funds and financial supports.

Advances welfare

In the meantime, small industries advances the welfare of the Indian economy. Eventually, it gives better standard of living to the poor people by reducing poverty and inequalities of income among people.

Encourage women growth

Occasionally,small industries encourages entrepreneurial skills in women whenever needed. Moreover, at the same time it gives opportunities to women as well, for their overall development.

Importance of Small Scale Industries

Parts manufacturing Industry

Given below are the following importance of SSI:

Generate employment

Undoubtedly, small industries generates large number of employment opportunities in the long run. Hence, as a result it is one of the powerful tool for the creation of job too.

Better industrial relations

Explicitly, the better relations of employers and the employees consequently increases the efficiency of employees and also reduces the industrial disputes. As a result, it increases the production of small industries as well as also develops the growth of economy of country.

Supports large industries growth

Since, small industries evidently plays a vital role in the growth of large scale industries. By all means, it provides various components as well as semi-finished goods to the large company which are further needed by them.

Gives opportunities for technology development

Small industries provides opportunities particularly for the development of technology. Moreover, innovations and inventions of entrepreneurs eventually facilitates the improvement and development of technology.

Promotes export

Of course, small industries promotes export in a large scale. The half number exports especially comes from the export of goods as well as services of small industries.

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Problems of Small Scale Industries

Given below are the following problems faced by SSI:

Unskilled manpower

Obviously, skilled manpower is the key to success for the industries at any event. But meanwhile, the shortage of skilled manpower particularly in rural areas results in the problem for the survival of small industries.

Shortage of raw material

Generally, irregular supply of raw material, low quality of raw material as well as shortage of raw material simultaneously as well as separately, causes a severe problem in the overall production of small industries.

Lack of machinery and equipment’s

Undeniably, most of the machines as well as equipment’s employed by the small industries are outdated.

Due to the shortage of large sum of money the small industries can’t purchase modern technology even though it needs it, to compete large industries.

Therefore, due to lack of appropriate technology, small industries faces problems particularly in its growth.

Competition of large scale industries

Chiefly, small industries faces difficulties particularly in competing with the products and goods of large scale industries.

The overall quality of the products of large scale industries are comparatively better than the products of small industries.

Lack of awareness

Particularly, many government organizations not only supports but also provides help to the small industries. Despite of providing such support, many of the entrepreneurs doesn’t know about this facilities provided by the government because of lack of awareness.

Government interference

Due to the large number of government inspections, the small industries have to waste their lot of time, money and effort specifically for various inspections and record verification’s. As a result, these inspections prevents small industries from concentrating on their activities.

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Government Support on Small Scale Industries

Part produced by Small scale industry

Given below are the following government support that a government gives to SSI:


Basically, NABARD stands for National Bank for Agriculture and Rural Development. Government established NABARD in 1982 in order to promote the overall industries of rural areas.

Chiefly, NABARD adopts various multi-purpose strategies to support rural industries, small scale industries as well as cottage industries with agriculture.


Generally, RSBDC stands for Rural Small Business Development Centre.

It is specifically a government centre which is specifically sponsored by NABARD.

Moreover, RSBDC do various program to motivate unemployed youth as well as particularly women to learn trades and skill up gradation, training and overall entrepreneurship concurrently.


Particularly, NSIC stands for National Small Corporation Industries.

Government established NSIC in 1995 in order to support small industries on commercial aspects.

Presently, NSIC started new schemeperformance and credit ratingfor small scale industries. for ensuring more credit rating as well as more financial support for capital requirement and investment.


Generally, SIDBI stands for Small Industries Development Bank of India.

It is one of the top government bank which help small business by providing them various direct as well as indirect financial support through various schemes for their credit requirement.


Basically, NCEUS stands for National Commission for Enterprises in the Unorganized Sector.

It was established by the specifically by the government in September 2004 in order to explicitly improve the small scale industries productivity and also to generate employment in the overall rural areas.


Particularly, RWED stands for Rural and Women Entrepreneurship Development.

It is basically a government organization which particularly focuses on business environment to support women for the business initiative. It chiefly provides training and advisory service for the women.

Scheme of Funds for Re-generation of Traditional Industries

Moreover, in 2005, government established Scheme of Funds for Re-generation of Traditional Industries to provide funds specifically for supporting traditional small industries. They does so for especially facilitating them higher productivity for enhancing their overall growth and development.


In general, Small Scale Industries are basically one of the major source of employment in country. It gives opportunities to entrepreneurs, youth as well as women for giving their contribution in overall growth of industries.

Small industries are evidently referred as the lifeline of economy. Since, it provides a better standard of living to the people.

On the whole, every new entrepreneur must surely use their knowledge as well as skills in small industries.

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(1) Which industries can be registered under SSI?

(Ans.) Manufacturing enterprises and service enterprises are basically registered under Small scale industries.

(2) Why we need Small scale industries?

(Ans.) We need Small scale industries because it not only helps in the economic development but also increases employment opportunities in our country. It also increases the growth of rural as well as urban area which results in the growth of our country.

(3)  What are the successful Small scale businesses?

(Ans.) The following are the successful small businesses for earning profits, and are specified below:
Website designing, cleaning services, online tutoring, courier services, catering services, and furthermore.



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