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Essay, Paragraph, Speech on “Small – Scale Industries” Complete Paragraph, Speech for Classes 8, 9, 10, 11 and 12.

Small – Scale Industries

Essay No.01

“Small – Scale Industries (SSI) play an important role that cannot be over-emphasized. The pivotal role played by SSIs in the development and growth of the Indian economy since independence is reflected in the growth of output and employment generation by this segment of the industrial sector.”

Generally, the size, capital resources, and labor force of the individual unit is the basis of the distinction between the large-scale, medium-scale, and small scale industries (SSIs). According to the First Five Year Plan, the difference between the small scale and cottage industries are basically two : (i) while small-scale industries are mainly located in urban centers as separate establishments, the cottage industries are generally associated with agriculture and provide subsidiary employment in rural areas and (ii) while small small-scale industries produce goods with partially or wholly mechanized equipment employing outside labor, the cottage industries involve operations mostly by hand which is carried on primarily with the help of the members of the family either as a whole or as a part-time occupation. A small scale industry, on the other hand, is one which is operated mainly with hired labor, usually 10 to 50 hands. Probably, it was this definition that prompted the industrial act, 1951 to exempt units employing less than 50 workers with power, and less than 100 workers without power, from registration. This exempted sector came to be known as the small-scale sector. Industrial units included under the small-scale and village industries by virtue of fulfilling the above capital investment requirement are a ‘hybrid’ of units of various types ranging from the age-old household industries to modern, mechanized small scale units.

Role in Indian Economy.

The role of small-scale and village industries was emphasized in the Second Five-Year Plan on the following five grounds : (1) Employment generation ; (2) Equitable distribution of national income; (3) Mobilization of capital (4) entrepreneurial skills, and (5) Regional dispersal of industries.

  1. Employment Generation: After agriculture, small scale and cottage industries provide employment to the largest number of people in India. Within the manufacturing sector itself, the small and decentralized sector contributes about one-half of the value-added and four-fifth of the manufacturing sector itself, small and decentralized sector contributes about one-half of the value-added and four-fifths of manufacturing employment in India. Given the acute unemployment problem in India with a backlog of unemployment, estimated at around 17 million in 1992, the creation of employment opportunities will depend crucially on the development of small-scale and cottage industries.
  2. Equitable Distribution of National Income: One of the main arguments put forward in support of the small-scale and cottage industries is that they ensure a more equitable distribution of the national income and wealth. This accomplished because of the following two considerations : (i) the ownership of small-scale industries is more widespread than the ownership of large-scale industries: and (ii) they possess a much larger employment potential as compared to the large industries.
  3. Mobilization of Capital and Entrepreneurial Skills: A number of entrepreneurs are spread over small towns and villages of the country and large-scale industries obviously cannot utilize them as efficiently as the small-scale and village industries, since the latter are distributed over the entire length and breadth of the country. Similarly, large scale industries cannot mobilize savings of the people in areas far-flung from the urban centers. But this task can be effectively accomplished by setting up a network of small-scale and cottage industries.
  4. Regional Dispersal of Industries: In the process of industries and its development in India there has been a tendency of the massive concentration of large-scale industries in the state of Maharashtra, West Bengal, Gujarat, and Tamil Nadu. Which has increased the regional disparities in industrial development in the country.

As against this, the small-scale industries are mostly set up to satisfy local demand and they can be dispersed over all the states very easily they can also affect a qualitative change in the economy of a state. The most glaring example of this phenomenon is the economy of the Punjab which has more small scale industrial units than even the industrially developed state of Maharashtra.

New Small Enterprise Policy, 1991

With the primary objective of imparting more vitality and growth impetus to this sector, the government announced a policy package for small, tiny, and village industries in Aug 1991. Its main features are :

  1. The ceiling of investment in the case of ‘tiny’ enterprises has been raised to Rs. 5 lakh from Rs. 2 lakh earlier.
  2. Locational restrictions on setting up these enterprises have been removed and their scope has been enlarged to include all industries-related service and business enterprises.
  3. With a view to encouraging modernization and technological up-gradation, equity participation, not exceeding 24 percent, by other industrial undertakings, including that by foreign collaborations in the small scale sector has been permitted.
  4. Setting. Up of a monitoring agency to ensure that the genuine credit needs of this sector are fully met.
  5. Review of all statutes, regulations, and procedures and their modifications to ensure that their operation does not militate against the interests of the small and village enterprises.
  6. Encouraging industry associations to establish quality counseling and common testing facilities.
  7. Sub-contracting exchanges and expansion of the Entrepreneurship Development Programme.
  8. Steps have been taken to alleviate the credit bottlenecks of this sector. The eligibility limit of the projects under the National Equity Fund Schemes has been doubled from Rs 5 lakh to Rs. 10 lakh.
  9. The single window scheme was extended to be operated by scheduled banks also in addition to state financial institutions; and.
  10. An ordinance was promulgated on Sept 23, 1992, making payment of interest obligatory on delayed payments to small-scale and ancillary industrial undertakings.

Problems of small-scale industries.

The small-scale and cottage industries have been facing a number of problems which often force these units to close down. The major problems that the small-scale units have to face are :

  1. Lack of timely fulfillment of finance and credit to this sector.
  2. Non-availability of raw materials.

iii. Use of obsolete machines and other equipment.

  1. Underutilization of capacity.
  2. Non-availability of a proper marketing system for them; and non-availability of cheap power, inefficient management, the burden of local taxes, competition from large-scale industries, etc.

In brief, we can say that small scale industries needed to be established in various backward regions of India by the Central livelihood and the gap between the urban and rural standard of ling which is increasing day by day, be decreased. These industries Government so that the peoples living in rural areas may earmark e have also played an important role in increasing the Indian Economy If Central, as well as State Government, emphasize in their set up in different parts of the country only then we can lead a prosperous life and India can make a progress by leaps and bounds.


Essay No.02

Small Scale Industries

Cottage and small-scale industries play an important role in the national economy. The cottage and small scale industries include village industries, cottage industries, and small-scale industries. The village industries are associated with agriculture and they process the raw material with simple techniques. Cottage industries are carried on in the houses of the workers and satisfy only local needs.

Small scale industries are a good source of opening employment opportunities. They lead to equal distribution of national income. These are more appropriate to Indian rural life. The independent identity of the workers are maintained in these industries. They reduce the dependence of the population on agriculture. They need lesser technical knowledge and skill. These are quite suitable for the economic structure of the country.

The small scale sector has acquired a prominent place in the socio-economic development of the country. It has contributed to the overall growth of the gross domestic product (GDP).

There are certain difficulties and problems in the working, organization, and development of cottage and small-scale industries in India. These main problems are Non-availability of adequate financial resources; difficulty in securing good quality raw materials at low prices; problems of facing competition with large-scale industries. There are other problems like illiteracy, poverty. conservation and unreliability of cottage workers.

According to the Seventh Plan Document, “the growth and development of the small sector have been constrained by several factors. These include technological know-how, inadequate and irregular supply of raw material. Lack of organized market channels, inadequate availability of credit, and deficient managerial and technical skills have further complicated the problems.”

India is an agricultural country and has a problem with a large population and unemployment. There is an urgent need for developing the cottage and small-scale industries on the proper lines. To improve the present conditions of these industries, we should emphasize adequate financial resources. Cottage workers should be given quality raw materials at a lower cost. Steps should be taken to remove illiteracy among cottage workers. Cottage and small-scale industries should be integrated with large scale industries to avoid unhealthy competition.

The Government of India has always accorded priority to the cottage and small scale industries sector in its Industrial Policy Resolutions and in the strategy for industrialization in the country.


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