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Advantages of Small Scale Industries

Small -scale industry (SSI) is those where manufacturing, production, and service delivery are done on a micro and small size. These businesses make just one investment in equipment, plant, & equipment, but it isn't more than Rs. 10 crores, and their annual revenue isn't more than Rs. 50 crores.

Small-Scale Industries

Small-scale industries have traditionally played a crucial part in the country’s economic development. Small-scale industries have the following advantages:

1. Possibility of a huge workforce

Small-scale industries have the ability to generate a large number of job opportunities. They have a labour-intensive nature to them. They employ more labour than other production elements. They may be set up in a short amount of time and provide employment to a larger number of people. This is critical in a country with a large labour pool, such as India.

2. Less capital is required

When compared to large-scale industries, small-scale enterprises require less capital. Because India is a capital-scarce country, Small Scale Industries are better suited to the Indian environment. They can be founded and run by small business owners with limited cash.

3. Contribution to the output of the industrial sector

Small-scale industry products account for a major share of the country’s industrial output. They manufacture a variety of consumer goods and also industrial components in big quantities to meet consumer demands. Small-scale industries produce consumer goods that are less expensive and meet the needs of the poor.

4. Obtaining foreign currency

Small-scale industries contribute to the country’s foreign exchange earnings by exporting goods to various countries across the world. Simultaneously, their purchases are minimal, resulting in a lower foreign exchange outflow. As a result, Small Scale Industries generate positive foreign exchange. Small Industries in Tirupur, for example, provide a significant share of India’s export trade and earn precious foreign cash.

5. Distribution that is fair

Inequalities in wealth distribution and economic power concentration result from large-scale companies. Smaller businesses, on the other hand, divide resources & wealth more evenly. Because it is labour intensive, money is dispersed among a larger number of workers. This has a positive impact on both the economy and society.

6. Make use of local resources

Small-scale industries make productive use of locally available resources that would otherwise be wasted. Tiny sums of money that might otherwise go unused are channelled into the establishment of small businesses. This boosts the economy’s capital formation and investment.

7. Entrepreneurial opportunities

Entrepreneurs with low funding can benefit from small scale industries. When compared to large-scale firms, establishing an SSI involves less finance and less expenditure in technology and machines. As a result, small business owners can simply create and run Small Scale Industries. Due to various small entrepreneurs who contributed considerably to the nation’s development, Japan, which was ravaged by WWII, had become a major economic force.

8. Cost-effectiveness

Small-scale businesses can use lean manufacturing techniques to achieve more quality and variety at a reduced cost. When compared to large-scale units, they can be more cost-effective because their expenditures are reduced.

9. Migrator reduction

When people residing in rural areas are unable to find work, they migrate to urban regions in search of work. Large-scale migration places enormous strain on urban land, water, and other resources, resulting in low quality of life. Small-scale industries make use of the skills and abilities of rural craftsmen, artisans, and others, and they provide useful work to people with inherited skills, allowing them to improve their economic status. As a result, small-scale industries aid in the reduction of migration.

10. Operational flexibility

Small businesses are more adaptable. They can quickly adjust to shifting market conditions and capitalise on new opportunities. Some latest small-scale industries are bakeries, school stationaries, beauty parlours, Candle Making Manufacturing Business, Incense Sticks or Agarbattis and Camphor, Handmade Chocolates etc.

11. Flexibility in the face of change

Small-scale businesses are better able to recognise and respond to changing customer needs. They can adapt their procedures, methods, and approaches more quickly to meet changing consumer needs.

12. Personalization

Customers nowadays prefer products that are personalized to their unique requirements. They expect one-of-a-kind items. Large-scale production will not be appropriate in situations where products must be modified to meet the needs of individual customers. If products must be tailored, small industries are more suited.

13. Low social costs 

Large-scale businesses impose enormous social costs in the form of air & water pollution, as well as environmental deterioration. Small businesses, on the other hand, face lower societal expenses.

14. Personal interaction with clients 

The number of consumers is restricted, and the small business owner is personally involved in the operation. Customers can be kept in touch on a personal level. Their requirements and demands can be recognized and met. As a result, clients are satisfied, and demand remains consistent.22. 

15. Self-interest 

The solitary entrepreneur of a small business is usually in charge. He earns everything and puts everything on the line. Self-interest can be a powerful drive. As a result, he would put out his best efforts to ensure the company’s success.


  • The ‘Make in India’ initiative and the ‘Atmanirbhar Bharat Abhiyaan’ (Self-Reliant India Campaign) have both played important roles in promoting local businesses manufacturing in India, with a particular focus on Micro, Small, and Medium Enterprises (MSMEs), as well known as the backbone of the Indian economy.
  • To maintain business continuity during the COVID-19 pandemic, the national government has implemented quick response measures in the form of the Atma Nirbhar Bharat Package.


  • In developing countries like India, marketing is critical, albeit difficult. Small Scale Industries (SSIs) are so important that their growth is linked to the balanced expansion of the Indian economy. The success of small, medium, and large-scale businesses is determined by how well they sell their products in highly competitive markets. 
  • Higher levels of income, consumption, and employment, all of which raise people’s living standards. Marketing is requiring more attention from not only industrialists, particularly those in the small-scale sector, but also from our planners as well as economists.


76% of the small-scale units in the survey have marketing issues. All challenges relating to Marketing Mix are analysed and interpreted in this section (4Ps). In general, market forces are guided by efficiency, productivity, and competitiveness, and this is especially true in the current period of liberalisation and globalisation. The key challenge for SSI and their development is to perform marketing functions satisfactorily and successfully in a global context.


Frequently asked questions

Get answers to the most common queries related to the CBSE Class 11 Examination Preparation.

What are the benefits of starting a small business?

Answer: The Benefits of Owning a Small Business: ...Read full

What distinguishes a small-scale retailer from a large-scale retailer?

Answer: Small businesses have a unique set of distinguishing traits that distinguish them from their larger competit...Read full

What are all the marketing challenges faced by small businesses?

Answer: Competitiveness from major industries, looseness in demand, pricing competition, and competition from known ...Read full

How can we encourage the growth of small businesses?

Answer: The following are some of the government’s announced programmes and schemes: ...Read full

What policies does the government have in place to assist small businesses?

Answer: To achieve the competitive advantage of the small-scale sector, the excise duty exemption level for small bu...Read full