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Impact of Small Industries

In this article, we will learn about the small scale industries, their impact on the Indian economy, incentives, subsidies and loans for small scale industries.

Small industry (SSI) is an industry where manufacturing, servicing, and production take place on a small or micro scale. For example, these are small industry ideas: napkins, handkerchiefs, chocolates, toothpicks, water bottles, small toys, paper, and pens. Small industries play an important role in India’s social and economic development. These industries make one-time investments in machinery, equipment, and industries that can be owned, purchased, or leased. But that does not exceed 1 crore. 

Objectives of the study 

The research is based on the following objectives:

To assess the favourable impact of the WTO on SSI by examining its performance in terms of contribution to the Indian economy’s overall growth. To look into the different issues that SSI units confront when seeking financial support.

Impact of WTO on social scale industries

  • The Indian SSI received the following benefits as a result of the WTO’s establishment. It allowed India to export commodities to other WTO members with less restriction. Tariff-based protection has arrived on the scene, with duties on export products to India being decreased.
  • The exports have increased steadily from Rs.13883 crores in 1991-92 to Rs.150242 crores in 2005-06.
  • Better agricultural export prospects due to a probable increase in global agricultural product prices as a result of reduced domestic subsidies and trade barriers.
  • Market orientation is being developed.
  • Exploration of new investment opportunities as a result of strong SSI trade, resulting in increased economic growth.
  • SSI’s Contribution and Performance SSI units numbered around 128.4 lakhs in 2006-07, producing Rs 587196 crores and employing 312.5 lakh people, accounting for more than 40% of total gross value.

In actual terms, the number of small scale units climbed from 101.1 lakhs in 2000-01 to 118.6 lakhs in 2004-05, indicating a downward trend in growth rate to 17.30 per cent. The data shows that, while the number of small scale units has been expanding, there has been a minor upward trend in terms of percentage from 1990-91 to 1994-95 (17.23 per cent) and 1995-96 to 1999-2000. (17.39 per cent). However, from 2000-01 to 2004-05, a minor reduction of 17.30 per cent was observed compared to the 1990s, and this phenomena may be attributed entirely to the winds of globalisation, which have created an intense competitive climate, posing a challenge to small businesses.

Impact of globalisation on small scale industries 

Small-scale industries are critical to the socio economic development of developing countries such as India. In 1991, India began economic reforms with the goal of achieving quicker economic growth. Given that the globalisation process has been in vogue for the past 22 years, it’s necessary to assess if the new economic order has had a beneficial or bad impact on SSI performance in India. The 1990s saw significant deregulation of the industrial economy, including deregulation of licensing and regulations, opening up the industrial sector to internal and external competition, cutting tariffs, and removing quantitative limits, among other things. The small-scale sector suffers as a result of these measures. Small-scale industries have suffered as a result of globalisation.

Impact of small scale industries on the development of Indian economy 

Industries play a critical part in the growth of a country’s economy. Unfortunately, due to its unique economic disadvantages arising from remoteness and poor connectivity, hilly and often inhospitable terrain, weak resource base, poor infrastructure, sparse population density, shallow markets, and other factors, Jammu and Kashmir has remained an industrially backward state. Nonetheless, numerous small and medium-sized businesses have sprouted up in conventional sectors as well as new ones such as food processing, agro-based businesses, and metallic and non-metallic items.

There is only one large-scale enterprise in the state, Chinar Textiles (Kathua), and a few smaller medium-scale private sector businesses. Due to some unfavourable conditions such as severe location, lack of natural resources, lack of sufficient capital and entrepreneur class, infrastructure bottlenecks, and so on, the development of large-scale enterprises in the state is ruled out save in a few selected lines. As a result of these and other factors, the state government has placed a greater emphasis on the growth of small-scale companies. As a result, the small-scale sector has accounted for the majority of the state’s industrial activity.

  • Small business industries provide employment. It uses labour intensive techniques. Hence, it reduces employment problems to a great extent.
  • It accounts for employment of people in rural areas and unorganised division.
  •  SSI also provides employment to skilled and unskilled people in India. The employment capital ratio is extraordinary for the SSI.
  • It also accelerates Women Growth
  • It endorses entrepreneurial skills among women as special incentives are given to women businesspersons.
  • It Brings Stable Regional Development
  • It encourages decentralised development of industries as utmost of the small scale industries are established in backward and rural areas.
  •  It eradicates regional inequalities by industrialising rural and backward areas and brings balanced regional development.
  • It helps to decrease the problems of mobbing, slums, sanitation and pollution in cities and provides employment and income to people living in rural zones. It plays a significant role by introducing the government to build the infrastructural services in rural areas.


During the study period of 1991-2012, small industries contributed to the expansion of production, exports, and employment. Since the services sector contributes so much to the GDP, the GDP growth rates have shown a decline in industry growth. The survey found that, despite India’s liberalisation agenda, micro and small businesses continue to thrive. Small businesses have contributed to the economy’s growth. The country’s per capita income in a small business, stakeholders are also important. The legislation that divides the Micro, Small, and Medium Enterprises. The Micro, Small, and Medium Enterprises Act of 2006, as well as the establishment of a ministry dedicated to them, have been enacted. India’s small business has been well-protected.


Frequently asked questions

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

What is the impact of globalisation on SSI?

Ans:- The globalisation process has been in vogue for the past 22 years, it’s necessary to assess if the new e...Read full

Describe several impacts of WTO on SSI?

Ans:- • The Indian SSI received the following benefits as a result of the WT...Read full

Write some of the examples of small scale industries in India?

Ans:- The small scale industries in India are: ...Read full

Write three impacts of SSI on the Indian economy?

Ans:-  The three impacts of SSI on indian economy are  as follows:- ...Read full