Why is It Easy to Set Up Small Industries

Small-scale industries are defined as businesses that manufacture, produce, or provide services with the use of small machinery and a small workforce. These businesses must adhere to the government of India’s standards. Little-scale industry ideas include, for example, napkins, tissues, chocolates, toothpicks, water bottles, small toys, papers, and pencils. Small-scale enterprises are the lifeblood of the economy, particularly in developing nations like India. Because these sectors are typically labor-intensive, they serve a critical role in job generation. Small scale industries are an important part of the economy, both financially and socially, because they contribute to per capita income and resource use.

Importance of Small scale industries

Small-scale enterprises are significant since they contribute to India’s economic development and employment. It accelerates the country’s development through promoting urban and rural development. Small and medium-sized businesses play an important role in assisting the government in expanding infrastructure and manufacturing industries, as well as eliminating pollution, slums, poverty, and other development challenges. Cottage industries and small-scale manufacturing enterprises play a critical part in India’s economic growth. If any cash is put in small scale enterprises, it would aid in the reduction of unemployment and increase self-employment in India. The industry is a sub-sector of the economy that deals with the manufacturing of goods.

The following are some specific importance of Small-scale industries:

Increases Production: India’s economy is one of the fastest expanding in the world. As a result, its production output is enormous. It’s worth noting that SSIs account for about 40% of India’s gross industrial value. Because of the government’s ‘Ease of Doing Business’ measures, this number has risen even higher in recent years.

Increases Export: SSIs have been able to export a huge range of goods and services in addition to generating more of them. Small-scale firms now account for over half of India’s total exports. Direct exports by SSIs account for 35% of overall exports, with indirect exports accounting for 15%.

Improves Employment Rate: First and foremost, Small Scale Industries employ more people than any other industry after agriculture. If Rs. 10 lakhs are invested in small-scale sector fixed assets, about four people might be employed full-time. Furthermore, SSIs employ people in both urban and rural areas.

Open New Opportunities: Small-scale industries provide a number of benefits and investment prospects. For example, the government provides them with several tax breaks and refunds. Because of a variety of factors, there is a significant possibility to benefit from SSIs. To begin with, SSIs require less money. They can also readily obtain financial assistance and funding. Second, they have an easier time obtaining people and raw materials. Even the government’s export policies are significantly skewed in their favor.

Advantages of Small Scale Industries

• Close Supervision: The small producer has the ability to oversee even the smallest parts of the firm. Nobody is authorized to sabotage machines or dispose of garbage. Everywhere you look, you can see the master’s eye. There can’t be any deception or inactivity. To attain the goal of maximum revenues, he will use the utmost economy.
• Nature of Demand: When demand is either limited or continually shifting, the small producer has an advantage over the large producer. As a result, he has his own area in which he has an edge against large-scale producers.
• More Employment: In the face of widespread unemployment in the country, the growth of cottage and small-scale enterprises is critical in creating additional job possibilities. Small-scale production is more labor-intensive, meaning that people rather than machines are used. As a result, many unemployed people find work in newly formed small-scale enterprises.
• Direct Relation between the Workers and the Employers: Small-scale manufacturing employs fewer people. As a result, the employer and the employees have a tight relationship. Because of this tight relationship, the employer can care after his workers’ well-being, and employees, in turn, consider their job to be their own, and work proceeds smoothly without any conflicts between the two sides.
• Direct Relation between the Customers and the Producers: The majority of small-scale producers cater to local demand. As a result, they maintain contact with their clients. A tiny manufacturer knows his clients by name. As a result, he may tailor things to the preferences and fashions of each unique buyer.
• Easy Management: Small business administration is simple and cost-effective. Simple accounting and a small team can effectively manage the work.
• Freedom of Work: In a small firm, employees have total autonomy over their job. Workers are self-sufficient in certain ways. They are not reliant on capitalists and are free to pursue their careers.

Disadvantages of Small Scale Industries

• High Cost of Production: Because of the high cost of labor, limited opportunity for division of labor, and limited utilization of machines, the cost of manufacturing per unit rises.

• Wastage of By-products: It is not possible to make profitable use of by-products in small-scale manufacturing, as it is in large-scale production. Small-scale producers’ by-products are frequently thrown away.
• Less Use of Machines: Machines have a limited role in small-scale production. As a result, these businesses are unable to benefit from the machinery’s utilization.
• Lack of Division of Labor: The level of production in small-scale industries is minimal, and there is no division of labor, resulting in lower earnings for the entrepreneurs.
• Difficulty in Getting Loans: It is unable to benefit from financial economies. They either don’t have the funds or have to pay a higher rate of interest if they do.
• Difficult to Face Economic Crisis: Small-scale producers are unable to confront economic catastrophe due to a lack of resources and financial fragility. The producers’ ability to suffer losses for an extended period of time is limited. In reality, many small factories close as a result of a little economic downturn.
• Costly Raw Materials: Raw materials are obtained in tiny amounts and are offered to small producers at higher prices in small-scale production.
• Lack of Research: The resources available to small-scale companies are limited. They can’t afford to spend a lot of money on science and technology research. Small-scale industries, in this sense, act as a roadblock to technological research and industrial growth.

Conclusion

Small industry (SSI) plays a very important role in the development of developing and underdeveloped countries, despite the remarkable growth of large industries. In fact, it is believed that small industries are developing in most countries. Small and micro enterprises have been recognized as one of the most important means of providing better economic opportunities for people in developed countries such as India. This industry promotes self-sufficiency, independence, and coordination. As a result, these businesses provide jobs for India’s rural people.