The role of small business is crucial to the Rural India for the growth of economy. Following are the main points showing the importance of this sector for the growth and development of rural areas of the country:
Small Scale Industries play an important role in the development in our country. It can be understood with the following points:
The following are the features of cottage industries:
The following are the differences:
Ancillary Unit |
Tiny Unit |
Small scale industry that supply minimum of 50% of their production to parent unit |
Industries that have maximum investment of ₹ 25 lakhs in their plant and machinery. |
Maximum level of investment ₹ 1 crore |
Maximum level of investment ₹ 25 lakhs |
Assistance from parent unit on technical and financial grounds |
No such assistance |
Industries are engaged in manufacture parts, components, subassemblies, tools or intermediate products for the parent unit |
Industries engaged in small shops, boutiques, photocopy centres, telephone booth
|
Assured demand from parent company |
No such assurances |
The Government of India defines small industries on the basis of their investment in plant and machinery. Industries where the amount invested in a fixed assets (particularly plant and machinery) is less than ₹ 1 crore are regarded as small scale industries. Export oriented units that use modern production techniques are considered as small scale industries if their investment does not exceed ₹ 5 crore.
The following are the different parameters used to measure the size of business:
The incentive provided by the Government for industries in backward and hilly areas are:
The Government has provided the following institutional support to solve the problem of finance and marketing in the small scale sector:
1. National Bank of Agriculture and Rural Development (NABARD): NABARD was set up by the Government of India in 1982 to promote integrated rural development in the country. It supports small and rural industries by offering credit facilities, counselling and consultancy services and organising training programs.
2. Small Industries Development Bank of India (SIDBI): Small Industries Development Bank of India (SIDBI) was set up in 1990 under an Act of Indian Parliament. It is the principal financial institution for the promotion, financing and development of the small business sector. It provides direct and indirect assistance to meet credit needs of small business organisations.
3. National Small Industries Corporation (NSIC): NSIC was set up in 1955 to foster the growth of small business units. It supports the commercial aspect of the business, such as:
4. Supplying machines on hire-purchase terms -
5.Rural and Women Entrepreneurship Development (RWED): Rural and Women Entrepreneurship Development programme aims at promoting a conducive business environment and providing encouragement and support for entrepreneurial initiatives of rural people and women. It provides training and advisory services to new entrepreneurs, especially women.
6. Scheme of Fund for Regeneration of Traditional Industries (SFURTI): The Central Government set up this fund to make the traditional industries more productive and competitive and to facilitate their sustainable development. The main objectives of SFURTI are to develop clusters of traditional industries in various parts of the country; build innovative and traditional skills, improve technologies and encourage public-private partnerships, develop market intelligence etc.
7. World Association for Small and Medium Enterprises (WASME): WASME is an international non-government organisation of micro, small and medium enterprises based in India. It promotes the non-farm sector by initiating various schemes. There are various schemes such as -Integrated Rural Development Programme, Prime Minister Rojgar Yojana, Training of Rural Youth for Self Employment and Development of Women and Children in Rural Areas.
Followings are the main problems faced by Small scale industries:
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