Indian Economy
General Knowledge

Small Scale Industries

Small Scale Industries

Small scale and cottage industries have an important role to play in a labour surplus developing economy like India. Their importance can be explained as :

(i) Employment Generation :
Large scale industries are generally capital intensive. Small-scale industries, on the other hand, are generally labour intensive and have a substantially higher employment potential.

(ii) Equitable Distribution :
The ownership of SSIs is more wide spread inter of both individuals as well as areas. Thus, these ensure equitable distribution of income individually and regionally.

(iii) Mobilisation of Small Savings :
S.S.Is can be run with the help of small capital. Thus, they facilitate mobilisation of small savings.

(iv) Export Contribution :
The share of small industries in the total export has increased over the years. It contributes 35% of total exports.

(v) Environment Friendly :
As these are dispersed far away from urban centres they do not pollute urban environment.

However, Small Scale Industries are suffering from a number of problems like :
(i) Lack of timely, adequate and easy finance,
(ii) Lack of availability of raw material,
(iii) Lack of sound marketing system,
(iv) Competition with large scale sector.