Small-scale industries (SSIs) play a decent part in boosting industrialization in India, just like large-scale ones. There was a time when industry meant large factories where a lot of goods/services are produced every day – not to forget the huge capital invested. Small-scale industries are precisely the opposite of that. Small-scale industries manufacture, produce, and service on smaller scales.

What Are Small-Scale Industries?

Small industries refer to the companies that manufacture small quantities of goods/ services with the help of a small manpower. Initially, small or micro-scale industries used to get SSI Registration from the Ministry of Small-Scale Industries. In 2006, all these industries came under the MSME Act. As a part of 2007’s Amendment of Government of India (Allocation of Business) Rules – 1961, the Ministry of SSIs and the Ministry of Agro and Rural Development merged and formed the Ministry of MSMEs; hence, SSIs came under the Ministry of MSMEs.

The Ministry of MSMEs specifies the annual turnover and investment for the SSIs – here it is:

• Allowed investment for machinery/plants: Not exceeding 10 crore
• Annual turnover: Not exceeding 50 crore

Initially, SSIs in the manufacturing and service sectors had different caps, but on 1 July 2020, the Ministry of MSMEs disclosed the new limits.

Some popular examples of small-scale industries include bakeries, candle making, toy making, water bottles, napkins, a Xerox-printing press, pickle making, beauty parlors, and many others.

Also, read: Successful eCommerce Business Ideas to Start Today

What Are the Objectives of Small-Scale Industries?

The small-scale industries aim at

• Introducing further employment opportunities to Indians
• Engaging rural people from every corner of India
• Strengthening rural economy
• Minimizing regional imbalances between rural and urban India
• Ensuring an equal distribution of wealth
• Uplifting the living standard of rural India
• Utilizing the manpower to the fullest
• Empowering this manpower with the latest technology

A majority of the vital daily used items are either produced or assembled in these industries, and these items are exported to pan-India. So, SSIs aim to support more people and encourage them to join them for a stronger national economy.

Types of SSIs

There are 3 primary types of small-scale industries –

1. Manufacturing industry – These industries manufacture goods that the customers can directly consume or use to process other goods; for example, processing units, power looms, etc., are manufacturing industries.

2. Service industry – These industries are involved in repair, maintenance, and all after-sales affairs; therefore, All service, repair, and maintenance units fall under this category.

3. Ancillary industry – These industries manufacture and assemble products for large manufacturers. Ancillary industries are basically the suppliers of medium to large manufacturers.

Apart from these 3 industries, some other types of SSIs are:

• Export units – It includes the industries that export 50% or more of the goods they manufacture. These industries may get export bonuses as well as grants from the government.
• Cottage units – These are private-resource-operated industries with a small investment. These do not utilize any dedicated technology; rather, natural resources and local workforce are the key elements and another characteristic of these units are the location - these are located in the living spaces or homes of the owners.
• Village units – These are rural industries and human labor is the heart and soul of these units. These are mostly a part of unorganized sectors.

Essential Characteristics of Small-Scale Industries

The small-scale industries have some remarkable characteristics:

• These are mostly sole-proprietorship; however, rarely it’s a partnership
• The owner solely controls and manages the operations
• These take care of the demands of only the people of a particular zone (local)
• Very little use of technology and maximum use of manpower
• These quickly adapt to sudden changes and handle changes flexibly
• Use local and natural resources to avoid wastage

How Small-Scale Industries Help the Indian Economy?

Small-scale industries mostly focus on rural areas; hence, it leaves positive impacts on the Indian economy.

• SSIs account for nearly 40% of goods and services in India, thereby strengthening the economy
• It also solves the unemployment issue by empowering the rural population and offering a livelihood
• SSIs bring development in the export industry as half of the items that are exported from India are manufactured in SSIs
• These are all make-in-India initiatives, hence a global recognition comes by exporting these
• SSIs provide a solid base for large and medium-scale industries in India
• These industries focus on equal distribution of wealth in rural and urban areas
• These play a pivotal role in public welfare by encouraging more people to step into it

SSI Registration

It is good to get SSI registration because it unlocks several benefits to the merchants - the Ministry of MSME provides SSI registration. To obtain SSI registration, here are the steps to follow:

• Step 1: Visit https://udyamregistration.gov.in/Government-India/Ministry-MSME-registration.htm
• Step 2: Click on “For New Entrepreneurs who are not Registered yet as MSME or those with EM-II”
• Step 3: Enter your Aadhaar number and name
• Step 4: Click on validate and generate OTP
• Step 5: Enter OTP
• Step 6: Enter PAN number and validate PAN
• Step 7: Enter all other details (address, bank account)
• Step 8: Submit and Generate final OTP

With this, the registration is complete, and a reference number will come along with a success note; also, the MSME registration certificate will be issued after the final step.

Eligibility Criteria for SSI Registration

Industries with an investment (in machinery) not exceeding 10 crore and a turnover not exceeding 50 crore can apply for SSI registration.

Benefits of SSI Registration

• Tax rebates
• Government tenders
• Easy loan availability
• Easy to get other licenses and certification
• Multiple government schemes and programs

Pre-Requisites To Set-Up SSI

Before setting up a small-scale industry, you need to decide about ownership, production, machinery, location, power and water supply, resources, workforce, marketing, and quality assurance. Only after all these, you can apply for SSI registration.

In order to get the SSI registration, SSIs first need Shop and Establishment Act registration. Then, there will be company registration or partnership firm registration.

If the SSI registration is done before the company starts production, the turnover and investment will be zero; however, they will be filled automatically if the registration is done after production.

Encouragement from the Government of India

The government of India is well aware of the need for SSIs and the role of these in economic development; therefore, there are a number of initiatives and schemes that encourage more people to set up small-scale industries in all corners of India. There are simple rules, as well as tax benefits and loans for SSIs. So, what is stopping you - Let's get the SSI registration and kickstart your business.

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