Small Scale Industries hold an important position in India, in terms of contributing to the country’s economy. As per the Ministry of Statistics and Programme Implementation, Government of India, the small-scale industry sector constitutes ~95% of the country’s industrial units, providing employment to more than 175 lakh individuals. SSIs contribute around 33.4% of manufacturing output in India and contribute over 30% of the GDP. They have become the backbone of the Indian economy.

For developing countries like India, such industries play an important role due to their trade contributions and looking after public welfare. Several initiatives such as Make in India have been launched by the Central Government to support the industrial sector in managing the demands and exploring growth opportunities.

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What are small scale Industries?

As per the guidelines issued by the Government of India, Small Scale industries are those industries where the production, manufacturing and rendering of services is done on a small scale. As per the Micro, Small and Medium Enterprises Act of 2006, the eligibility criteria to identify small industries are:

  • The investment in the plant, machinery and equipment should not exceed INR 10 crore; and
  • The annual turnover should not be above INR 50 crore.

The main characteristics of small scale industries include sole ownership or a small partnership, concentrated management with control resting in the hands of the owner, more flexible towards changing demands of businesses, labour intensive industry and limited operation reach, thereby fulfilling the local demands.

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Objectives of Small Scale Industries

The Small Scale Industries mainly strive to achieve the following objectives:

  • Attain self-reliance
  • Provide more employment opportunities to the working class
  • Balance out the regional economic and employment disparities
  • Improve the standard of living of the people
  •  Ensure optimum utilisation of the resources with minimal wastage
  • Produce better quality products at affordable prices by adopting latest technologies

Types of Small Scale Industries

Generally, the Small Scale industries are classified into 3 types, based on their nature of work:

  • Manufacturing Industries: These industries specialise in producing finished goods for human consumption or used further in processing industries. Usually, such industries have a single ownership structure. Some small scale industry examples can be food processing units, engineering units, power looms, etc.
  • Ancillary Industries: These industries act as feeder units to the bigger manufacturing industries. Large or medium scale industries generally do not produce all the parts of their products. They buy the required parts from such small scale industries.
  • Service Industries: Such industries are not involved in any type of manufacturing or production, rather are only involved in offering repair and maintenance services.

Apart from these major types of industries, the other small scale industries examples include village industries, cottage units, export units, mining or quarries, etc.

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Registration of Small Scale Industries

The Government of India offers different schemes, incentives and subsidies to registered small scale industries. Though such registrations are on a voluntary basis. The registration process falls under the purview of the Ministry of Micro, Small and Medium Enterprises through the Directorate of Industries of the State Government. Follow the guide below to register your Small Scale industry through the official government portal ‘UDYAM’. Any registration through a private body shall not be recognised as a Small Scale Industry.

  • Visit the official government registration portal – UDYAM.
  • On the given page, select the tab ‘For New Entrepreneurs who are not registered yet as MSME or those with EM-II”.
  • On the following page, enter your Aadhaar number and your name for verification. You will receive OTP on your registered mobile number.
  • After verification, the PAN Verification page opens up. Enter your PAN details and click on the “Validate PAN” tab.
  • Next, the UDYAM Registration page opens up. Proceed to fill in all the required details and then select the option of “Submit and Get Final OTP” tab.
  • Now, after successfully registering yourself on the MSME portal, you will receive a notification acknowledging the receipt of your application with a reference number. Once your registration is verified, you will receive your MSME registration certificate.

You can also register for more than one industry on the platform using the same Aadhaar and PAN details. No registration fees are levied for such registration.

Benefits of SSI registration

The Government of India offers various incentives to Small scale industries to promote the Make in India scheme and entrepreneurship among the citizens. Some benefits are:

  • Tax rebates
  • Easy access to credit under specific government tenders
  • A credit for Minimum Alternate Tax is allowed to be carried forward up to 15 years
  • Concessions on cost of acquiring patent, setting up plants and offices
  •  Higher preferences to registered industries for government licenses and certification.

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Small Scale Industries List

The wide range of industries includes organised large and medium scale industries up to the unorganised micro and traditional industries. The Modern Small Scale Industry and the unorganised traditional industries are also identified as Village and Small Industries (VSI). The VSI Sector is categorically divided into 7 different sub-sectors, namely, Khadi and Village industries, handlooms, power looms, coir, handicrafts, sericulture and residuals. Apart from the power looms and residuals which are known as the ‘Modern Small scale industries’, the remaining five sectors are recognised as the ‘traditional sector’.

Some Small Scale Industry examples are rice mills, agarbatti production, sugar candy manufacturing, toys, detergent powder, spices, chocolates, honey processing, biodiesel production, etc.

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 Government Schemes for Small Scale Industries

In order to promote the MSME sector in India, the Government has come with various initiatives to support the upcoming industries and businesses in this Sector. Various announcements have been made under the ‘Atmanirbhar Bharat’ scheme, such as collateral free automatic loans upto INR 3 lakh, disallowing global tenders to offer better opportunities to the MSMEs, and clearing of the MSME dues by the PSUs within 45 days.

The Credit support initiatives are:

  • Prime Minister Employment Generation Programme
  • Credit Guarantee Trust Fund for Micro and Small Enterprises
  • Credit Linked Capital Subsidy for Technology Upgradation

The initiatives to support development of Khadi, village and coir industries are:

  •  Market promotion and development scheme
  • Revamped Scheme of Fund for Regeneration of Traditional Industries
  • Coir Vikas Yojana
  • A Scheme for Promotion of Innovation, Rural Industries and Entrepreneurship (ASPIRE)

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