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DEFININATION OF SMALL SCALE INDUSTRY.docx

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DEFININATION OF SMALL SCALE INDUSTRY Sometimes called a small business, a small-scale enterprise is a business that employs a small number of workers and does not have a high volume of sales.  Such enterprises are generally privately owned and operated sole proprietorships, corporations or partnerships. The legal definition of a small-scale enterprise varies by industry and country.  Defining small-scale industry is a difficult task because the definition of small-scale industry varies from co
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  DEFININATION OF SMALL SCALE INDUSTRY Sometimes called a small business, a small-scale enterprise is a business that employs a small number of workers and does not have a high volume of sales.    Such enterprises are generally privately owned and operated sole proprietorships, corporations or partnerships. The legal definition of a small-scale enterprise varies by industry and country.    Defining small-scale industry is a difficult task because the definition of small-scale industry varies from country to country and from one time to the another in the same country depending upon the pattern and stage of development, government policy and administrative set up of the particular country. Rationale of Small Scale industries    The Fiscal Commission, Government of India, New Delhi, 1950, for the first time defined a small-scale industry as, one which is operated mainly with hired labour usually 10 to 50 hands.    The new Policy Initiatives in 1999-2000 defined small-scale industry as a unit engaged in manufacturing, repairing, processing and preservation of goods having investment in plant and machinery at an srcinal cost not exceeding Rs. 100 lakhs.    For small-scale industries, the Planning Commission of India uses terms 'village an small-scale industries'. These include modern small-scale industry and the traditional cottage and household industry.    The U.S. Small Business Administration states that small-scale enterprises generally have fewer than 500 employees within a 12-month period in non-manufacturing industries.    A company must consider any individual on its payroll as an employee. In Australia, however, a small-scale enterprise is one that has fewer than 15 employees on payroll, as defined by the Fair Work Act.    The Small Business Act for Europe states that small enterprises are those that have 250 employees or less.    Small-scale enterprises in Asian countries generally have 100 or fewer employees, while small-scale African enterprises hire 50 or fewer workers Objective of Small Scale industries Small Scale sector can stimulate economic activity and is entrusted with the responsibility of realizing the following objectives:    To create more employment opportunities with less investment.    To remove economic backwardness of rural and less developed regions of the economy.     To reduce regional imbalance.    To mobilize and ensure optimum utilization of unexploited resources of the country.    To improve standard of living of people.    To ensure equitable distribution of income and wealth.    To solve unemployment problem. Small    To attain self reliance.    To adopt latest technology aimed at producing better quality products at lower costs. scope of Small Scale industries The scope for entrepreneurial activities in small business sector can broadly be classified into:    Industrial sector    Agricultural and allied industrial sector    Service sector INDUSTRIAL SECTOR      Small scale industries occupy an important place in the industrial sector. This sector provides a wider scope for the potential entrepreneur to develop his or her own industry.    There is a good scope and enormous potential to use technology based products in the small- scale sector. An entrepreneur can exploit a profitable venture in any of the industries reserved for exclusive department under the small- scale sector. AGRICULTURAL AND ALLIED INDUSTRIAL SECTOR      There is a vast cope for entrepreneurial activities in the agricultural sector. By establishing a link between agriculture and allied industries, the rural entrepreneur can exploit opportunities in areas of farming, agricultural processing and marketing.    The government has given priority to IRDP programme and ensured adequate flow of credit to small and marginal farmers through re-financing facilities and by establishing national bank for agriculture and small development.    Trading takes place in wholesaling and retailing. It may be in domestic or overseas market. The retailer entrepreneur makes the goods available at the time and places the consumer wants them. He may decide to start single line store, specialty shop, departmental store etc. trade in overseas market is in wholesale.  AGRICULTURAL AND ALLIED INDUSTRIAL SECTOR      There is a vast cope for entrepreneurial activities in the agricultural sector. By establishing a link between agriculture and allied industries, the rural entrepreneur can exploit opportunities in areas of farming, agricultural processing and marketing.    The government has given priority to IRDP programme and ensured adequate flow of credit to small and marginal farmers through re-financing facilities and by establishing national bank for agriculture and small development.    Trading takes place in wholesaling and retailing. It may be in domestic or overseas market. The retailer entrepreneur makes the goods available at the time and places the consumer wants them. He may decide to start single line store, specialty shop, departmental store etc. trade in overseas market is in wholesale. Role of SME in Economic Development of India    The small-scale industries sector plays a vital role in the growth of the country. It contributes almost 40% of the gross industrial value added in the Indian economy.    It has been estimated that a million Rs. of investment in fixed assets in the small scale sector produces 4.62 million worth of goods or services with an approximate value addition of ten percentage points.    The small-scale sector has grown rapidly over the years. The growth rates during the various plan periods have been very impressive. The number of small-scale units has increased from an estimated 0.87 million units in the year 1980-81 to over 3 million in the year 2000. Employment      SSI Sector in India creates largest employment opportunities for the Indian populace, next only to Agriculture. It has been estimated that 100,000 rupees of investment in fixed assets in the small-scale sector generates employment for four persons. Export      SSI Sector plays a major role in India's present export performance. 45%-50% of the Indian Exports is contributed by SSI Sector. Direct exports from the SSI Sector account for nearly 35% of total exports. Export      Besides direct exports, it is estimated that small-scale industrial units contribute around 15% to exports indirectly. This takes place through merchant exporters, trading houses and export houses. They may also be in the form of export orders from large units or the production of parts and components for use for finished exportable goods.  Opportunity      The opportunities in the small-scale sector are enormous due to the following factors:    Less Capital Intensive    Extensive Promotion & Support by Government    Reservation for Exclusive Manufacture by small scale sector    Project Profiles    Funding - Finance & Subsidies    Machinery Procurement    Raw Material Procurement    Manpower Training Opportunity      The opportunities in the small-scale sector are enormous due to the following factors:    Technical & Managerial skills    Tooling & Testing support    Reservation for Exclusive Purchase by Government    Export Promotion    Growth in demand in the dom REGISTER OF SME    There are two stages of registration-provincial and permanent (final). An enterprise is granted provincial registration when it is at a pre-investment stage. After getting provincially registered, an enterprise can apply for permanent registration just before launching its production facilities.    However, an enterprise that is already functioning need not have to apply for provincial registration as it is eligible to apply for permanent registration.    Enterprises falling under the three categories (micro, small and medium) are further categorized into two types of industries- manufacturing industry and service industry. The status of an enterprise under the MSMED Act is determined according to the investment slab under which an enterprise falls.

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