ARTHVED 12/2011; I(I):126-129.


Industry is the segment of economy concerned with production of goods. Small scale industry (SSI) is a term which applies to the small entrepreneurs who are engaged in manufacture and production on a micro scale. The SSI sector continues to remain an integral part of Indian economy with significant contribution to GDP, industrial production and employment generation in India. Worldwide, the SSIs have been accepted as the engine of economic growth and for promoting equitable development. The major advantage of the sector is its employment potential at low capital cost. The labour intensity of the SSI sector is much higher than that of the large enterprises. In 2000, the Union Government has reduced the investment limit in plant and machinery for small scale units from Rs. 3 crore to Rs. 1 crore. However the investment ceilings for tiny industries remain unchanged to Rs. 25 lakh. The small- scale industrial sector has recorded a high growth rate since independence in spite of stiff competition from the large sector and not so encouraging support from the government. This is evidenced by the number of registered units which went up from mere 16,000 units in 1950 to 36,000 units in 1961 and to 133.67 lakh units in 2007-08. As far as the output of the SSI unit is concerned, it was Rs.1,22,154 crore in 1994-95 and this has considerably risen to Rs. 695126 crore in 2007-2008 (at current prices). Production in SSI sector during the last ten years has recorded an annual average growth rate of 8.6 percent. The share of SSI in the countries industrial output is around 39 percent. SSI Sector plays a major role in India's present export performance. 45% to 50% of the Indian export is being contributed by SSI sector. Direct exports from the SSI sector account for nearly 35% of total exports. The number of small scale units that undertake direct exports would be more than 5000.

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