Small scale industries are those industries in which production, manufacturing and providing the services are executed on a small or micro scale.
In a country like India, the small scale industries play a very important role in generating employment, improving the financial status of people, development of rural areas and removing the regional imbalances.
Let us look into the roles and importance of small scale industries in India:
1. Employment generation: Small scale industries are one of the best sources of employment generation in India. Employment is one of the most important factors that determines the growth of a nation. Therefore, development of small scale industries should be encouraged for the development of more employment opportunities in the nation.
2. Less Capital Requirement: Small scale industries are less capital intensive than the large scale industries. Capital is scarce in developing countries like India and therefore, small scale industries are most suitable for maintaining the balance.
3. Use of resources and development of entrepreneurial skills: Small scale industries allow for the development of entrepreneurial skills among the rural population which is not having the scope of large scale industries. These industries help in the appropriate use of the resources available in the rural areas, which leads to development of rural areas.
4. Equal income distribution: Small scale industries by generating employment opportunities create equal income opportunities for the youth of the underdeveloped areas. This leads to the growth of the nation in terms of employment, human development.
5. Maintains regional balance: It has been seen that large scale industries are mostly concentrated in the large cities or restricted to areas which leads to migration of people in search of employment to these cities. The result of such a migration is overcrowding of the city and damage to the environment. For sustaining a large population, more of natural resources need to be utilised.
6. Short production time: Small scale industries have a shorter production time than the large scale industries which results in flow of money in the economy.
7. Supporting the large scale industries: Small scale industries help in the growth of the large scale industries by producing ancillary products for the large industries or producing small components that will be useful for the assembling of final products by the large scale industries.
8. Improvement in Export: Small scale industries contribute to around 40% of the total exports done by India, which forms a significant part of the revenue earned from the exports. Small scale industries work towards increasing the forex reserves of the country that reduces the load on balance of payment of the country.
9. Reduce the dependence of agriculture: Most of the rural population will be dependent on agriculture and this creates a burden on the agricultural sector. Small scale industries by providing employment opportunities to the rural population provides more avenues for growth and also paves way for a more arranged distribution of occupation.
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FAQs
The small-scale industry is responsible for the rural and urban growth of the economy. The small-scale industries also play a key role in increasing manufacturing and infrastructure which leads to further development of the economy.
Why are small scale businesses important? ›
Small businesses also help to reduce unemployment rates and stimulate economic growth by increasing consumer spending. Small businesses also play a critical role in promoting economic resilience. During economic downturns, large corporations often lay off workers and cut costs to maintain profitability.
What are the advantages of small scale industries? ›
Small-scale industries have the following advantages:
- Possibility of a huge workforce. ...
- Less capital is required. ...
- Contribution to the output of the industrial sector. ...
- Obtaining foreign currency. ...
- Distribution that is fair. ...
- Make use of local resources. ...
- Entrepreneurial opportunities. ...
- Cost-effectiveness.
Role of Small-Scale and Cottage Industries In India
It is considered one of the effective means for a balanced regional development of the rural economy. It promotes women's self-reliance since they play a significant role in these industries at the working and managerial levels.
What is the importance of the industry? ›
Industries are engines of economic growth, contributing to government revenue, international trade, social services, and employment. The growth rate of the industrial sector directly impacts the country's overall growth rate .
Why is small scale important? ›
Supporting the large scale industries: Small scale industries help in the growth of the large scale industries by producing ancillary products for the large industries or producing small components that will be useful for the assembling of final products by the large scale industries. 8.
What is the role of the small business? ›
They create jobs, drive innovation, and boost economic growth. In fact, small businesses account for 99.7% of all U.S. businesses and employ 47.1% of private sector workers. Small businesses also play an important role in their communities. They provide jobs, support local charities, and sponsor community events.
What is small scale industry? ›
Small scale industries are referred to as those industries in which the process of manufacturing, production and servicing are done on a small scale. The investment on such industries is one time and these investments are mostly done on plant and machinery, the total investment on such industries do not exceed 1 crore.
What are the problems faced by small scale industries? ›
Article shared by : ADVERTIsem*nTS: Major problems faced by the small scale industries are : (1) Finance (2) Raw Material (3) Idle Capacity (4) Technology (5) Marketing (6) Infrastructure (7) Under Utilisation of Capacity (8) Project Planning!
What is the difference between small scale and cottage industry? ›
Cottage industries work with hired workers, while small-scale industries work with their family members. Cottage industries use traditional tools to produce goods, while small-scale industries use modern machines for the production of goods.
Industrialization plays a major role in the economic development of underdeveloped countries like India by providing goods, services, and infrastructure development. It raises income levels and drives structural changes in economies by shifting the share of sectors from agriculture to industry.
How important is the business industry? ›
Businesses contribute significantly to the prosperity of a nation by producing and selling goods and services, leading to increased income, employment, and improved living standards. So, the importance of business as a catalyst for economic growth cannot be denied.
What is the most important advantages of having industry? ›
Through industrialization, machines help people do their work more quickly. As productivity is optimized, more products are made, and therefore, the surplus results in cheaper prices. Some may argue that this advantage is the most significant one as it affects economic growth immensely.
Why are small businesses important to? ›
Small enterprises are particularly essential in providing livelihood opportunities in semi- urban and rural areas where large companies have limited reach. They empower local communities by hiring from within towns and villages.
Why are small businesses so important to the US economy? ›
Independent businesses provide their local economies with new jobs, products, revenue, services and more. Small businesses not only contribute economic benefits to their community but also charitable and innovative ones as well. Research shows that 66% of small business owners donate to charity.
Why are small businesses so successful? ›
Small businesses have the ability to build a community around them in a way that bigger corporations can't. Customers come to know the staff, the owners, and other people behind the scenes and build relationships with them.
What is the main objective of small scale business? ›
Objectives of Small Scale Industries
To create job opportunities for the population. To help in the development of the rural areas of the economy. To play an active role in reducing the regional imbalances in the nation. To help in improving the standard of living for people in rural areas.
