What are small scale industries?
Small scale industries are the small to medium sized enterprises that are involved in manufacturing and production. They are usually located in the rural areas of any country, where lack of capital and skill can be easily overcome by the local entrepreneur. They are also known as microenterprises because they have only one or two workers. Based on the capital requirement, there are following three types of small scale industries:
- Micro: Maximum investment Rs 25 lakh
- Small: Investment between Rs 25 lakh and Rs 5 Crore
- Medium: Investment between Rs. 5 Crore and Rs. 10 crore
Small-scale industries have been able to reach high levels of productivity due to their low cost structures. They also benefit from better access to resources such as land, labour and raw materials than large scale firms do. For example, in China there are many small scale industries which produce textiles and clothing for export to other countries such as Vietnam and Cambodia.
What is the importance of small-scale industries?
- Create jobs
One of the most important objectives of small-scale industries is to create job opportunities and promote industrialization. In order to create job opportunities, small-scale industries will have to invest in research and development. This is because small-scale industries need new technologies and ideas to improve their products. In addition, they also need human resources who can help them develop new products and processes.
- Pushes development
Small-scale industries are also important for developing rural areas. They help develop rural areas by providing employment opportunities for people living in rural areas. The government should give financial assistance to these companies so that they can hire more people from rural areas as well as other countries around the world.
- Reduces regional imbalance
Another reason why small-scale industries are important is that it reduces regional imbalance in the nation. What does regional imbalance mean? Well, let’s explain it with an example. If too many people implement manufacturing business ideas in Delhi and nobody does that in Assam then over time Delhi will progress more than Assam. When there are too many large companies located in one region of a country, it tends to become a monopoly instead of competition. Therefore, there will be some kind of imbalance between different regions of a country which may result in lower wages or poor quality of goods produced by companies based on their location.
- Improves standard of living
The objective of small-scale industries is to improve the standard of living of the people by providing employment opportunities and by providing assets. Small-scale industries are primarily engaged in processing raw materials into finished goods. The products produced by small-scale industries are mainly used by the local people or who need them for their daily use.
- Ensures equal distribution of wealth
Small-scale industries provide employment opportunities to all sections of society, irrespective of caste, creed and religion. They also ensure that there is no disparity between rich and poor sections of society as these small-scale industries provide employment opportunities to all sections of society irrespective of caste, creed and religion Read more
