Small scale industry are those industries where manufacturing or services are done on a small scale. It can start with minimum capital. Small scale industry involved in manufacturing products and services with the assistance of low-cost machines and fewer workers and employees. These Industries play a very important role in the economy of the country. Around 40% of the products in India are manufactured by these small scale industries.
For developing countries like India, these industries are the backbone to support the country’s economy and that is the reason our government encourages “Make in India”. To encourage this Small Scale Industries Government of India has started many schemes under MSMED Act, 2006. Under these schemes, there are lots of benefits and integrated support services encompassing Marketing, Technology, Finance, and other services.
For better understanding let’s take an example of a project of the Small Scale Industry. Paper and paper products are versatile in use. It is an eco-friendly product and substitutes for plastic containers and bags. To replace the plastic from society, the government encouraged setting up corrugation plants under the scheme of MSME. People grab the opportunity and many Corrugated Box Manufacturers are not only earning handsome income but also serving the society by providing employment.
More than 80% of industrial packaging is done by corrugated boxes due to helpful cushioning, lightweight, easy to fabricate, trouble-free storing, recycle products, the packaging is a nice mode of advertisement, etc.
Advantages of Small Scale Industries
1. Need for small capital – Small scale Industries required less capital to run the plant as compared to big organizations. As it is a labor-intensive unit with a comparatively less overhead cost. No advertisement cost and less welfare cost. With the help of domestic resources, the raw material is also available at an affordable price within reach. Under the scheme, MSME got a bank fund also at subsidized rates. In short, it requires very less amount of capital for operation of a small scale unit.
2. More employment – Small scale industries are labor intensive units as of limited funds they use few manual or semi automatic machines and massive scale of workers. Small scale industries generate more employment which is boon for countries like India where unemployment is one of the major problems.
3. Close supervision – Every single mistake increases the cost of production. With the lesser technical staff and manual machines, best quality delivery is the prime motive. To meet this objective entrepreneurs take reports of the entire process directly.
4. Cost competency – Small scale units hunt for lowest price raw material and other required items with good quality, which is a lean production method. With the help of this strategy they produce better quality and more variety at a lower cost. This method is more cost efficient than large scale units.
5. Government support – Indian government is encouraging small scale industries under MSME (Micro, small & medium enterprises). It is a government body which facilitates small scale industries in Financing, capital subsidy; marketing support, tender marketing, single point Registration for Government Purchase etc.
6. Contribution in export – A large contribution of export is based on small scale industries. This industry directly or indirectly exports many products like processed food, snacks, ayurvedic medicines, cosmetic, clothes, imitation jewellery, art & kraft products etc.
7. Not required bulk orders – Because of manual machineries and labor intensive work there is no pressure of bulk order requirement to meet machine running cost. A small order can also serve. In large organizations fully automatic machine running costs can only justify with bulk order.
8. Use of domestic resources – To keep the cost of production at lower side small scale industries uses the domestic resources available nearby. This helps in maintaining the cost as well worth for domestic resource suppliers which are unutilized in large organizations.
9. Quick decision – To take any decision in a small scale industry need not to wait for long as there are no tantrums of board meetings. There may be few owners or sometimes only one owner who can make decisions instantly.
10. Direct contact with customers – You can directly be in touch with your customers as there are limited customers. You can directly understand the needs and requirements of them. Also the scope of improvement is huge which leads you to understand the market latest trend.
Above we have discussed all the benefits of Small Scale Industries which will help all who want to start a small scale industry but are afraid off.
Below are some important steps to start a new project under a small scale industry.
- Find a product – Before selecting any product to start any business, the first step is to go through a deep market research. The product with good profit margin and would be long lasting in demand should be opt.
- Select the location of Business – Keeping few things in mind before selection of location i.e. availability of raw material, easy transportation facility, approachable distance to target customers, other basic facilities should available like electricity, bank, government offices etc.
- Decide the Business category – Which form of business suits you Proprietorship, Partnership, and Company
- Contact a Financial Consultant- To start up any business you have to follow many paper works which require a legal consultant. You can be a Chartered Accountant to prepare all your documents like project reports.
- Registration with MSME– Registration under MSME is mandatory to start any small scale industry. It is very simple and free of cost to get your company registered and get an Udyog Aadhar Card online. For more details visit MSME.
- GST Registration – GST registration is also compulsory for any organization. You can take help from CA to apply for GST.
- Project Approval from Bank– After above all formalities you should approach for financing facilities under the scheme of MSME. On the basis of your project report and MSME registration Bank will grant you working capital on subsidized rates.
- Start Production– And finally you can start production and marketing.
List of some problems in running small scale Industry
- Shortage of funds– Shortage of funds is the core problem of the small scale industry. Managing funds and meeting all liabilities on time is quite challenging.
- Marketing problems – Most of the market is captured by big organizations. In the competition of large scale industries pulling out orders is a big challenge.
- Quality – Low price, less order with high quality is very much difficult.
- Latest Technology – All the customers are looking for the latest technology as it helps in improving quality and reduction in price.
List of trendy Small Scale Industries
- Ayurvedic Products manufacturers
- Corrugated box manufacturers
- Pet bottles manufacturers
- Food processing units
- Sanitizer and mask manufacturers
- Packaging and printing companies