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The Performance of Small Scale Industries (SSIs) in India: An Overview

Venkataramanaiah Malepati

University of Gondar

January 10, 2011

Small-scale industries have been playing a momentous role in overall economic development of a country like India where millions of people are unemployed or underemployed. Poverty and unemployment are two of the burning problems of the country today. This sector solves these two problems through providing immediate large-scale employment, with lower investments. According to Dr. Manmohan Singh, β€œthe key to our success in employment lies in the success of manufacturing in the small scale sector.” The economic development of any country primarily depends upon the establishment of industries, which require sufficient amount of capital. In a country like India, where capital is scarce and unemployment is wide spread, growth of small-scale industries is vital in order to achieve balanced economic growth. The strength of small-scale enterprises lies in their wide spread dispersal in rural, semi-urban and urban areas, fostering entrepreneurial base, shorter gestation period, and equitable distribution of income and wealth.

Having recognized the significance of SSI sector, the Govt. of India has set up various agencies and institutions at different levels-central, state and local, have been pursuing the policy of protection and promotion of this sector since independence and also offered several incentives and concessions for their promotion and development.

Since the launching of five-year plans in country the SSI sector has grown at a phenomenal rate. This sector comprises 95 per cent of the total industrial units in the country, accounting for 40 per cent of the total industrial production, 34 percent of the national exports, and 250 lakh persons of industrial employment. So, this sector emerged as a bosom and dynamic part of the Indian economy. In fact, it is one side of the coin. Another side there is another story that tells us the declining position of the small-scale industries in India. Due to the Liberalization, Privatization and Globalization (LPG), the importance of the government is shifted from labor intensive industries to capital intensive industries. It leads to decline of small-scale industrials gradually during post LPG period. In this paper an earnest attempt is made to analyze the condition of SSIs, challenges and future opportunities in India.

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Date posted: January 11, 2011  

Suggested Citation

Malepati, Venkataramanaiah, The Performance of Small Scale Industries (SSIs) in India: An Overview (January 10, 2011). Available at SSRN: https://ssrn.com/abstract=1737836 or http://dx.doi.org/10.2139/ssrn.1737836

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Venkataramanaiah Malepati (Contact Author)
University of Gondar ( email )
Gondar, Amhar 196
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