Discuss the problems of small-scale industries in India.

1. Q) Discuss the problems of small-scale industries in India. Critically analyse the Indian government’s policy for the small-scale industrial sector ? 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. In small scale industries, the manufacturing of goods and rendering of services are done with the help of smaller machines and very limited manpower. Small scale industries or SSIs are known as the lifeline of an economy, which is very important for a country like India. Being a labor intensive industry, it is very helpful in creating employment opportunities for the population of the country. Small business have been facing a large number of problems compared to large-scale industries. The scale of operations, shortage of funds, procurement of raw materials are some of them. The detailed description of the problems are as follows Problems of Small-Scale Industries in India: 1. Financial Constraints:

2. ○ Lack of access to formal credit and financial institutions is a significant issue for small-scale industries. These businesses often face challenges in obtaining loans due to their size, limited collateral, and higher perceived risk. 2. Technological Obsolescence: ○ Many small-scale industries struggle to keep pace with technological advancements. Outdated machinery and technology hinder their competitiveness and efficiency. 3. Marketing Challenges: ○ Limited resources and market reach make it difficult for small-scale industries to compete with larger enterprises. Marketing and distribution networks are often underdeveloped. 4. Scale of Operations: ○ Small-scale industries often face issues related to economies of scale. Their production volumes are lower, resulting in higher production costs per unit compared to large-scale industries. 5. Lack of Skilled Labor: ○ Small-scale industries may experience difficulties in attracting and retaining skilled labor due to competition from larger enterprises and the limited capacity for training and skill development. 6. Inadequate Infrastructure: ○ Poor infrastructure, including inadequate transportation, power supply, and water facilities, hampers the smooth functioning of small-scale industries. 7. Regulatory Compliance: ○ Cumbersome bureaucratic procedures, complex regulatory compliance requirements, and a lack of ease of doing business can be significant obstacles for small-scale industries. 8. Limited Research and Development (R&D): ○ The ability to invest in research and development activities is constrained for small-scale industries. This limits their capacity for innovation and adapting to changing market demands. Measures adopted by the government to solve the problems small a cottage industry: 1. Setting up of Boards to Look After cottage and small Industries: The Government of India have set up a number of Boards to look after the development of industries under their responsibility: (i) Cottage Industries Board was set up in 1948 -to look after the specie problems of cottage industries and take steps for the development, (ii) All India Handloom Board was set up in October 1952 to help the

3. handloom industry, (iii) All India Handicrafts Board for promotion of scales of handicrafts goods in India and abroad. 2. Khadi and Village Industries commission provides facilities for training and purchase of raw materials and marketing goods of Khadi and village industries. 3. District Industries centres have been set up to provide all required services to small industries under one roof. Many other organisations (Small Industries Development Organisation, National Small Industries Corporations, National Institute for Entrepreneurship and small Business Development, etc.) have been set up to look after various problems facing these industries.m 4. Reservation of Items for Production: To enhance competitive strength and an assured market to product of small-scale sector many items have been reserved for exclusive production in the small-scale sector. 5. Government purchases a number of products from the small-scale sector: Presently, the Government has reserved 409 items for exclusive purchase from small Scale Sector. 6. Credit facilities: State Financial Corporations look after the financial needs of this sector. 7. Equity participation by large Industries: Under the New Industrial Policy of July 1991, the large industries have been permitted to buy shares of small industries up to 24% of the total shareholding. 8. More concessions have been given to the tiny sector In conclusion, while the Indian government has implemented various policies to support small-scale industries, there is room for improvement. Addressing issues related to access to finance, technology upgradation, skill development, and infrastructure will be critical for the sustained growth and competitiveness of the small-scale industrial sector in India. Additionally, a continuous review of policies and responsiveness to the evolving needs of these industries will contribute to their overall development. Checkout more at-

4. https://uplevelway.com/