SSIs

Meaning
A small-scale industry is one in which the investment in plant & machinery is less than Rs. 1 crore. When investment is less than Rs. 25 Lakhs it qualifies to be treated as a Tiny sector SSI. The term small scale industry (SSI) indicates an individual undertaking industry in which the entire expenses on fixed assets dont exceed more than Rs.1Crore but it is not certain and can be changed with government rules, this amount can be in form of ownership or hire purchase or it may be leased. Fixed asset includes plant & machinery and all other kinds of fixed asset.. In most of the developing countries like India, Small Scale Industries (SSI) constitutes an important and crucial segment of the industrial sector. They play an important role in employment creation, resource utilisation and income generation and helping to promote changes in a gradual and phased manner. They have been given an important place in the framework of Indian planning since beginning both for economic and ideological reasons. The reasons are obvious. The scarcity of capital in India severely limits the number of non-farm jobs that can be created because investment costs per job are high in large and medium industries. An effective development policy has to attempt to increase the use of labour, relative to capital to the extent that it is economically efficient. Small scale enterprises are generally more labour intensive than larger organisations. As a matter of fact, small scale sector has now emerged as a dynamic and vibrant sector for the Indian economy in recent years. It has attracted so much attention not only from industrial planners and economists but also from sociologists, administrators and politicians. The only thing they need to do is to take registration from the State Directorate or from DICs to make their unit eligible. This kind of registration gives them help to take any type of assistance from the Government or from DIC (Department of Industries). Once they get registration then they can take short or medium term loan from commercial banks and state based Financial Corporations which help them to take fixed assets on the basis of hire-purchase from National based Small Industries Corporation and from others. This can also help them to take advantage of special schemes particularly for promotions, this may be Credit guarantee Scheme, ISO-9000 certification and reimbursement program, decreased custom duty on any particular items, capital subsidy and any other schemes launched by the State Government. The Ministry of these small, medium or Macro enterprises performs like a nodal agency especially for the growth of SSIs inside the country. This Ministry implements different types of policies and programmers just to promote these running SSIs and in this way increase their competitiveness and get assistance from other public sector enterprises, they are:

SIDO that is Small Industry Development Organization is working as an apex body just to assist active Government in the formulation and implementation of the types of schemes/ programs/ projects. \ NSIC established by GOI is known as National Small Industries Ltd, basically working for promoting and aiding the development of SSI and put its focus on the country commercial aspects. The respected Industry has set up three institutes named as National Entrepreneurship Development Institutes to take care of every type of training modules, research and for providing consultancy services especially for the growth of SSI sector and they are:

NISIET, Hyderabad known as National Institute of Small Industry Extension Training. NIESBUD, Noida this is known as National Institute of Entrepreneurship and Small Business Development. IIE, Guwahati is known as Indian Institutes of Entrepreneurship. The well known SIDBI (Small Industries Development Bank of India) is working as an apex body for SSI and provide financial assistance on regular interval through his different credit schemes. In the same way

NCEUS stands for National Commission for Enterprise in the Unorganized Sector is working to recognize the problem of Small Scale Industries and assist to overcome from them.

Definition
Defining small-scale industry is a difficult task because the definition of small-scale industry varies from country to country and from one time to another in the same country depending upon the pattern and stage of development, government policy and administrative set up of the particular country. Every country has set its own parameters in defining small-scale sector. Generally, small-scale sector is defined in terms of investment ceilings on the original value of the installed plant and machinery. But in the earlier times the definition was based on employment. In the Indian context, the parameters are as follows: The Fiscal Commission, Government of India, New Delhi, 1950, for the first time defined a small-scale industry as, one which is operated mainly with hired labour usually 10 to 50hands.Fixed capital investment in a unit has also been adopted as the other criteria to make a distinction between small-scale and large-scale industries. This limit is being continuously raised up wards by government. For small-scale industries, the Planning Commission of India uses terms village an small-scale industries. These include modern small-scale industry and the traditional cottage and household industry. As per the latest definition which is effective since December 21, 1999, for any industrial unit to be regarded as Small Scale Industrial unit the following conditions are to be satisfied: - Investment in fixed assets like plants and equipment either held on ownership term on lease or on hire purchase should not be more than Rs 10 million. Less than 150 employees in a unit.

The policy reservation of items for manufacturing in SSIs was introduced in 1967. Initially only 47 items were reserved, but as of today about 675 items are reserved. SSIs are the second largest employers of Human resources after agriculture in India. They generate more employment opportunities per unit of capital invested than large-scale industries. Employment provided to more than 273. 97 lakh persons.

Nature and Characteristics

Small-scale industries have certain unique features, which distinguish it from the Large-scale sector. Some of the salient characteristics of small-scale businesses are given below. 1. Personal Character: In most small businesses the owners themselves are managers and so they can operate independently. They can give customized service to their clients, which in many cases is their USP. 2. Flexibility: Since most small businesses are a one-man show they do not have to go through a hierarchy to get permissions to make changes. Small business can respond quickly to environmental trends. Nimbleness and agility are characteristics that allow small entrepreneurs to understand market conditions and rapidly respond to changes. 3. Labour Intensive: Small businesses have tremendous capacity for employment generation through their labour intensive techniques. Small businesses actually create more jobs than big businesses. This feature of a small-scale unit is of great significance in a country like India where the number of unemployed people is phenomenal. 4. Local Area of Operation: Small businesses are largely local in operation; however the market for its products may be local, regional or even international.

5. Short Gestation Period: The capital investment in the small sector is generally low and the time taken for production to commence is also less. As a result of short gestation period the units give quick returns and consequently the pace of economic development quickens.

Who can start an industry? Do you need to be an existing Entrepreneur?

Anyone can start a unit, whether

Existing entrepreneur or fresh to business, With or without a business background in the family, Educated or Uneducated, Rural area / Backward area persons, Women, Physically Handicapped persons, Minorities, SC-ST have special incentives available to them.

A strong will to set up industry, essential skills, ability of hard work, and ability to take calculated risk are the key requirements.

Where is the Money? :

Artisans, who have skill in their hands, as well as some vision, can start their unit by availing of the Composite Loan scheme, where they need not contribute any of their own capital. Other entrepreneurs need to contribute 25 to 30% of the project cost as their own contribution (that is, Equity capital). The rest can be got as a Loan from a financial institution or bank. The Loan would have two components Term Loan for creating fixed assets, and Working capital to run the industry. These have to be returned over a period of a few years. The Loans generally require Collateral. However, there is the Credit Guarantee scheme which is Collateral-free. Assistance under Technology Upgradation scheme is also one, which can be of much advantage. The unit may be owned either by one Proprietor, or a Partnership, or a Cooperative of some members, or a limited company.

Where to Locate? :
An industry can be started by the entrepreneur at either his own place / own shed, or rented place / rented shed. It can also be located at an industrial estate.

What are the types of Small Scale Industries found in India?

All types of small-scale industries found in India whether in manufacturing sector or service sector are divided into five types: 1. Manufacturing Industries: Those units which are producing complete articles for direct consumption and also for processing industries are called as manufacturing industries. For example: Powerlooms, engineering industries, coin industries, khadi industries, food processing industries etc. 2. Ancillary Industries: The industries which are producing parts and components and rendering services to large industries are called as ancillary industries. This industry is liable for producing small to bigger parts of every component that are used to render services in big industries. An ancillary unit is one which is engaged or proposed to be engaged in the manufacture c production of parts, components, sub-assemblies, tooling or intermediaries or rendering services and the undertaking supplies or renders or proposes to supply or render not less than 50%

of its production or services, as the case may be, to one or more other Industries undertakings and whose investment in fixed assets in plant and machinery whether held on ownership terms or lease or on hirepurchase does not exceed Rs. 75 lakhs 3. Feeder Industries: Feeder industries are those which are specialising in certain types of products and services, e.g. casting, electro-plating, welding, etc. 4. Mining or Quarries. The demand of minerals, different types of stones is increasing in the global market and so many mining projects are running just to meet the requirement of the masses. Today we can see many findings are in the process just in hunt of finding the right location for mining. Just because of increasing awareness on the issue of the environmental impact of these mining they have reduced its effect and trying to improve safety. Searching location for mining is not very simple thing you must beware about the respected location, quarry, other infrastructure and related facilities. After selection of sites they need to establish better management just to ensure that things will be handled properly. The end step of mining is quite complex and so it must be handled carefully as it reflect some impact on the environment. Therefore stoppage of existing mines must be done with full attention. 5. Tiny enterprise A unit is treated as a tiny enterprise where the investment in plant and machinery does not exceed Rs. 2.5 million (Rs. 25 Lakhs) irrespective of the location of the unit. Many shops, schools, parlours, Photostat and STD booths in your vicinity are all examples of tiny units. 6. SMALL SCALE SERVICE AND BUSINESS ENTERPRISE [SSSBES]/Service Industries An industry related service/business enterprise with investment up to Re.0.5 million (5 Lakhs) in fixed assets, excluding land and building, is treated as an SSSBE. E.g. advertising agencies, Marketing consultancy, Auto repair, services and garages, Tailoring, Desktop printing etc. The service sector has emerged as the major segment of the economy. Service industries are those which are covering light repair shops necessary to maintain mechanical equipments. These industries are essentially machine- based 7. Womens enterprises A Women Entrepreneurs Enterprise is termed as an SSI unit/industry-related service or business enterprise, managed by one or more women entrepreneurs in proprietary concerns, or in which she/they individually or jointly have a share capital of not less than 51 percent as partners/shareholders/directors of a private limited company/members of a cooperative society. 8. EXPORT ORIENTED UNIT [EOU] A unit with an obligation to export at least 30 percent of its annual production by the end of the third year of commencement of production and having an investment ceiling up to Rs. 10 million (Rs. 1 crore) in plant and machinery is termed as an export oriented SSI unit.

INVESTMENT CEILINGS FOR SSIs & SSSBEs

Small scale industries were first defined in 1950. At that time, in addition to a limit on investment in fixed assets, there was also an employment stipulation. The employment condition was deleted in 1960. In 1966, the limit on investment in fixed assets was changed to a limit on investment in plant and machinery (original value) only. The Table below indicates the historical evolution of the definition of small scale and ancillary units. YEAR SMALL SCALE INDUSTRIES ANCILLARY

INDUSTRIES* 1955 1960 1966 1975 1980 1985 1991 1997 1999 Upto Rs. 5 lacs in fixed assets and employment less than 50/ --100 workers with / without power. Upto Rs. 5 lacs in fixed assets Upto Rs. 7. 5 lacs in plant and machinery Upto Rs. 10 lacs in plant and machinery Upto Rs. 20 lacs in plant and machinery Upto Rs. 35 lacs in plant and machinery Upto Rs. 60 lacs in plant and machinery Upto Rs. 300 lacs in plant and machinery Upto Rs. 100 lacs in plant and machinery ** --Upto Rs. 10 lacs in plant and machinery Upto Rs. 15 lacs in plant and machinery Rs. 25 lacs Rs. 45 lacs Rs. 75 lacs Rs. 300 lacs Rs. 100 lacs

* For ancillary industries, an additional condition is that the unit must supply or render not less than fifty per cent of its production or services to other (parent) industrial units. In April 1991, a third category of unit, viz. Export oriented Unit has also been introduced (Reference: Notification No. S.O 232 (E) dt. 2nd April, 1991). ** The investment ceiling for SSI units manufacturing reserved items in the hosiery and hand tools sectors has been enhanced to Rs. 500 lacs since October 2002 and for reserved items in the stationary and pharmaceutical sectors since June 2003. Service Enterprises Service oriented enterprises were recognized as Small Scale Service Establishments (SSSE) from 1982 onwards. These included specified service related enterprises with an investment in fixed assets, excluding land and building, upto Rs. 2 lacs provided they were located in rural areas or in towns with a population upto 5 lacs. This category was reorganized in 1991 as industry related Small Scale Service and Business Enterprises (SSSBE's). SSSBE's were units with investment in fixed assets, excluding land and building, upto Rs. 5 lacs irrespective of location. SSSBE's are entitled to all the incentives and facilities that are available to small scale units. Since September 2000, the investment ceiling for SSSBE's has been enhanced to Rs. 10 lacs. Enhancement of Investment Ceilings Requests have been periodically received from stakeholders for suitable enhancement in investment ceiling for both SSIs and SSSBEs. Requests have also been received for extending the ceiling of Rs. 5 crore to the specified industry sector as a whole instead of only the reserved items in that sector.

Items Reserved For Small Scale Industries in India

A completely new product is rare for an SSI. An entrepreneur would usually start with a product that some others are already doing business with. To identify the right product, one has to keep looking till your right choice becomes clear to you, almost magically! For every product that you explore, it is essential to look at its possible market, its price, and competition. One can then try to find ways of catering the same product to a different market, or offering it at a more competitive price-- these are often the pathways to a new business.

Small Scale Industries (SSI) have played a vital role in strengthening the industrial structure of the country. They facilitate the tapping of resources for productive purposes with minimum amount of capital investment. SSI have contributed greatly in bringing down regional imbalance; generating employment opportunities, output, and exports, fostering entrepreneurship and in accelerating economic development. As per the government definition an industrial undertaking in which the investment in fixed assets in plant and machinery whether held on ownership terms on lease or on hire purchase does not exceed Rs 10 million, can be categorized as small scale undertaking. To encourage the growth of small scale industries in India, Government has reserved certain products for manufacture in the small scale sector in areas where there is techno-economic justification for such an approach. Large/Medium units can, however, manufacture such reserved items provided they undertake to export 50% or more of their production. As on 10 October 2008, following items are reserved for exclusive manufacture by micro and small enterprise sector:

Food and Allied Industries: Pickles & Chutneys, Bread, Mustard Oil (except solvent extracted), Ground nut oil (except solvent extracted). Wood and Wood Products: Wooden furniture and fixtures Paper Products: Exercise books and registers Injection Moulding Thermo Plastic Product: PVC Pipes, including conduits upto 110 mm dia, Fittings for PVC pipes Other Chemicals & Chemical Products: Wax candles, Laundry soap, Safety matches, Fire works, Agarbatties Glass & Ceramics: Glass Bangles Mechanical Engg. Excluding Transport Equipment: Steel almirah, Rolling shutters, Steel chairs all types, Steel tables all other types, Steel furniture all other types, Padlocks, Stainless steel utensils, Domestic utensils - Aluminium

Registration of Small Scale Industries

Registration of an existing or proposed small scale enterprise is voluntary and not compulsory. It has no statutory basis. But, registration is beneficial for the enterprise itself because it makes the unit eligible for availing the benefits given by the Central or State Governments for the promotion of SSIs. Some of the incentives so obtained by them relate to credit guarantee scheme; priority sector lending; capital subsidy; reduced customs duty; ISO-9000 certification reimbursement; power tariff subsidies; exemptions under tax laws; etc. The State Directorate or Commissioner of Industries or District Industries Centres (DIC's) are the concerned authorities for registration of small scale units. This registration is both location specific and product specific. Like in certain State capitals and metropolitan cities, it is granted to only those units which are located in the designated industrial areas/estates. Any small scale enterprise always comes under two types of registration. In its earlier stage they need to take provisional registration. The term provisional enterprise means the particular enterprise is yet to come into existence and within some limited time period it will be going to start. This type of certification is taken for some fixed time period and within that they suppose to set up the industry.

 Provisional Registration Certificate (PRC) : In order to take steps to set up an industry for a particular product at a particular place, one needs to Register it with the state Governments District or Tehsil Industries Centre (DIC / TIC etc), which issues a Provisional Registration certificate (PRC). To get the PRC, apply to the DIC etc in prescribed format with a Project Report / Project Profile. A 2 to 3 page project report / profile would suffice if it is a small SSI. It would highlight the background of the entrepreneur, plant & machinery to be bought & its value, details of where the product would sell & at what price, and the sources of funds including term loan, working capital loan, own equity, etc. For large SSI project, details like cash-flow chart will also be needed. The DIC etc will issue the PRC (normally, across the table) if the investment in plant & machinery is within Rs. 1 Crore, the product is not banned, and such an activity is declared as an industry (many services like IT, Hotels, Hospitals are included). The PRC is valid for 3-years, and can be extended if the entrepreneur cites unavoidable circumstances. The PRC is a prerequisite for getting other permissions permission of local authority to set up the industry, Trade licence, Power, Pollution clearance, clearance of inspector of Boilers, Registration for commercial Taxes (State & Central sales tax) etc. The PRC is also needed for obtaining Term Loan & Working Capital. The term PRC reflects Provisional Registration Certificate and it enables you to get below mention things:

Any kind of term loans and capital can be taken from any financial institutions or bank through the heading of private sector lending. They can take the facilities of accommodation, land and any other types of favorable approvals. With its help they can apply for NOCs (No Objection Certificates) from any regulatory body like from pollution control board, labor system and from others.

Permanent Registration Certificate (PMT) Having set up the unit and achieved Trial production, the entrepreneur is expected to take the Permanent registration (PMT). This is also issued by the DIC etc. To get PMT, apply in prescribed format along with copies of PRC, Power sanction, Municipal / Panchayat Licence, First Sale Invoice, Lease or rental agreement, Partnership Deed or Memorandum of Association (in case of limited co.), and a required affidavit. The PMT is normally issued either after inspection or without inspection subject to later verification. To get the permanent registration these units need to commence a type of permanent registration. They will search the authentication of your document and go for a physical inspection before giving a permanent registration of your enterprise. Here mentioning a list of some formalities:

They need to take clearance certificate from municipal corporation Taking approval from the State pollution control board They also need to take sanction from the board of electricity Taking whole rights of ownership for the newly set-up unit

If the enterprise is a private firm then doesnt forget to take Memorandum of association and an extra copy of the partnership. One should not forget to take sale and a purchase bill of manufactured product along with bill of all other products Taking sale and a purchase bill of all raw materials and end products is essential. One should also have a purchase bill of installed machinery inside your enterprise One should have BIS/QC certificate (only if it's required) At last owner should have an affidavit that proves the status of the firm along with the used power consumption and detail of installed machinery.

This type of registration certificate proves the authenticity and makes it reliable for customers and in this way they can take advantage of the given below concessions:

They can be benefitted from Income Tax and sales tax exemptions that are mainly given by the State Government From the incentives that are given as power tariff Preference to the produced goods Stock of raw material that depends on existing policy

Taking provisional registration is not essential just to take a permanent registration but it is the fact that once you have taken provisional registration then no wonder you can take advantage of state and center level assistances. This kind of registration process always comes in the uniformity in all states but individual states makes some changes in it as per their convince like in some state you can find SIDO registration scheme and in other the same is running with the name of the State registration scheme, however both have the same meaning. But, whatever be the registration scheme, the main purpose is to maintain statistics and a roll of such units for providing incentives as well as to create nodal centres at the Centre, State and District levels to promote SSIs. It gives recognition to the industrial unit and helps in generating a database for policy planning. A small scale unit may also become liable for de-registration, if it crosses the investment limits; starts manufacturing any new item or items that require an industrial license or other kind of statutory license; or does not satisfy the condition of being owned, controlled or being a subsidiary of any other industrial undertaking.

Advantages/Role of SSIs in economic development

Small Scale Industries may sound small but actually plays a very important part in the overall growth of an economy. The small scale sector has played a very important role in the socio-economic development of the country during the past 50 years. It has significantly contributed to the overall growth in terms of the Gross Domestic Product (GDP), employment generation and exports. The performance of the small scale sector, therefore, has a direct impact on the growth of the overall economy. Small business has played a very crucial role in transforming the Indian economy from a backward agrarian economy to its present stature. Its benefits range from creating job opportunities for millions of people, including many with low levels of

formal education. It has nurtured the inherent entrepreneurial spirit in far flung corners of the nation resulting in the growth and development of all regions. It has been instrumental in raising the standard of living of the multitudes. The small scale sector has contributed specifically in the following areas: 1. Employment Generation: Small Scale Industries can be characterized by the unique feature of labour intensiveness. The importance of this industry increases manifold due to the immense employment generating potential. The countries which are characterized by acute unemployment problem especially put emphasis on the model of Small Scale Industries. It has been observed that India along with the countries in the Indian continent have gone long strides in this field. This industry is especially specialized in the production of consumer commodities. Small scale industries can be characterized with the special feature of adopting the labor intensive approach for commodity production. As these industries lack capital, so they utilize the labor power for the production of goods. The main advantage of such a process lies in the absorption of the surplus amount of labor in the economy who were not being absorbed by the large and capital intensive industries. This, in turn, helps the system in scaling down the extent of unemployment as well as poverty. 2. Reduction in economic inequality: It has been empirically proved all over the world that Small Scale Industries are adept in distributing national income in more efficient and equitable manner among the various participants in the process of good production than their medium or larger counterparts. SSIs help equitable distribution of national income because of 2 reasons: a) Ownership of SSI is more widespread than large-scale industries. b) SSIs possess large employment potential. When entrepreneurial talent is tapped in different regions and areas the income is also distributed instead of being concentrated in the hands of a few individuals or business families\ 3. Balanced Regional Development: Small Scale Industries help the economy in promoting balanced development of industries across all the regions of the economy. This industry helps the various sections of the society to hone their skills required for entrepreneurship. Political, social and economic factors affect the development of all regions. Some regions are more developed while others continue to lag behind. Large scale industries are mostly centered in some big cities, while SSIs help decentralize industries thus helping avoid, space crunch, slum development problems etc. Since SSIs are easy to set up, they can be set up anywhere and hence contribute to a balanced regional development. Dispersion of small business in all parts of the country helps in removing regional imbalances by promoting decentralized development of industries. It helps in industrialization of rural and backward areas. It also helps to reduce problems of congestion, pollution, housing, sanitation etc. 4. Efficient use of Human resource of economy: Small Scale Industries act as an essential medium for the efficient utilization of the skills as well as resources available locally. Small Scale Industries enjoy a lot of help and encouragement from the government through protecting these industries from the direct competition of the large scale ones, provision of subsidies in the form of capital, lenient tax structure for this industry and many more. 5. Capital light: India is a capital scarce country, which is why we need to make optimum use of all the capital and resources available in terms of employment and productivity. SSIs are capital light and hence more suitable to underdeveloped nations. Limited capital is needed to start an SSI, the returns are quick, and those returns can again be reinvested. 6. Skill light and import light: No technological skill or managerial skill required. It is more suitable to underdeveloped countries where literacy rate is low and skilled labour is scarce. It require less import of machinery, technical skill hence placing little or no strain on the scarce foreign exchange reserves of developing nations.

7. Mobilization of capital resource and entrepreneurial skill: it helps in easy mobilization of capital, entrepreneurial skill and other sources all over the country. Savings in rural areas can be mobilized by SSIs more easily then large scale industries. Idle resources can be put to effective use. 8. Support to agriculture and large- scale industries: They help supply inputs, processing facilities as well as consumer goods to rural masses. Rural based SSIs help absorb all the surplus labor in villages and towns thus improving the productivity in the agricultural sector. SSIs also help large scale industries by supplying spare parts, components etc SSI units are supplementary and complementary to large and medium scale units as ancillary units. Many small units produce sub-parts, assemblies, components and accessories for the large scale sector especially in the electronic and automotive sectors 9. Contribution to exports and industrial output: 45%-50% of the Indian Exports is being contributed by SSI Sector. Direct exports from the SSI Sector account for nearly 35% of total exports. It is estimated that small scale industrial units contribute around 15% to exports indirectly. The exports from SSI sector have been clocking excellent growth rates mostly fuelled by the performance of garment, leather and gems and jewellery units from this sector. The most significant contribution of the SSI has been in the field of exports. There has been a significant increase in the exports from this sector of both traditional and non-traditional goods including jewellery, garments, leather, hand tools, engineering goods, soft ware etc. 10. Less industrial disputes: Do not face problem of frequent strikes and lockouts. Hence no loss of mandays and output in SSIs. 11. Development of Entrepreneurship: Small business taps the latent potential available locally. This way they facilitate the spirit of enterprise, which results in overall growth, and development of all the regions /sectors of the nation.

Problems of small business

While the small entrepreneurs can set up a unit even with less capital, enjoy quick returns and have the flexibility to handle the vagaries of the market, they have to face many problems like the following: 1. Paucity of Finance: The small entrepreneurs possess a weak financial structure and find it extremely difficult to obtain credit because of lack of collateral security. This acts as a big handicap, especially in the initial stages, in most of their operations like their ability to hire the best workers or to purchase the latest machinery and equipment or to acquire sophisticated technology. 2. Poor availability of power and other infrastructure: Though infrastructural bottlenecks are problems for big businesses too, yet they can overcome these problems to some extent because of their financial strength e.g. generating their own power, or even influencing the government in framing its policies sometimes. The small entrepreneur on the other hand has to battle with them. 3. Obsolete Technology: Most small businesses use old technologies because they cannot afford better. As a result the quality of their goods is inferior and the cost of production is higher than in case of other big ventures. This has acted as a serious handicap especially after opening up of the economy when they have had to compete with imported goods. 4. Marketing Problems: The small entrepreneur cannot supply standardized goods of high quality and as a result cannot compete with products of large companies or MNCs. They usually do not have a brand name or loyalty, as there are hardly any funds for advertising or sales promotion. All these increase their marketing woes.

5. Poor Managerial and Organizational Skills: usually the entrepreneur has to perform a multitude of diverse functions invariably with out having any exposure to professional education or formal training. The large sector on the other hand can hire the best qualified and trained people. 6. High Incidence of Sickness 7 out of 10 small businesses usually fall sick and die within 3to5 years. Main causes for this are a wrong choice of product, poor managerial skills, lack of experience, poor quality of products because of the use of old technologies, etc.

Apart from the above-mentioned problems the small entrepreneur has weak bargaining power to deal with suppliers and financial institutions, has to face bureaucratic red tapism and is unable to invest in R & D. After the opening up of the economy the small sector has been finding it extremely difficult to compete with the high quality goods available in the market.

Taxation of small scale industries http://www.smallscaleindustries.org.in/taxation-of-small-scale-industries.htm