steps to start a small scale industry

steps to start a small scale industry

PRODUCT IDENTIFICATION
The overriding reason for anyone to think of establishing a SSI unit can be summarised in one word OPPORTUNITY. If one can see an opportunity to provide a product or service in a manner to generate sufficient surplus, then one way is to start up a SSI unit. This is the first step towards setting up a industry and is called

FORM OF OWNERSHIP
SOLE PROPRIETORSHIP FAMILY OWNERSHIP PARTNERSHIP This is the entrepreneurs personal decision.

Location of unit
PROXIMITY TO SOURCE OF RAW MATERIALS NEARNESS TO THE MARKET GENERAL BUSINESS CLIMATE OF THE REGION CLIMATE AND ENVIRONMENTAL FACTORS

APPROVALS
Every SSI unit has to comply with various regulations in force. These include regulatory, taxation, environmental and certain product specific clearances.

APPROVALS :
Licensing in the Industries sector is governed by the licensing exemption notification issued by Govt. of India in July 25 1991 under the Industries (Development and Regulation) Act, 1951. In SSI, there are virtually no licensing restrictions. No industrial license is required except in case of 6 product groups included in compulsory licensing (These products groups mainly cover

APPROVALS
t if a small-scale unit employs less than 100 workers with/without power then it would not require a license from the Govt. of India even for the 6 product groups covered in licensing under Schedule II of the notification

CLEARANCES
An entrepreneur has to obtain several clearances or permissions depending upon the nature of his unit and products manufactured

clearances
Regulatory or Taxation Clearances Registration under Sales Tax Act - Commercial Tax officer of area concerned Registration under Central Excise Act - Collector of Central Excise or his nominee for area Payment of Income Tax - ITO of the area concerned Registration of Partnership deed - Inspector General of area concerned Calibration of weights & measures - Weights and Measures Inspector of State Power Connection - Designated Officer of State Electricity Board Employee strength exceeding 10 with power connection or 20 without power - Chief Inspector of Factories

Arrangement of finance
FIXED CAPITAL : THE FINANCE REQUIRED FOR SETTING UP INFRASTRUCTURE LIKE LAND, BUILDINGS, MACHINERY ETC.. This can be generated by PARTNERSHIP BANK LOANS

ARRANGEMENT OF FINANCE
WORKING CAPITAL: It is necessary for buying raw materials and recurring expenditure. It hugely depends on the financial position of the firm.

starting production
After the basic trial runs, commercial production has to begin with proper quality checks in place.

Marketing the product

This is the last but the most important step in realizing the business ambition. No business is complete without selling the products and ensuring that the revenues flow into the organisation. Marketing is the prime way to enhance the business and the best way to survive in this competitive

2 SMALL SCALE INDUSTRY

SMALL SCALE INDUSTRY AND POLICY WITH REGARD TO SMALL SCALE INDUSTIES

Roles of SSI:
Contribute almost 40% of the Gross Industrial

Merits of S S I
Limited Resources Flexibility of Operation Suppliers of large scale Business Employment Promotion of Artistic & Creative Sense Rural Development Mobilization of local resources

Demerits of S S I
Shortage of raw material Old technique of Production Lack of technical knowledge Lack of Marketing Shortage of Raw Material & Power Imperfect Organizational Setup Lack of Skilled labour Global Competition

3 SCOPE OF SSI
SCOPE OF SSI

Scope of SSI means..

The range of activities and the type of products that come under the SSI sector.

1.Manufacturing activities 2.Public utilities 3.Financial Activities 4.Wholesale Business 5.Construction Activities 6.Service Activities 7.Retailing Activities

THE IMPORTANT ACTIVITIES THAT SSIs are involved in are :

PRODUCTION EXCLUSIVELY FOR SSI

The Indian Government has made a list of 114 items which are reserved for exclusive production in small sector. No Large Scale Industry can produce the items reserved in favour of SSIs. The main objective of this reservation policy is to insulate the small sector from unequal competition from the large scale

Some of the items reserved in the list of 114 are. :

Leather Products Rubber products Natural essential oils Boat making Stationery Item Sports Goods Pickles and Chutneys Khadi Products Electrical Goods Wooden Furniture

 Role of ssi in economic development

employment
Since SSIs are more labour intensive and less sophisticated technologically, they provide employment on a large scale. Since India has a large number of semi skilled and unskilled labour, such industries would be an ideal place for their employment. SSIs account for 75% of total employment in the Industrial sector.

Feeding lsis
SMALL SCALE INDUSTRIES COMPLEMENT THE LARGE INDUSTRIES BY PROVIDING THEM PARTS, COMPONENTS, SUB ASSEMBLIES, ACCESSORIES, SERVICES ETC..

PROMOTION OF EXPORTS
SSIs help improve Indias balane of payments in two ways: First, they do not require importing of sophisticated equipment thus saving foreign exchange Second,they export their goods and earn foreign exchange. SSIs account for 25% of Indias total exports.

Promoting regional development

Since SSIs can be set up in Rural and Semi urban areas of the country, they help promoting a balanced regional development.

INSPIRING NEW ENTREPRENEURS

Existing and successful small scale industries inspire many more entrepreneurs to start on their own which improves competition which in turn helps the cause of Indian economy.