Small scale industries (SSI) such as bakeries, beauty parlours, and leather bag-making units, are those that manufacture and render services by making a limited investment.
What are Small Scale Industries (SSI)?
HSmall Scale Industries (SSIs) are integral to the Indian economy, contributing significantly to employment generation and economic growth. These enterprises are characterised by their limited investment in plant and machinery, often ranging from a few lakhs to a few crores of rupees. SSIs typically operate on a modest scale, catering to local or niche markets with their products or services. In terms of investment, the cost of equipment and materials varies widely depending on the industry sector. For instance, setting up a small-scale food processing unit might require machinery worth several lakhs, while a handicraft enterprise may require comparatively lower investment in tools and raw materials.
Characteristics of Small Scale Industries
- Limited investment in machinery and infrastructure: SSIs often start with modest capital investments, focusing more on efficient utilisation of resources.
- Flexibility in operations: These enterprises can quickly adapt to changing market demands and production requirements.
- Labour-intensive production methods: SSIs often rely on manual labour due to limited automation, providing employment opportunities, especially in rural areas.
- Localised market focus: They cater to regional or niche markets, serving specific customer needs or preferences.
- Entrepreneurial ownership and management: SSIs are typically owned and managed by entrepreneurs or families, fostering a culture of innovation and adaptability.
Objectives of Small Scale Industries
- Employment generation: SSIs aim to provide livelihood opportunities, especially in rural and semi-urban areas, thus reducing unemployment and poverty.
- Encouraging entrepreneurship: These enterprises promote self-employment and nurture a culture of innovation and creativity among individuals.
- Equitable distribution of wealth: By decentralising economic activities, SSIs contribute to a more balanced distribution of income and wealth within society.
- Balanced regional development: They play a crucial role in developing backward regions by providing infrastructure and employment opportunities.
- Fostering indigenous technology: SSIs focus on adopting and promoting indigenous technologies, contributing to self-reliance and innovation.
Role of Small Scale Industries in the Indian economy
- Employment generation: SSIs are major contributors to employment, absorbing a significant portion of the workforce, especially in rural and semi-urban areas.
- Inclusive growth: They provide opportunities to marginalised sections of society, including women and disadvantaged groups, thus fostering inclusive development.
- GDP contribution: Despite their modest scale, SSIs collectively contribute a substantial share to the country's Gross Domestic Product (GDP) through production and value addition.
- Industrial base strengthening: SSIs form the backbone of India's industrial sector, diversifying production and reducing dependency on imports.
- Export promotion: Many SSIs are engaged in export-oriented activities, earning foreign exchange and contributing to the country's trade balance.
Examples of Small Scale Industries
- Cottage industries: Handloom weaving, pottery, and traditional handicrafts.
- Food processing units: Bakeries, small-scale dairies, and fruit processing units.
- Garment manufacturing: Tailoring units, embroidery workshops, and small-scale apparel production.
- Plastic and rubber products manufacturing: Plastic moulding units, rubber goods production, and packaging material manufacturing.
- Handicrafts and artisanal products: Woodwork, metal crafts, and traditional artwork.
Types of Small Scale Industries
- Manufacturing: Engaged in the production of goods such as textiles, food products, electronics, and consumer goods. Estimated equipment and material costs vary widely depending on the industry sector.
- Service-based: Includes businesses offering services like repair services, beauty parlours, small-scale consultancy firms, and IT services. Initial investment may involve setting up office space, equipment procurement, and marketing expenses.
- Agro-based: Involved in activities such as food processing, dairy farming, poultry keeping, and organic farming. Costs include land, equipment, seeds, fertilisers, and animal husbandry expenses.
- Cottage industries: Home-based businesses focusing on traditional crafts and artisanal products. Costs typically involve raw materials, tools, and marketing expenses.
- Ancillary units: Support larger industries by manufacturing components or providing services like maintenance and repair. Investment depends on the scope of services and equipment required for production.
Small scale industries are crucial to India’s economy because they generate employment and utilise local resources. The government provides a range of schemes and subsidies, and to promote these industries and access them, you must register your SSI.
You can voluntarily register your SSI online or offline to make the most of the incentives offered to this sector.
Read on to know more about SSI registration and how to get it done.
What is Small Scale Industries (SSI) Registration?
Small Scale Industries (SSI) registration, also known as MSME registration, is a voluntary process undertaken by Micro, Small and Medium Enterprises (MSMEs) in India. It enables these business entities to avail numerous government benefits such as subsidies, easy loan accessibility, and eligibility for various schemes. The registration process involves providing essential business details, including the industry's nature, investment in plant machinery, and the official address. The objective of SSIs or MSME registration is to promote, facilitate, and develop small scale industries by extending them financial assistance and enabling a platform for their growth and opportunities.
What are the benefits of SSI registration?
Registration is not mandatory for small scale industries. You can obtain an SSI certificate of registration voluntarily. Several benefits come your way when you register. These include:
- Reduced interest rates
- Easy access to credit
- Access to government tenders
- Concessions and rebates that reduce the cost of acquiring patents
- Preference for government certification and licence
- State government incentives
What are the eligibility criteria for SSI registration?
Micro and small scale industries are segregated based on the investment involved by the Ministry of Micro, Small and Medium Enterprises. There are two types of small scale industries: service and manufacturing.
SSI registration can be obtained for any of these categories.
Manufacturing enterprise
- Micro: The investment in plants and machinery does not exceed Rs. 25 lakh.
- Small: The investment in plants and machinery exceeds Rs. 25 lakh but not Rs. 5 crore.
- Medium: The investment in plants and machinery exceeds Rs. 5 crore but not Rs. 10 crore.
Service industry
- Micro: The investment in equipment does not exceed Rs. 10 lakh.
- Small: The investment in equipment exceeds Rs. 10 lakh but not Rs. 2 crore.
- Medium: The investment in equipment exceeds Rs. 2 crore but not Rs. 5 crore.
Methods of small-scale registration process
The process differs from state to state. However, there are three broad steps:
Step 1: Applying for a provisional registration.
his SSI certificate is given to units in the pre-operative period to help them secure working capital. Once a firm applies, provisional registration is provided without a physical inspection.
Step 2: Starting the business.
The provisional certificate is valid for five years, and you must ensure that your enterprise becomes operational at this time.
Step 3: Applying for a permanent SSI certificate of registration.
If your enterprise becomes operational within five years, you can apply to the Ministry of Micro, Small and Medium Enterprises (MSMEs) for a permanent certificate.
Thanks to Udyog Aadhaar, the SSI registration process does not involve much paperwork these days. Fill out the Entrepreneur Memorandum instead of 11 different forms to get started.
What are the documents required for SSI registration?
Documents required for the registration of SSI include:
- Proof of business address
- Purchase bill copies of raw materials, machinery, and so on.
- Partnership deed/ AoA and MoA
- NOC from the pollution control committee
SSI registration is a process that gives you access to schemes and financial offerings that can take your business up a notch. Without a viable incentive, you can still improve your small scale manufacturing business or service unit by opting for Business Loan. It offers you funding of up to Rs. 80 lakh on a collateral-free basis.
You can apply for it with just two documents, and you get approval within 48 hours. You can also opt for a Flexi Loan to withdraw from your sanction multiple times, as the need arises. Explore our small scale industries loan options.
