Economics Project

Topic: Micro and Small Scale Industries

Name of the student: Nadir Ali Sheikh

Class: 12 COM H
Board Exam Roll Number:
Teacher in charge: Mrs. Chandra
Date of Submission:
 Bonafide Certificate

This is to certify that Nadir Ali Sheikh of Class 12 Com H.

Has completed his Economics project under my supervision. He has
taken proper care and shown utmost sincerity in completing it.
I certify that this project is up to my supervision and as per the
guidelines issued by the CBSE.
Teacher in Charge: Mrs. Chandra
Signature:
Internal Examiner:
 Acknowledgement

I would like to convey my heart full thanks to Mrs. Chandra my

Economics teacher who always gave valuable suggestions, invaluable
support, encouragement and supervision for completion of my project.
She helped me to understand and remember important details of the
project. Her moral support and continuous guidance enabled me to
complete my work successfully.
 Index

SR TOPIC Page
NO Number
1 Objectives of the project

2 Introduction

3 Characteristics of Small Scale Industries

Role in the Indian Economy

4

5 Objectives of Small Scale Industries

Registration of Small Scale Industries in India

6

7 Eligibility Criteria for SSI Registration

Benefits of obtaining Small Scale Industries Registration

8
Employment in Small Scale Industries
9
MSME ACT 2006
10
Features of MSME
11

12 Role of MSMEs in Indian Economy

 Objectives of the project
 To understand an increase in employment of Small scale
industries.
 To understand challenges faced by MSME.
 To improve Economic conditions and standard of living of the
people in the country.
 To eradicate unemployment problem from the country.
 Introduction
Micro and Small Scale Industries are those industries in which the
manufacturing, production and rendering of services are done on a
small or micro scale. These industries make a one-time investment in
machinery, plant, and equipment, but it does not exceed Rs.10 corers
and annual turnover does not exceed Rs.50 corers.
Essentially the small scale industries are generally comprised of those
industries which manufacture, produce and render services with the
help of small machines and less manpower. These enterprises must
fall under the guidelines, set by the Government of India.
The small scale industries are the lifeline of the economy, especially in
developing countries like India. These industries are generally labor-
intensive, and hence they play an important role in the creation of
employment. SSI’s are a crucial sector of the economy both from a
financial and social point of view, as they help with the per capita
income and resource utilization in the economy.
Examples and Ideas of Small Scale Industries:
 Bakeries
 School stationeries
 Water bottles
 Leather belt
 Small toys
 Paper Bags
 Photography
 Beauty parlors
 Characteristics of Small Scale Industries
 Ownership
Small scale industries generally are under single ownership. So it can
either be a sole proprietorship or sometimes a partnership.
 Management
Generally, both the management and the control is with the
owner/owners. Hence the owner is actively involved in the day-to-day
activities of the business.
 Labour Intensive
Small scale industries dependence on technology is pretty limited.
Hence they tend to use labour and manpower for their production
activities.
 Flexibility
Small scale industries are more adaptable to their changing business
environment. So in case of amendments or unexpected
developments, they are flexible enough to adapt and carry on, unlike
large industries.
 Limited Reach
Small scale industries have a restricted zone of operations. Hence,
they can meet their local and regional demand.
 Role in the Indian Economy
 Employment
Small scale industries are a major source of employment for
developing countries like India. Because of the limited technology and
resource availability, they tend to use labour and manpower for their
production activities.
 Total Production
These enterprises account for almost 40% of the total production of
goods and services in India. They are one of the main reasons for the
growth and strengthening of the economy.
 Make in India
Small scale industries are the best examples for the Make in India
initiative. They focus on the mission to manufacture in India and sell
the products worldwide. This also helps create more demands from
all over the world.
 Export contribution
India’s export industry majorly relies on these small industries for
their growth and development. Nearly half of the goods that are
exported from India are manufactured or produced by these
industries.
 Public Welfare
These industries have an opportunity to earn wealth and create
employment. Small scale industries are also important for the social
growth and development of our country.
 Objectives of Small Scale Industries
The objectives of the small scale industries are:
 To create more employment opportunities.
 To help develop the rural and less developed regions of the
economy.
 To reduce regional imbalances.
 To ensure optimum utilization of unexploited resources of the
country.
 To improve the standard of living of people.
 To ensure equal distribution of income and wealth.
 To solve the unemployment problem.
 To attain self-reliance.
 To adopt the latest technology aimed at producing better quality
products at lower costs.
Registration of Small Scale Industries in India
 Small scale Industries registration is a registration provided by the
Ministry of MSME. A business should obtain SSI registration in order to be
eligible for a number of schemes, subsidies and other incentives provided
by the Government to such SSI’s. SSI registration can be obtained online
too.
 SSI registration is provided by the Ministry of Micro, Small and Medium
Enterprises through the Directorate of Industries of the State
Government. The main logic behind the SSI registration is to set up new
SSI businesses in India. SSI registration helps the business to be eligible
for a number of subsidies given by the Government. We can also get
SSI/MSME registration online through Udaym Registration. Let’s look at
the process of SSI/MSME registration online:
 Visit the Udaym Registration portal and click on the “For New
Entrepreneurs who are not registered yet as MSME or those with EM-II”.
 Fill in your “Aadhaar Number” and “Name of the Entrepreneur” and click
on the “Validate and Generate OTP” button. 
 You will receive OTP to your mobile number. Enter OPT on the PAN
verification page will open. Enter PAN details and click on the “Validate
PAN” button.
 The Udaym Registration page will open. Fill in all the personal details and
industry details such as industry name, address, bank account details and
some common information and click on the “Submit and Get Final OTP”
button.
 With this the MSME registration is complete and a message of successful
registration with a reference number will appear. After verification of
registration, the MSME Registration Certificate is issued.
 If a person wants to get registration for more than one industry then also
he/she can opt for an individual SSI registration. The documents required
for the SSI registration are Aadhar number and PAN number. No
registration fees are required for the registration.
Eligibility Criteria for SSI Registration

SSI registration can be obtained for enterprises that are

considered as micro and small enterprise under the MSME Act,
2006.
A micro enterprise is an enterprise whose investment in plant,
machinery and equipment does not exceed Rs.1 crore, and
turnover does not exceed Rs.5 crore.
A small enterprise is an enterprise whose investment in plant,
machinery and equipment does not exceed Rs.10 crore, and
turnover does not exceed Rs.50 crore.
 Benefits of obtaining Small Scale Industries
Registration
 There are various tax rebates offered to small scale industries.
 A credit for Minimum Alternate Tax (MAT) is allowed to be
carried forward for up to 15 years instead of 10 years.
 There are many government tenders that are only open to the
small scale industries.
 Once registered the cost of acquiring a patent, or the cost of
setting up the industry reduces as many rebates and concessions
are available.
 Business registered as small scale industries are given higher
preference for government license and certification.

Employment in Small Scale Industries

As per 4th All India Census of micro, small and medium
enterprises (MSMEs), around 594.61 lakh persons are employed in the
MSME sector, including agro, rural, cottage and small scale
industries.  The State-wise details of employment created in rural
non-farm sector under erstwhile Rural Employment Generation
Program (REGP) implemented by the Government from 01.04.1995 to
31.03.2008 through the Khadi and Village Industries Commission
(KVIC) and the present Prime Minister’s Employment Generation
program (PMEGP) during 2008-09 and 2009-10, are given at Annex.   
 
There has been overall increase in employment under the khadi
and village industries. Department of Agriculture and Cooperation,
Ministry of Agriculture has reported that employment in agro-
industries is growing with increase in agricultural production,
processing, etc. With mechanization of agriculture and seed
processing / treatment, the agro sector is providing enhanced
employment opportunities as reported by Department of Agriculture
and Cooperation. 
 

MSME ACT 2006

The Parliament of India has enacted the Micro, Small and Medium
Enterprises Development Act, 2006. The implications of the various
provisions of the Act need to be studied in the backdrop of the
general scenario of micro, small and medium enterprises in our State.
MSME facilitate the promotion and development of and enhancing
the competitiveness of micro, small and medium, enterprises and for
matters connected therewith or incidental thereto.
 MSMEs promote inclusive growth by providing employment
opportunities in rural areas especially to people belonging to weaker
sections of the society. For example: Khadi and Village
industries require low per capita investment and employs a large
number of women in rural areas.

Features of MSME
Following are some of the essential elements of MSMEs –
 1. MSMEs work for the welfare of the workers and artisans. They
help them by giving employment and by providing loans and
other services.
2. MSMEs provide credit limit or funding support to banks.
3. They promote the development of entrepreneurship as well as
up-gradation of skills by launching specialized training centers
for the same.
4. They support the up-grading of developmental technology,
infrastructure development, and the modernization of the
sector as a whole
5. MSMEs are known to provide reasonable assistance for
improved access to the domestic as well as export markets.
6. They also offer modern testing facilities and quality certification
services.
7. Following the recent trends, MSMEs now support product
development, design innovation, intervention, and packaging.

Role of MSMEs in Indian Economy

Since its formation, the MSME segment has proven to be a highly dynamic
Indian economy sector. MSMEs produce and manufacture a variety of products
for both domestic as well as international markets. They have helped promote
the growth and development of khadi, village, and coir industries. They have
collaborated and worked with the concerned ministries, state governments,
and stakeholders towards the upbringing of rural areas.

MSMEs have played an essential role in providing employment opportunities

in rural areas. They have helped in the industrialization of these areas with a
low capital cost compared to the large industries. Acting as a complementary
unit to large sectors, the MSME sector has enormously contributed to its socio-
economic development.

MSMEs also contribute and play an essential role in the country’s development
in different areas like the requirement of low investment, flexibility in
operations, mobility through the locations, low rate of imports, and a high
contribution to domestic production.

With the capability and capacity to develop appropriate local technology,

provide fierce competition in domestic and international markets, technology-
savvy industries, a contribution towards creating defense materials, and
generating new entrepreneurs by providing knowledge, training, and skill up-
gradation through specialized training centers.

Contribution of MSMEs in Country’s Economy

at Current Price
 Share of
MSME- Total Share of
Growth Total
Year Addition of Addition of MSME in MSME in
(%) GDP
Gross Value Gross Value GVA (%)
GDP (in %)

2011-12 2622574 – 8106946 32.35 8736329 30

2012-13 3020528 15.17 9202692 32.82 9944013 30.40

2013-14 3389922 12.23 10363153 32.71 11233522 30.20

2014-15 3704956 9.29 11504279 32.21 12467959 29.70

2015-16 4025595 8.65 12566646 32.03 13764037 29.20

2016-17 4405753 9.44 13841591 31.83 15253714 28.90

Importance of MSMEs for the Indian Economy

Across the globe, MSMEs are accepted as a means of economic growth and for promoting

equitable development. They are known to generate the highest rate of growth in the

economy. MSMEs have driven India to new heights through requirements of low

investment, flexible operations, and the capacity to develop appropriate native technology.

1. MSMEs employ around 120 million persons, becoming the second-largest

employment generating sector after agriculture.

2. With approximately 45 lac units throughout the country, it contributes about 6.11%
of GDP from manufacturing and 24.63% of the GDP from service activities.

3. MSME ministry targets to increase its contribution towards GDP by up to 50% by

2025 as India moves ahead to become a $5 trillion economy

4. Contributing around 45% of overall Indian exports

5. MSMEs promote all-inclusive growth by providing employment opportunities,

especially to people belonging to weaker sections of the society in rural areas.

6. MSMEs in tier-2 and tier-3 cities help in creating opportunities for people to use
banking services and products, which can amount to the final inclusion of the
contribution of MSMEs for the economy.

7. MSMEs promote innovation by providing an opportunity to budding entrepreneurs

to help them build creative products hey and thereby boost competition in business
and fuel the growth.

The Indian MSME sector provides silent support to the national economy and acts as a

defense against global economic shock and adversities. Hence, we can say that India is

propelling towards a robust global economy through a silent revolution powered by

MSMEs.

Government assistance and initiatives to

MSME
  Scheme 1: Prime Minister Employment Generation Program and Other Credit
Support Schemes
PMEGP scheme aims to generate employment opportunities in both rural and urban areas for
the MSMEs through setting up of new self-employment projects in the country. This MSME
scheme is being managed by Khadi and Village Industries Commission (KVIC) at the national
level and being implemented by State KVIC Directorates, State Khadi and Village Industries
Boards (KVIBs), District Industries Centers (DICs) and banks at the state and districts level.
Ministry of MSME and SIDBI has jointly established the Credit Guarantee Fund Trust for Micro
and Small Enterprises (CGTMSE) to implement Credit Guarantee Scheme for MSMEs. The
corpus of CGTMSE is contributed by the Government of India and SIDBI.
To facilitate technology to MSEs through institutional finance for induction of well-
established and proven technologies in the specific and approved 51 sub-sector/products.
Both up gradation projects (with or without expansion) and new projects are eligible.

 Scheme 2: Development of Khadi, Village and Coir Industries

This MSME scheme is an amalgamation of different MSME schemes implemented by the
Khadi sector including publicity, marketing, and market promotion and marketing
development assistance.
The main objectives of the SFURTI scheme is to organize traditional industries, provide
sustained employment, enhance marketability, equip traditional artisans and further boost
the governance cluster systems.

 Scheme 3: Technology up gradation and Quality Certification

The scheme aims at supporting & promoting the Make in India initiative, achieving Zero
Defect & Zero Effect practices in manufacturing processes and ensure continuous
improvement.
This MSME scheme aims to create new jobs and reduce unemployment, promote
entrepreneurship culture in India, boost economic development, facilitate innovative
business solution for un-met social needs, and promote innovation to further strengthen the
competitiveness of the MSME sector.

 National Manufacturing Competitiveness program (NMCP) 

o Credit Linked Capital Subsidy for Technology up gradation
o Marketing Support/Assistance to MSMEs (Bar Code)
o Lean Manufacturing Competitiveness for MSMEs
o Design Clinic for Design Expertise to MSMEs
 Case Study: Implementation of technology
innovation in MSMEs in India

In the present age of globalization, micro, small and medium

enterprises (MSMEs) are consistently causative to productivity
growth and, consequently, competitiveness and aggregate
economic growth by providing the training opportunities, basic
services and are believed to be especially effective job creators
and enjoy the reputation of being sources of income. But
technological progressions have increased greatly, the
competition impelled by the globalization of the world
economies and even MSMEs are no more protected to the
challenges that the globalization brings about. It is a
remarkable, and in certain instances, a worrying situation
because MSMEs play an important role in most economies,
including in India, in that they comprise the largest business
block and offer the bulk of employment. The purpose of this
paper is to assess the status of problems faced by MSMEs and
study the technology innovation implementation (TII)
dimensions in the selected small firms in the Northern region in
India.
 Bibliography

https://msme.gov.in/

https://cleartax.in/s/small-scale-industries-ssi

https://www.lendingkart.com/blog/small-scale-industries-
in-india/

https://www.encyclopedia.com/international/encyclopedias
-almanacs-transcripts-and-maps/small-scale-industry-
1947
Appendix