chapter i indian small scale industries in pre and post...

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CHAPTER – I

Indian Small Scale Industries in Pre and Post Liberlisation Era: An

Overview

1.1. Small Scale Industries: Global Scenario

Small business has played a role in history since the beginning of recorded

time. The first known writing on small business, describing how bankers loaned

money at interest for doing small business, appeared more than 4,000 years ago1.

Since then, small business on new products and services for benefiting consumers

were started.

1.1.1. The SBA's Definitions

The Small Business Administration (SBA) has defined small business for

every industry, which depends on the industry average. For example, the small

business for computer manufacture has been defined to contain below 1000

employees since the average for this industry is very high due to reputed computer

manufactures such as IBM. Similarly, SBA‟s definition of small business for selected

industries (Made in 1987 and still in effect) is presented in Table 1.1. It is interesting

to note that the definition for small business differs from industry to industry. Also,

the definition is based on the number of employees for certain industries and earning

sales for other industries.

1 Edward C.Bursk, The World of Business (New York: Macmillan, 1963), P.1

2

Table 1.1

Industry - Wise Definition of Small Business

Manufactures Number of employees

Petroleum refining Less than 1,500

Electronic computers Less than 1,000

Macaroni and spaghetti Less than 500

Sporting goods Less than 500

Furniture Less than 500

Paints and varnishes Less than 500

Retailers Earning Sales per year

Groceries Less than $ 13.5 million

Automobile dealerships Less than $ 11.5 million

Restaurants Less than $ 10.0 million

Services Earning Sales per year

Computer Less than $ 12.5 million

Accounting Less than $ 4.0 million

Television repair Less than $ 3.5million

Source: "U.S. Small Business Administration: Small Business Size

Standards". Federal Register, Vol.49. No. 28 (Washington, D.C: U.S.

Government Printing Office, January 6, 1987).

According to U.S. Small Business Administration, small business is a vital

force in the American economy. This is due to the fact that employees of small

business contributes roughly half of the Nation‟s workforce and generates 54% of the

sales revenue and 40 % of Gross National Product2.

2 U.S.Small Business Administration: The state of Small Business: A report of the President

(Washington, D.C: U.S.Government Printing Office, 1995) P.3.

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1.1.2 Global Change and Small Business

As the world moves towards a global economy, the barriers among nations

will gradually dissolve. Indeed, freedom of opportunity, or what economists often

refer to as free enterprise, is a basic freedom, one of the pillars of liberty. So it follows

that with the winds of change sweeping across lands like the former Soviet Union,

small business is likely to emerge as an agent of creativity. For example, it is the

genius of small business that offers the greatest hope for the greatest number of

people. Now accepted virtually by every nation that something basic has happened to

change forever the way our global economy works. In the words of Merrill Lynch,

the nation‟s largest investment banking firm, “today's global marketplace offers new

opportunities for investors to expand their borders beyond national borders.

Technology is erasing traditional barriers. Thanks to the Computer, we can send

billions of dollars overseas and back again in a second”3.

1.2. Small Business in Other Countries

In India, there is no specific definition for small business and only the

concept of small scale ancillary and tiny industry exists, which are related to the

investment in plant and machinery. In other countries, small business is termed as

Small and Medium Enterprises (SME). Here, SMEs are defined on the basis of both

quantitative and qualitative elements, such as, the number of employees, annual

turnover or the level of fixed investment. However, number of workers employed

seems to be an omnipresent criterion for determining the size of the unit. The

prevailing definitions and the criteria determining it for some countries are listed in

Table 1.2.

3 Cecily Patterson, "Going Global", Forbs (October 19, 1992) p.1.

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Table 1.2

Definition of SMEs in other Countries

Country Category of

industry Criteria / Country‟s Official Definition

Measure

North America

USA

Very Small

Enterprises

Small Enterprises

Medium

Enterprises

<20 employees

20-99 employees

100-499 employees

Number of

employees

Canada Small Enterprise Independent firms having <200 employees

Number of employees

Latin

America

Manufacturing

Micro

<15 employees and gross income

/ sales

< US $ 175,000 Million

Number of

employees

and gross

Mexico

Small 15-99 employees and gross income / sales <US $ 175,000

Income/sales

Medium 100-249 employees and gross income /sales

<US $3,500,000

Europe

Belgium

SME Annual staff average of 50

employees, Annual turnover (VAT excluded)

ECU-4.2 Million, balance sheet total of

ECU 2.1

Million

Number of

employees

and annual

Turnover

Denmark Manufacturing <500 employees, production units

with More than 5 employees

Employment

France

Germany

Greece

SME

SME

Small Enterprises Medium

Enterprises

10-499 employees

<500 employees

<50 employees

50-500 employees

Employment

Employment

Employment

Employment

Ireland SME < 500 employees Employment

Italy

Nether

lands

Small Enterprises

Small Enterprises

Medium

Enterprises

<200 employees

<10 employees

10-100 employees

Employment

Employment

Portugal SME <500 employees

<ECU 2400 million in sales

(value for 1993) is not controlled,

more than 50 percent of any

Employment

And sales

value

5

Country Category of

industry Criteria / Country‟s

Official Definition

Measure

company (nor

does it hold more than 50 percent of any other company)

Spain Small Enterprises

Medium

Enterprises

<200 employees

<500 employees

Employment

Employment

Sweden SME Autonomous firms with <200

employees

Employment

Switzerland SME No fixed definition

United

Kingdom

SME No fixed definition

Asia

China

SME Depends on product group usually <100

Employees: investment ceiling 30 million Yuan (US $ 8 million

Employment &investment

Indonesia SME <100 employees Employment

Japan Manufacturing,

Wholesale Trade,

Retail Trade and

Services

<300 employees or asset capitalization <100 million yen

<50 employees or asset capitalization <30

Million yen

< 50 employees or asset

capitalization < 10 million yen

Employment

And assets

Korea Manufacturing

Services

< 300 employees

< 20 employees

Employment

Malaysia SME‟S

SSI

MSE

< 75 full time workers or with a shareholder

Fund of Rs. 2.5 million (US $1 million

Manufacturing establishments

employing Between 5 and 500 employees or

with a Shareholder fund up to Rs

50000 Manufacturing establishments

employing. Between 50 and 75

full time employees or With shareholders fund between

Rs50000 to Rs. 2.5 million

Employees

and

Shareholder

fund

6

Country Category of

industry Criteria / Country‟s

Official Definition

Measure

Taiwan

SME

SSI

In manufacturing, mining and

Construction- invested capital is< $ 40

Million or regular employees to be < 200

In manufacturing and

construction sales Turnover <NT $ 120 million or

regular 20

Employment

or Invested

capital

Employees

or Sales

turnover

Thailand Labour intensive

Sectors

Capital intensive Sector

< 200 employees

< 100 employees

Employment

Vietnam SME No fixed definition generally <

200

Employees

Employment

Brunei SME 0-100 employees Employment

Hong Kong SME Manufacturing enterprises with

fewer than 100 employees and

non-manufacturing enterprises with fewer than 50

employees

Employment

Australia Manufacturing

Services Small enterprises <100 employees

Medium enterprises <20

employees

Employment

Employment

Sources:

1. Handbook on Foreign Direct Investment by small and medium sized enterprises Lessons from Asia, United Nation Conference on Trade and Development (UNCTAD), Geneva, 1998.

2. Globalisation and Small and Medium Enterprises (SME s) - Vol-I.

Synthesis Report Organisation for Economic Cooperation and

Development (OECD). 3. Industry Division, Government of Hong Kong Special Administrative

Region.

4. Small and Medium Business Administration Government of Korea.

1.3. Small Business in India

Economic development of a country is directly related to the level of industrial

growth. The expansion of industrial sector leads to a greater utilisation of natural

resources, production of goods and services, creation of employment opportunities

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and improvement in the general standard of living. India has also been striving to

develop the country‟s industrial base since independence. It has framed various

policies aimed at development of industries in the public and private sectors. Special

emphasis has been laid on small-scale industries. Small Scale Industries play a key

role in our planned development with its advantages of low investment, high potential

for employment generation, diversification of the industrial base and dispersal of

industries to rural areas. The small scale industries sector has been appropriately

given a strategic position in our planned economy towards the fulfillment of the socio

economic objectives particularly in achieving equitable growth. P.N.Dhar and

H.F.Lydall in the introduction to their book, “The Role of Small Enterprise in Indian

Economic Development” have observed that „The promotion of small scale industries

has been widely recommended as one of the most appropriate means of developing

industry over populated backward countries‟.

The definition of small business in India is broadened from small-scale

industries to small scale enterprises that include all business enterprises in the services

sector which provide service to industrial sector. In addition to these factors, Reserve

Bank of India(RBI) uses an expanded definition of Small Scale Industries(SSI) which

includes industrial undertaking that are engaged in the manufacturing, processing and

preservation of goods in which the investment in plant and machinery doest not

exceed Rs. 5crore. These would include units engaged in mining or quarrying,

servicing and repairing of machinery.

The SSI sector covers a wide spectrum of industries categorized under (a)

small scale industrial undertakings, (b) ancillary industrial undertakings , (c) export

oriented units, (d) tiny enterprises (e) small-scale service enterprises, (f) small-scale

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1977 Small Scale Industrial units Investment of less than Rs. 10 lakhs

Year Defining Authority were defined aDs semfinalitl-ioscnale industrial

1950 Fiscal commission

Atheuinnivt eosptemraetnint glimiatiwnlayswRist.h15hilraekdhs. lUabnoitusrwuistuhailnlyve1s0tmtoen5t0ohfalnesdss than Rs.

1955 Small Scale Industries Board, (SCIB) Govt. of India

1SSla: kRhss. w5 elarekhdsefainndedemasptlionyying less ethnatner5p0rispeesr.sons when using power and

1980 Ministry of Industry, Govt. of

India

less than 100 persons when not using SS: Rs. 20 lakhs A: Rs. 25 lakhs power

1966 1985

Ministry of Industry, Govt. of Ministry of Industry, Govt. of India India

SS: Investment in plant and machinery SS: Rs.35 lakhs A: Rs. 45 lakhs not exceeding Rs. 7.5 lakhs. A: Rs. 10 lakhs

1990 1975

Ministry of Industry, Govt. of Small Scale Industries Board India SCIB, Government of India.

SS: Rs. 60 lakhs A: Rs. 75 lakhs SS: Rs. 10 lakhs A: Rs. 15 lakhs

service business (Industry Related) enterprises (g) artisans, village and cottage

industries, and (h) woman entrepreneurs‟ enterprises, i.e., a small scale unit where one

or more women entrepreneurs have not less than 51 percent financial holding.

1.4. Definition of Small Scale Industry in Pre Liberalisation Period

The definition of small business in India has changed over the years.

Retrospective views of this change in definition are presented in Table 1.3.

At present, a small scale industrial units is an undertaking in which investment

in plant and machinery, does not exceed Rs.1crore, except in respect of certain

specified items under hosiery, hand tools, drugs and pharmaceuticals, stationary items

and sports aids, where this investment limit has been enhanced to Rs. 5crore. A

comprehensive legislation which would enable the paradigm shift from small scale

industry to small and medium enterprises is under consideration of the parliament.

Pending enactment of the above legislation, current SSI tiny industries definition may

continue. Units with investment in plant and machinery in excess of SSI limit, and up

to Rs.10 crore may be treated as medium enterprises.

Table 1.3

Definitions of Small Scale and Ancillary Undertakings

undertaking while for ancillary units,

9

Source: Punjab National Bank Monthly Review, June 1990, p.351

1.5. Definition of Small Scale Industries after Liberalisation Period

In 1991 (the year in which economic reforms were initiated) the investment

limit for small scale industries was Rs. 60 lakhs, for ancillary units Rs. 75 lakhs, and

for tiny enterprises Rs. 51 lakhs. In 2000, the investment limit for SSI (Small-scale

industry) was Rs. 1 crore, for ancillary unit Rs. 1 crore and exporting enterprise Rs.

25 lakhs. Consequent to the enactment of Micro, Small and Medium Enterprises

Development (MSMED) Act, 2006, the small and medium sector has been defined as

micro, small and medium enterprises with effect from October 2, 2006 (the act

defined the medium enterprises for the first time). Further, separate investments limit

have been prescribed for manufacturing and service enterprises. The new definition is

as follows:

A: Manufacturing Enterprises

(i) A Micro enterprise, where the investment in plant and machinery does not

exceed Rs. 25 lakhs;

(ii) A small enterprise, where the investment in plant and machinery is more

than Rs. 25 lakhs but does not exceed Rs. 5 crore; and

(iii) A Medium enterprise, where the investment in plant and machinery is

more than Rs 5 crore but does not exceed Rs. 10 crore

B: Service Enterprises

(i) A micro enterprise, where the investment in equipment does not exceed

Rs. 10 lakhs;

(ii) A small enterprise, where the investment in equipment is more than Rs. 10

lakhs but does not exceed Rs. 2 crore; and

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(iii) A medium enterprise, where the investment in equipment is more than Rs.

2 crore but does not exceed Rs. 5 crore.

1.5.1. Micro and Tiny Enterprises

Till 2006, there was no law or Act which could regulate the small scale

industries and institutions which were supporting the MSME sector. Micro industries

are those whose installed capacity ranges from zero to Rs.25 lakhs. The tiny industries

include those whose installed capacity ranges form zero to Rs.5 lakhs. Some tiny

enterprises are clubbed together to form the micro sector.

1.5.2. Small enterprise

Investment in plant and machinery above Rs 25 lakhs but does not exceed

Rs. 5 crore. Investment in equipment above Rs.10 lakhs but does not exceed 2 crore.

1.5.3. Medium Enterprise

Investment in plant and machinery above Rs. 5 crore but does not exceed

Rs.10 crore. Investment in equipment above Rs. 2 crore but does not exceed Rs.5

crore.

1.5.4. Large Enterprise

Investment in plant and machinery is above 10 crore.

Source: Micro, Small and Medium Enterprises Development (MSMED) Act 2006.

1.6. Growth of Small Scale Industries in India: Pre and Post Liberalisation

Period

The small scale industries play a significant role in boosting the overall

economic growth of a country. The small scale industries set-up by the entrepreneurs

in different states and Union Territories of India have contributed to the increased

shares in overall production, fixed investment, exports, employment and capacity

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utilisation of SSI Units etc. The importance of SSI sector in providing large scale

employment is of paramount importance.

The policy framework right from the first plan has highlighted the need for the

development of SSI sector, keeping in view its strategic importance in the overall

economic development of India. The impact of Industrial liberalisation and

deregulatory policies on the growth of small scale industries has been captured by

computing and subsequently comparing the growth rates between pre and post

globalisation period. In this section, the overall performance of SSI sector has been

examined in depth on the basis of the different parameters such as number of units,

production, employment and exports.

1.7. Number of SSI Units in Pre and Post Liberalisation Period

The working number of units in small scale sector in Pre and Post

liberalisation Period in India is shown in Table 1.4. It shows that the Annual Average

Growth Rate of number of units in the pre- liberalisation period, from1973-74 to

1989-90 was 9.36 percent and in post-liberalisation it was 4.07 percent.

Table 1.4

Number of SSI Units in Pre and Post Liberalisation Period

(Units = Million Nos)

Pre-Liberalisation Period Post-Liberalisation Period

Year

Units % Increase to Previous year

Year

Units % Increase to Previous year

1973-74 0.42 - 1990-91 6.79 -

1974-75 0.5 19.05 1991-92 7.06 3.98

1975-76 0.55 10 1992-93 7.35 4.11

1976-77 0.59 7.27 1993-94 7.65 4.08

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Pre-Liberalisation Period Post-Liberalisation Period

Year

Units % Increase to

Previous year

Year

Units % Increase to

Previous year

1977-78 0.67 13.56 1994-95 7.96 4.05

1978-79 0.73 8.96 1995-96 8.28 4.02

1979-80 0.81 10.96 1996-97 8.62 4.11

1980-81 0.87 7.41 1997-98 8.97 4.06

1981-82 0.96 10.34 1998-99 9.34 4.12

1982-83 1.06 10.42 1999-00 9.72 4.07

1983-84 1.16 9.43 2000-01 10.11 4.01

1984-85 1.24 6.9 2001-02 10.52 4.06

1985-86 1.35 8.87 2002-03 10.95 4.09

1986-87 1.46 8.15 2003-04 11.4 4.11

1987-88 1.58 8.22 2004-05 11.86 4.04

1988-89 1.71 8.23 2005-06 12.34 4.05

1989-90 1.82 6.43 2006-07 12.84 4.05

2007-08 13.41 4.44

2008-09 14.09 5.07

2009-10 14.87 5.54

AAGR 9.36 AAGR 4.07

Source: Ministry of Micro, Small and Medium Enterprises, GOI.

AAGR= Annual Average Growth Rate or Exponential Growth Rate.

In pre-liberalized period, the yearly growth rate was higher than average

growth rate in the initial years and from 1984-85 to 1989-90, the yearly growth rate

was less than average growth rate. In 1989-90, the yearly growth rate was least in the

pre- liberalisation period. In the post-liberalisation period, in 1991-92 it was very high

and after that it fluctuated between 3.98 percent and 4.11 percent. In 1999-2000 the

yearly growth rate and average growth rate was the same. The number of SSI units

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was increasing in the study period but the average and yearly growth rate was higher

in pre-liberalised period than post liberalised period.

1.8. Production Growth in Pre and Post Liberalisation Period

Table 1.5 provides the information about the growth of small scale sector on

production from the period 1973-74 to 2009-10. It shows that the Annual Average

Growth Rate of production in the pre- liberalisation period, from 1973-74 to 1989-90

was 18.97 percent and in post- liberalisation it was 13.55 percent. In pre-liberalised

period, the yearly growth rate was decreasing in the initial years and from 1973-74 to

1978-79. It was increasing. The yearly growth rate was fluctuating from 1980-81 to

1983-84, after that it has shown increasing trend except in 1986-87. In the post-

liberalisation period, in 1990-91 the yearly growth rate was very low, it was negative

and after that it shows increasing trend from 1991-92 to 1994-95. The yearly growth

rate was showing decreasing trend from 1995-96 to 2002-03 except in 1998-99 and

2001-02. Most of the time, the yearly growth rate was less than average growth rate.

The production was increasing in the study period but the average and yearly growth

rate was higher in pre- liberalised period than post liberalised period.

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Table 1.5

Production Growth of SSI units in Pre and Post LiberalisationPeriod

(Production= Crores)

Pre LiberalisationPeriod Post LiberalisationPeriod

Year

Production

(Current

Prices)

% Increase

to previous

year

Year

Production

(Current

Prices)

% Increase

to previous

year

1973-74 7200 - 1990-91 78802 -

1974-75 9200 27.78 1991-92 80615 2.3

1975-76 11000 19.57 1992-93 84413 4.71

1976-77 12400 12.73 1993-94 98796 17.04

1977-78 14300 15.32 1994-95 122154 23.64

1978-79 15800 10.49 1995-96 147712 20.92

1979-80 21600 36.71 1996-97 167805 13.6

1980-81 28100 30.09 1997-98 187217 11.57

1981-82 32600 16.01 1998-99 210454 12.41

1982-83 35000 7.36 1999-00 233760 11.07

1983-84 41600 18.86 2000-01 261297 11.78

1984-85 50500 21.39 2001-02 282270 8.03

1985-86 61200 21.19 2002-03 314850 11.54

1986-87 72300 18.14 2003-04 364547 15.78

1987-88 87300 20.75 2004-05 429796 17.9

1988-89 106400 21.88 2005-06 497842 15.83

1989-90 132300 24.34 2006-07 585112 17.53

2007-08 692412 18.33

2008-09 813456 17.48

2009-10 972314 19.52

AAGR 18.97 AAGR 13.55



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1.9. Creating Employment Opportunities of SSI Units in Pre and Post

Liberalisation Period

In India, the major argument for promoting small scale sector is that the small

enterprises provide avenues for gainful employment. The performance of SSI in

creating employment opportunities is really a matter of great interest. The following

Table 1.6 provides the information for creating employment opportunities of SSI units

in pre and post liberalisation period.

It shows that the Annual Average Growth Rate of employment in the pre-

liberalisation period, from 1973-74 to 1989-90 was 6.77 percent and in post-

liberalisation it was 4.23 percent. In pre-liberalised period, the yearly growth rate was

more than average growth rate in the initial years and from 1973-74 to 1978-79, after

that the yearly growth rate was too much decreased from 1979-80 to 1989-90, it

fluctuated between 5.02 percent and 5.84 percent. In the post-liberalisation period, in

1990-91 the yearly growth rate was very high than the average growth rate. After that

the yearly growth rate fluctuated from 1991-92 to 2003-04. Most of the time, the

yearly growth rate was less than average growth rate. In the last three years, the

annual growth rate was increasing. The employment was increasing during the study

period but the average and yearly growth rate was higher in pre-liberalised period

than post-liberalised period.

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Table 1.6

Creating Employment Opportunities of SSI units in pre and post liberalisation

period

(Employment= Million Nos)

Pre Liberalisation Period Post Liberalisation Period

Year

Employment

% Increase

to prev. year

Year

Employmen

t

% Increase

to prev. year

1973-74 3.97 - 1990-91 15.83 -

1974-75 4.04 1.76 1991-92 16.6 4.86

1975-76 4.59 13.61 1992-93 17.48 5.3

1976-77 4.98 8.5 1993-94 18.26 4.46

1977-78 5.4 8.43 1994-95 19.14 4.82

1978-79 6.38 18.15 1995-96 19.79 3.4

1979-80 6.7 5.02 1996-97 20.59 4.04

1980-81 7.1 5.97 1997-98 21.32 3.55

1981-82 7.5 5.63 1998-99 22.06 3.47

1982-83 7.9 5.33 1999-00 22.91 3.85

1983-84 8.42 6.58 2000-01 24.09 5.15

1984-85 9 6.89 2001-02 25.23 4.73

1985-86 9.6 6.67 2002-03 26.37 4.52

1986-87 10.14 5.63 2003-04 27.53 4.4

1987-88 10.7 5.52 2004-05 28.76 4.47

1988-89 11.3 5.61 2005-06 29.99 4.28

1989-90 11.96 5.84 2006-07 31.25 4.2

2007-08 32.64 4.48

2008-09 34.37 5.30

2009-10 36.20 5.32

AAGR 6.77 AAGR 4.23



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1.10. Exports of Small Scale Industries in Pre and Post LiberalisationPeriod

In the context of liberalisation and globalisation of Indian economy, the

performance of small scale sector in the field of exports needs a closer look. The

exports from small scale sector found to be higher from the total export.

Table 1.7

Exports of Small Scale Industries in Pre and Post LiberalisationPeriod

(Exports = Million Nos)

Pre LiberalisationPeriod Post LiberalisationPeriod

Year

Exports

% Increase

to prev. year

Year

Exports

% Increase

to prev. year

1973-74 400 - 1990-91 9664 -

1974-75 500 25.00 1991-92 13883 43.66

1975-76 500 0 1992-93 17784 28.10

1976-77 800 60.00 1993-94 25307 42.30

1977-78 800 0.00 1994-95 29068 14.86

1978-79 1100 37.50 1995-96 36470 25.46

1979-80 1200 9.09 1996-97 39248 7.62

1980-81 1600 33.33 1997-98 44442 13.23

1981-82 2100 31.25 1998-99 48979 10.21

1982-83 2000 -4.76 1999-00 54200 10.66

1983-84 2200 10.00 2000-01 69797 28.78

1984-85 2500 13.64 2001-02 71244 2.07

1985-86 2800 12.00 2002-03 86013 20.73

1986-87 3600 28.57 2003-04 97644 13.52

1987-88 4400 22.22 2004-05 124417 27.42

1988-89 5500 25.00 2005-06 150242 20.76

1989-90 7600 38.18 2006-07 179258 19.31

2007-08 201342 20.76

2008-09 236508 17.46

2009-10 281439 21.41

AAGR 19.35 AAGR 19.42



18

It is clear from the above table that the Annual Average Growth Rate of

exports in the pre-liberalisation period, from 1973-74 to 1989-90 was 19.35 percent

and in post-liberalisation it was 19.42 percent. In pre-liberalised period, the yearly

growth rate was too much fluctuating, it was sometimes very high than average

growth rate. In 1976-77, the yearly growth rate was 60 percent. It was highest during

the pre-liberalisation. In 1978-79 to 1984-85 the AAGR was yearly increasing or

decreasing, in 1982-83 it was on the lowest peak and showed negative trend. After

this, from 1985-86 to 1989-90, the yearly growth rate was increasing and reached at

38.18 percent. In the post- liberalisation period, from 1990-91 the yearly growth rate

changed its trend yearly, in one year its trend was increasing and then next subsequent

years the trend was decreasing. It was least in 2001-02 and highest in 1991-92. The

exports were increasing during the study period but the average and yearly growth

rate was higher in pre- liberalised period than post liberalised period.

1.13. Scope of the Study

The present study covers conceptual framework of small scale industries in

India. It also examines the number of small scale industrial units, production, creating

employment opportunities and export of small scale sector in the pre and post

liberalisation period. It also covers the prospects of small scale industries with the

help of Trend analysis, Ratio analysis and Correlation analysis.

The problems of small scale industries include area- wise, organisation -wise,

industry- wise and size- wise faced by the small scale industrialists in these areas.

The study of small scale industries has always been a subject of wide interest

and various interpretations. But the scope of the present study is restricted to those

19

units, which fall under small scale sector as defined under the Industries Development

and Regulation Act of the Government of India (1999). A small scale unit is defined

as, “a unit engaged in manufacturing, repairing processing and preservation of goods

having investment in plant and machinery at an original cost not exceeding Rs.1

crore.” Keeping in view the growing importance of the small scale sector in the region

and the crucial problems faced by small scale sector, the present study is confined to

the problems and prospects of small scale industrial units in Krishnagiri district. The

study concentrates on prospects of small scale industrial units and factors influencing

to start the small scale industrial units, and production problems, labour problems,

financial problems and marketing problems in these area.

chapter i indian small scale industries in pre and post...

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