{"id":155476,"date":"2022-06-20T10:19:11","date_gmt":"2022-06-20T04:49:11","guid":{"rendered":"https:\/\/cbselibrary.com\/?p=155476"},"modified":"2022-06-20T13:50:34","modified_gmt":"2022-06-20T08:20:34","slug":"small-scale-industries-advantages-and-disadvantages","status":"publish","type":"post","link":"https:\/\/cbselibrary.com\/small-scale-industries-advantages-and-disadvantages\/","title":{"rendered":"Small Scale Industries Advantages and Disadvantages | Merits and Demerits, Definition, Types, Pros and Cons"},"content":{"rendered":"<p><strong>Advantages And Disadvantages Of Small Scale Industries:<\/strong> Small-scale industries generally consist of businesses that use small machines and employ less manpower to manufacture, produce and provide services. These enterprises must adhere to the Government of India guidelines to operate legally.<\/p>\n<p>In developing countries like India, small-scale industries are a vital part of the economy. These industries are usually labour-intensive, so they take up a large share of employment opportunities. Small Scale Industries are an important part of the economy both from a financial and social standpoint, as they contribute to per capita incomes and resource utilization.<\/p>\n<p>Students can also find more\u00a0<a href=\"https:\/\/cbselibrary.com\/advantages-and-disadvantages\/\" target=\"_blank\" rel=\"noopener\"><strong>Advantages and Disadvantages<\/strong><\/a>\u00a0articles on events, persons, sports, technology, and many more.<\/p>\n<h2>What are Small Scale industries? Advantages and Disadvantages of Small Scale industries<\/h2>\n<p>A small-scale industry (SSI) is any business in which manufacturing, production, or service delivery is controlled at a small or micro level. These companies invest in equipment, machinery, and plants only once and do not exceed Rs.10 crore in annual turnover.<\/p>\n<p>The enterprise must comply with the guidelines set by the Indian government. India&#8217;s small-scale industries are one of the major drivers of the economy, and they offer many employment opportunities to skilled labourers, and the small-scale also contribute to enhancing the Indian economy.<\/p>\n<ul>\n<li><a href=\"#Advantages_of_Small_Scale_Industries\">Advantages of Small Scale Industries<\/a><\/li>\n<li><a href=\"#Disadvantages_of_Small_Scale_Industries\">Disadvantages of Small Scale Industries<\/a><\/li>\n<li><a href=\"#Comparison_Table_for_Advantages_And_Disadvantages_Of_Small_Scale_Industries\">Comparison Table for Advantages And Disadvantages Of Small Scale Industries<\/a><\/li>\n<li><a href=\"#FAQ's_on_Advantages_And_Disadvantages_Of_Small_Scale_Industries\">FAQ&#8217;s on Advantages And Disadvantages Of Small Scale Industries<\/a><\/li>\n<\/ul>\n<p><img loading=\"lazy\" class=\"alignnone size-full wp-image-155864\" src=\"https:\/\/cbselibrary.com\/wp-content\/uploads\/2022\/06\/Small-Scale-Industries-Advantages-and-Disadvantages-2.jpg\" alt=\"Small Scale Industries Advantages and Disadvantages 2\" width=\"1532\" height=\"2296\" srcset=\"https:\/\/cbselibrary.com\/wp-content\/uploads\/2022\/06\/Small-Scale-Industries-Advantages-and-Disadvantages-2.jpg 1532w, https:\/\/cbselibrary.com\/wp-content\/uploads\/2022\/06\/Small-Scale-Industries-Advantages-and-Disadvantages-2-200x300.jpg 200w, https:\/\/cbselibrary.com\/wp-content\/uploads\/2022\/06\/Small-Scale-Industries-Advantages-and-Disadvantages-2-683x1024.jpg 683w, https:\/\/cbselibrary.com\/wp-content\/uploads\/2022\/06\/Small-Scale-Industries-Advantages-and-Disadvantages-2-768x1151.jpg 768w, https:\/\/cbselibrary.com\/wp-content\/uploads\/2022\/06\/Small-Scale-Industries-Advantages-and-Disadvantages-2-1025x1536.jpg 1025w, https:\/\/cbselibrary.com\/wp-content\/uploads\/2022\/06\/Small-Scale-Industries-Advantages-and-Disadvantages-2-1367x2048.jpg 1367w\" sizes=\"(max-width: 1532px) 100vw, 1532px\" \/><\/p>\n<h3>Types of Small Scale Industries<\/h3>\n<p>There are 3 main types of Small Scale Industries, which are classified according to the nature of the work carried out:<\/p>\n<table border=\"2\">\n<tbody>\n<tr>\n<td><b>Basis<\/b><\/td>\n<td><b>Manufacturing Industries<\/b><\/td>\n<td><b>Ancillary Industries<\/b><\/td>\n<td><b>Service Industries<\/b><\/td>\n<\/tr>\n<tr>\n<td><b>Definition<\/b><\/td>\n<td>A manufacturing industry produces finished products to be consumed or used in further processing. Examples of such Small Scale Industries include food processing units, power looms, engineering operations, etc.<\/td>\n<td>Companies that assemble the finished goods are known as ancillary industries. They manufacture components for other companies, which then assemble the final product. Large companies manufacture finished goods, however, they seldom produce all parts themselves. Because of this, these large companies have vendors, which are called ancillary industries.<\/td>\n<td>A service-based industry does not manufacture products; it provides services such as repair, maintenance, and upkeep of the products after they have been sold.<\/td>\n<\/tr>\n<tr>\n<td><b>Example\u00a0<\/b><\/td>\n<td>Bricks, steel, cement, cosmetics industry, etc.<\/td>\n<td>automobiles, railway engines, tractors, etc<\/td>\n<td>Transportation, Healthcare, etc.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h3>Characteristics of Small Scale Industries<\/h3>\n<p>Now, that we know that the small-scale industries are those that manufacture, produce, and render the products and services, let\u2019s know about some characteristics of small scale industries-<\/p>\n<ul>\n<li><b>Ownership: <\/b>An SSI generally has a single owner, so the company is generally a sole proprietorship or sometimes a partnership.<\/li>\n<li><b>Management: <\/b>The control and management of a business are generally in the hands of the owner\/owners, which means the owner is actively involved in the business&#8217;s day-to-day operations.<\/li>\n<li><b>Labor Intensive: <\/b>SSI typically relies on labour and manpower to produce its products rather than technology.<\/li>\n<li><b>Flexibility: <\/b>SSIs are more adaptable to their changing business environments, so they can adapt and carry on in the face of amendments or unexpected developments, unlike large industries.<\/li>\n<li><b>Limited Reach: <\/b>A small business has a constrained zone of operation, so it can meet demand locally and regionally.<\/li>\n<li><b>Resources Utilisation: <\/b>Their use of locally available and readily available resources maximizes the use of natural resources with minimal wastage.<\/li>\n<\/ul>\n<h3><a id=\"Advantages_of_Small_Scale_Industries\"><\/a>Advantages of Small Scale Industries<\/h3>\n<ul>\n<li><b>Close Supervision: <\/b>Small producers can supervise every aspect of their business; nobody can vandalize the machinery or waste materials; no fraud or idleness is allowed; they will use maximum economic efficiency to reach the highest profits; i.e., the supervisor inspects every action.<\/li>\n<li><b>Nature of Demand: <\/b>Small producers have an advantage when the demand is small or constantly changing, thereby having a sphere of their own where they can compete with large-scale producers.<\/li>\n<li><b>Employment Generation: <\/b>Since the country&#8217;s unemployment rate is quite high, cottage and small-scale industries are a great way of creating more employment opportunities since small size production is more labour-intensive. Small size production involves more manual labour than machinery, thus, many unemployed individuals are employed by small-scale industries.<\/li>\n<li><b>Minimum Investment Requirement: <\/b>Small-scale industries are of great advantage for the development of industries where capital is scarce. They can be started with small amounts of capital.<\/li>\n<li><b>Worker-Employer Direct Relationship: <\/b>As a result of the lower number of workers used in small-scale production, there is a close relationship between the employer and his workers. Because of the strong relationship between the employer and workers, the employer can take good care of his employees; the workers, in turn, consider their work as their own, and the work is done smoothly without any disputes between them.<\/li>\n<li><b>Customers and the Producer&#8217;s direct relationship: <\/b>In general, small-scale producers concentrate on catering to the local market, so they remain in touch with the clientele. Since small producers know their customers personally, they can provide goods tailored to meet the tastes and preferences of individual consumers.<\/li>\n<li><b>Freedom of Work: <\/b>Small scale industries allow the employees to work in a free environment. They are competent enough and work independently in their own comfort zone.<\/li>\n<\/ul>\n<h3><a id=\"Disadvantages_of_Small_Scale_Industries\"><\/a>Disadvantages of Small Scale Industries<\/h3>\n<ul>\n<li><b>Demand and Supply Problems: <\/b>When high-demand products are available, small-scale industries may find it difficult to increase production in sufficient amounts to meet the demand.<\/li>\n<li><b>Geographically limited: <\/b>Small scale industries are often confined to a small town or even to one building. These geographical restrictions prevent them from becoming household names around the world.<\/li>\n<li><b>Less financial power: <\/b>Smaller companies normally deal with less money (both in terms of income and expenditures) than larger companies and therefore have less financial power.<\/li>\n<li><b>Access to Machinery: <\/b>A small-scale industry usually lacks the available space or the funds to use large-scale machinery. However, it may be able to obtain expensive, specialized equipment.<\/li>\n<li><b>A niche business: <\/b>There are many niches within small-scale industries, but what makes them appealing to some \u2013 such as their uniqueness and niches \u2013 can turn away others. Small scale industries do not have the capability of satisfying all tastes.<\/li>\n<\/ul>\n<h3><a id=\"Comparison_Table_for_Advantages_And_Disadvantages_Of_Small_Scale_Industries\"><\/a>Comparison Table for Advantages And Disadvantages Of Small Scale Industries<\/h3>\n<table border=\"2\">\n<tbody>\n<tr>\n<td><b>Advantages\u00a0<\/b><\/td>\n<td><b>Disadvantages\u00a0<\/b><\/td>\n<\/tr>\n<tr>\n<td>Small scale industries can be supervised easily<\/td>\n<td>No assurity of demand<\/td>\n<\/tr>\n<tr>\n<td>It is easier for small scale industries to predict demand<\/td>\n<td>Location is limited to a certain area or locality<\/td>\n<\/tr>\n<tr>\n<td>It generates employment for localities<\/td>\n<td>Financial power is limited as compared to partnership firm<\/td>\n<\/tr>\n<tr>\n<td>Low investment is needed for the operation of small scale industries<\/td>\n<td>Small scale industries are mainly labour intensive<\/td>\n<\/tr>\n<tr>\n<td>Employees and workers work together<\/td>\n<td>Small selected business category<\/td>\n<\/tr>\n<tr>\n<td>Direct access to customers for producers<\/td>\n<td>In small scale industries work is mainly done through machinery<\/td>\n<\/tr>\n<tr>\n<td>There is single ownership<\/td>\n<td>Small scale industries are mostly not capable of satisfying all tastes and preferences<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><img loading=\"lazy\" class=\"alignnone size-full wp-image-155863\" src=\"https:\/\/cbselibrary.com\/wp-content\/uploads\/2022\/06\/Small-Scale-Industries-Advantages-and-Disadvantages-1.jpg\" alt=\"Small Scale Industries Advantages and Disadvantages 1\" width=\"1532\" height=\"2296\" srcset=\"https:\/\/cbselibrary.com\/wp-content\/uploads\/2022\/06\/Small-Scale-Industries-Advantages-and-Disadvantages-1.jpg 1532w, https:\/\/cbselibrary.com\/wp-content\/uploads\/2022\/06\/Small-Scale-Industries-Advantages-and-Disadvantages-1-200x300.jpg 200w, https:\/\/cbselibrary.com\/wp-content\/uploads\/2022\/06\/Small-Scale-Industries-Advantages-and-Disadvantages-1-683x1024.jpg 683w, https:\/\/cbselibrary.com\/wp-content\/uploads\/2022\/06\/Small-Scale-Industries-Advantages-and-Disadvantages-1-768x1151.jpg 768w, https:\/\/cbselibrary.com\/wp-content\/uploads\/2022\/06\/Small-Scale-Industries-Advantages-and-Disadvantages-1-1025x1536.jpg 1025w, https:\/\/cbselibrary.com\/wp-content\/uploads\/2022\/06\/Small-Scale-Industries-Advantages-and-Disadvantages-1-1367x2048.jpg 1367w\" sizes=\"(max-width: 1532px) 100vw, 1532px\" \/><\/p>\n<h3><a id=\"FAQ's_on_Advantages_And_Disadvantages_Of_Small_Scale_Industries\"><\/a>FAQs on Advantages And Disadvantages Of Small Scale Industries<\/h3>\n<p><strong>Question 1.<\/strong><br \/>\nWhat is the full form of MSME?<\/p>\n<p><strong>Answer:<\/strong><br \/>\nThe full form of MSME is Micro, Small &amp; Medium Enterprises.<\/p>\n<p><strong>Question 2.<\/strong><br \/>\nWhat are small-scale industries?<\/p>\n<p><strong>Answer:<\/strong><br \/>\nA small-scale industry (SSI) is an industry that produces, manufactures, and renders services on a small or micro scale. It will make a one-time investment in machinery, plant, and equipment, but does not exceed 10 crores in revenue and 50 crores in annual turnover.<\/p>\n<p><strong>Question 3.<\/strong><br \/>\nAre small-scale industries profitable?<\/p>\n<p><strong>Answer:<\/strong><br \/>\nSome of the small-scale industries are highly profitable in India, for example, ice cream industries are profitable in India.<\/p>\n<p><strong>Question 4.<\/strong><br \/>\nWhat is the investment level in small-scale industries?<\/p>\n<p><strong>Answer:<\/strong><br \/>\nIn the case of manufacturing, a small-scale industrial enterprise should raise no less than 25 lakhs and no more than 10 crores in plant and machinery. For the services sector, the minimum amount of investment should be 10 lakhs and no more than 5 crores in plant and machinery.<br \/>\n<script type=\"application\/ld+json\">{\"@context\": \"https:\/\/schema.org\",\"@type\": \"FAQPage\",\"mainEntity\": [{\"@type\": \"Question\",\"name\":\"What is the full form of MSME?\",\"acceptedAnswer\": {\"@type\": \"Answer\",\"text\":\"The full form of MSME is Micro, Small & Medium Enterprises.\"}\t}, {\"@type\": \"Question\",\"name\":\"What are small-scale industries?\",\"acceptedAnswer\": {\"@type\": \"Answer\",\"text\":\"A small-scale industry (SSI) is an industry that produces, manufactures, and renders services on a small or micro scale. 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