The small scale industries are either service provider or manufacturing and requires little capital. It should be in notice that small scale industrial units experience severe handicaps due to inadequate allocation system for obscure raw materials, inadequate organizational finances, weak technical skills and lack of management capacity and marketing channels.
Therefore, it is necessary to take a holistic approach to overcome these difficulties and put the small scale industrial sector on the sound path of development.
The six measures to eradicate the difficulties
There are six measures which are helpful in eradicating the problems faced by Small Scale Industries.
- Equal allocation of raw materials, equipment and imported components.
2. Improving production methods and techniques.
3. Provision for adequate funds.
4. Marketing assistance.
5. Provision for industrial education and training.
6. Determination of area for large scale and small scale units.
In detail about the six measures
1. Equal allocation of raw materials, equipment and imported components.
Small, basic industrial units should have a sufficient degree of priority in the method of allocation of required, but rare, raw materials, imported components and equipment.
2. Improving production methods and techniques:
Small scale Industrial units should have the encouragement to incorporate advanced technology by replacing their modern equipment, and to provide facilities and incentives where necessary.
Dating up the methods and techniques of production of quality goods consistent with the standards. The role of the government in this regard is very significant.
The standardization of certain products should have the certainty in the quality of the products. Also it have should the assurance, and misuse such as adulteration, misrepresentation, etc. should be prevented quickly.
3. Adequate funding provision:
In small-scale industrial units the promoter’s own capital is usually small and the production of internal resources is small and slow. Therefore, they rely sufficiently on external sources of money.
This factor therefore requires a unified credit system, through which long-term as well as short-term money made available in sufficient quantity and at an interest rate, which these ventures can afford.
4. Marketing Assistance:
Marketing their products at remunerative prices is a big problem for small scale industrial units. Therefore, there is a clear case for government intervention with the aim of minimizing the disadvantages caused by market imperfections. Market research, intelligence and information systems should obtain strength and those results should be made available to the units.
5. Industrial Education and Training:
With the full benefits of the changing technology of production, the distribution of technical knowledge to both small entrepreneurs as well as their workers should form an essential element of the overall strategy. The provision of adequate facilities for industrial education and training, therefore, cannot be overemphasized.
6. Demarcation of areas of large-scale and small-scale industrial units:
Once the role of small scale industries in the national economy has the recognition, it becomes necessary to give it a safe berth. The guiding principle in this connection should have definition as clear as possible in the field of production of these units. It may have pointed out that all of the steps outlined above should have the view as a package and should be applied simultaneously.
The MSME Amendment bill 2018
The MSME Development (Amendment) Bill, 2018 had introduction in the Lok Sabha on July 23, 2018 by Shri Giriraj Singh, Minister of State for Micro, Small and Medium Enterprises. Bill, Micro, Small and Medium Enterprise Development Act, 2006. The Act classifies and regulates industries as micro, small and medium enterprises.
- The law invests in micro, small and medium enterprises (MSMEs): (i) plant and machinery enterprises engaged in the production or manufacture of goods and (ii) equipment, enterprises providing services.
- The bill has introduced classification that is uniform for all MSMEs. Under the bill, all MSMEs, whether manufacturers or service providers, will be categorized on the basis of their annual turnover.
- The Central Government may change this annual turnover limit by a notification. The maximum turnover may be three times the limit specified in the bill.
- Under this Act, the Central Government may classify micro, small or rural enterprises as small enterprises. The bill seeks to extend this to allow the classification of small as well as medium enterprises into micro, small or village enterprises.
The Government of India has some guidelines for small businesses in terms of investments made by the company and the income generated from them. Small businesses are classified into three parts: manufacturing, ancillary and service industries.
Manufacturing Industries: Units that have usage in ready-made products or processing industries. These types of small businesses have the owning privately. Examples of small business products are power looms, engineering industries, food processing, etc.
Ancillary Industries: Large companies or MNCs. Makes finished goods, but it usually does not make all the parts themselves. The sellers of these companies are ancillary industries. Ancillary industries can also have identification as companies that make machines for multinational companies or mid-sized enterprises.
Service Industries: Repair shops, maintenance industries fall under this category.
Apart from these types of industries, there are feeder industries and mining or mining.
Administrative bodies for small scale enterprises
Government institutions have established for the welfare of the members of small businesses. The Ministry of Small Industries designs policies, plans and programs to promote small businesses.
The Ministry of Agro and Rural Industries coordinates and assists in the development of villages and khadi industries, micro and small enterprises in rural and urban areas.
Tips to keep in mind to avoid problems in controlling a small scale enterprise
Lack of funds and raw materials – the most serious problem and money management should be done at all levels
Marketing Problems – The right ad to run the show every time
Quality – To meet the demand, one should not compromise with the condition.
Techno – G – Be the latest technology. It helps in reducing the cost of investment and increasing the quality
Managerial skills – to manage the working class and get work from them.
The President noted that the development of small and cottage industries has gained momentum through measures such as improving the definition of MSMEs, increasing investment limits or prioritizing government procurement.
President Kovind said that in addition to bringing more transparency, MSMEs’ participation in government procurement through far-flung and far-flung areas has also increased through the (Government e-Marketplace) portal.
He pointed out that small scale industries, cottage industries and micro, small and medium enterprises (MSMEs) spread in rural and small towns are the backbone of India’s economy.
“These small businesses have great potential to make India self-sufficient. The sector accounts for about 50 per cent of India’s total exports. Many steps have been taken to enhance the role of MSMEs in the development goals of a self-reliant India, ”Kovind said.