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To start with, here are some mind-boggling numbers. As per CII (Confederation of Indian Industries), small scale industries contribute over 30% of the GDP. Small Scale Industries make up around 33.4% of India’s manufacturing output. Figuratively speaking, there is certainly nothing small about this. Now, if you are willing to consider the micro-scale industry along with the small scale, the scales tip a bit further. As per the latest survey, 55% of these units are located in rural India.
The first thing to do naturally then would be to define what constitutes a small-scale industry. It is important to note what the government defines a small-scale industry as:
Prior to the new classification guidelines released in July 2020, the Government of India used to classify small scale industries in manufacturing and small scale industries involved in services separately. This has changed after an official notification by the government in July 2020.
As per the new notification, small scale industries involved in either manufacturing or services will be classified as small scale industries, if the capital investment in manufacturing plants or machinery does not exceed 10 crores and annual revenue does not exceed 50 crores.
Some small scale businesses can be labour intensive, and in some other cases, they employ a small workforce. Nonetheless, small scale industries in India employ a sizable population across the country. According to a recent survey the small scale industry employs close to 2.5 crore people.
In the small-scale industry, you will notice that a good number of them are set up in the unorganised sector. Although there are provisions for registering a small scale industry, it is entirely voluntary. If the enterprise is in the manufacturing business with a certain number of employees, it then becomes mandatory for the proprietor to register the business under the Factories Act.
SSI are categorised into 3 types, based on the nature of work carried out.
These types of industries are into manufacturing finished goods for consumption or used further in processing. Some examples of such small scale industries are power looms, food processing units, engineering units.
Ancillary industries are feeder industries that manufacture components for other manufacturers. These manufacturers then assemble or incorporate the final product. A good example is of a small unit that manufactures nuts and bolts of various sizes. You could also consider industries that manufacture electronic components or even engines.
Service-based industries are not involved in any kind of manufacturing. They are mostly to do with repair, maintenance and upkeep of the products after-sales.
A few more, less frequently used categories also deserve mention.
A small-scale industry is considered as an export unit if it is exporting more than 50% of its production.
These small units do not involve a dedicated facility and are carried out within houses or living spaces of the owners or contributors.
Many industries in rural areas that are not part of the organised sector can be considered under village industries. Typically, these industries depend solely on human labour for production.
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Registration of small scale industries is voluntary. There are benefits offered by the government in the form of schemes, incentives and subsidies that you can enjoy if your business is registered as a small scale industry. We shall talk about those benefits and government schemes a little later.
For your business to be registered as a small scale industry, you will have to approach the Ministry of Micro, Small and Medium Enterprises (MSMEs).
We shall go through the process of online registration in the following sections. There are several online facilitators who offer their services to help with the registration process of any industry.
The only government portal for online registration is available at the following website- https://udyamregistration.gov.in/Government-India/Ministry-MSME-registration.htm
As per the government notification on the website, no other private entity is authorized to do registration or even undertake any activity related to the process of registration. Please read the notification diligently before approaching these online facilitators.
For a detailed classification of MSMEs, a thorough document is provided by the ministry at https://udyamregistration.gov.in/docs/Udyam%20Registration%20Booklet.pdf
You may register your small scale business using the Udyam registration portal based only on a self-declaration without any requirement to post documents or proofs. Also, there is no fee charged on registration through the Udyam portal.
As highlighted in the image below:
The registration certificate thus issued does not expire. Remember the process is completely free and paperless. Also, District Industries Centre and Champions Control Rooms officials may get in touch with you as part of the registration process.
Here are a few important guidelines for those businesses which were already registered.
With your small scale industry being registered you are now eligible to take advantage of various schemes, tax rebates and relaxations.
Banking and Financial institutions can offer you loans under designated loan schemes for small businesses. You also stand eligible to participate in various tenders raised by the government.
There are various schemes that are listed under this programme, including,
Under this scheme, the government takes on the major burden of setting up marketing complexes/khadi plazas to help expand the marketing network of Khadi & Gram Udyog products. To know more, visit- https://msme.gov.in/sites/default/files/Khadi_MPDA_Guidelines.pdf
A scheme that is intended to sustain the employment of workers and artisans in the traditional industry in rural enterprises. To know more, visit- https://sfurti.msme.gov.in/SFURTI/Home.aspx
Some of the schemes running under this programme are:
This scheme aims to promote the Make In India initiative while achieving zero defects following Zero Defect & Zero Effect principles and practices.
This scheme is aimed at creating more jobs, reducing unemployment while also promoting entrepreneurship culture.
This scheme supports:
Some of the schemes listed under this programme are:
This scheme arranges for delegations to other countries for exploring technology upgradation, facilitating buyer-seller meets in foreign states.
This scheme allows for arranging overseas exhibitions, campaigns and other promotional activities.
This scheme is aimed at improving the domestic markets and promoting new market access.
Among the various schemes included under this programme are
This scheme aims to develop entrepreneurial skills in youth who are keen on setting up small scale industries
This scheme facilitates capital grants to training institutions at the national level that operate skill development and training workshops for sustained skill development.
One of the schemes under this programme is MSE-CDP (Micro & Small Enterprises Cluster Development). This scheme offers financial aid for the development of common facility centres that can be used for research and development or testing, helping shore up infrastructure available for small scale industries.
For a full listing of schemes offered by the government for small and medium scale industries, you may visit- Infrastructure Development Programme
There are several administrative bodies that get established over a period of time to help sustain and encourage small and medium scale industries. All of these operated under the Ministry of Small and Medium Scale Enterprises. Some of these government administrative bodies are listed here.
With initiatives like Make In India, the ease of doing business has improved for good. The best part is, you do not have to pay a penny to register your business online. Moreover, it is a paperless process now. In India, there are a wide variety of small scale industries. We hope through this article, we have been able to convey the list of small scale industries and the methods of registration. The various schemes available for industries have also been highlighted in this article. Wishing you all the success!
What are small scale industries?
Small scale industries in India, as described by the Ministry of MSME, are businesses that are involved in either manufacturing or services with an investment in machinery and equipment not more than Rs.10 crores and annual revenue does not exceed Rs.50 crores.
Are micro and small scale industries the same?
No micro and small scale industries are not the same in terms of how they are defined by the ministry, but in a general sense, they can be considered together.
Are small scale industries and medium scale industries considered together?
Although they differ in terms of revenue and investment capital, micro, small and medium scale enterprises are considered in the same vein as far as the government policies and schemes go.
Can services be categorised as small scale industries?
Yes, a services-based business can be considered as a small scale industry just like manufacturing is. As per the new classification codes, there are no differences between the two.
How do I register my small scale business?
The only legitimate way to register any small scale business is using the Udyam portal.
Can I go through a private entity to register a small scale business?
The government strongly indicates that the only authority to register a micro, small or medium scale business is the government. This is done through the Udyam portal.
What is the cost of registering a small scale business?
Zero. Yes, the cost of registering any micro, small or medium scale business is zero.
How often should I renew my registration certificate?
The registration certificate is a lifetime document and is valid as long as the business lasts.
Where can I register my small scale business online?
You can register your small scale business online via the Udyam portal.
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