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  • Subject area(s): Marketing
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  • Published on: 14th September 2019
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The small-scale industries, regardless of their significance in the economy, are not contributing to their maximum towards the progress of the country (Rajendraprasad 2004) . It is for this reason that these industries are set with a number of troubles in regard to their functions. The issues that are emerged from Review of Literature are financial challenges (Reetu 2012) , productivity, performance, competitiveness, marketing problems and support (Arjunkumar 2012) , quality products, entrepreneurial skills, managerial competency, technological advancement, infrastructural facilities (Ram et al 2012) , rural development, awareness and utilization of available government support, availability and utilization of resources, etc. The Small-Scale Industries have serious problems with both longterm and short-term credits (Daniel2012) . This is clear from the fact that the supply of credit has not been corresponding with their needs associated with the capital required. The timing of the credit is another aspect. The credit situation is particularly hard for the very small or micro units. The methods of production which the small and micro industries use are older and incompetent (Umashankar2008) . The outcome is lower productivity, low quality of products and increased costs. The producers, due to lack of information system, know very little about modern technologies and training openings available for the Small-Scale Industries.

Another serious challenge which these industries face is that of competition from large-scale industries (Ismail 2006) . The problem of raw materials continues to plague the small scale industries (Malga1997) . Raw materials are available neither in sufficient quantity, nor of required quality and also not at normal price level. Being small customers, the producers are not able to go for bulk buying like the large industries. This leads to taking whatever quality is available in quality and at high prices. The small-scale industries face the acute problem of marketing their products. The challenges arise from such factors are production in small scale, lack of market knowledge, competition from technically more strong units, shortage of marketing amenities, etc.

Apart from the above problems, small-scale units have been constrained by a number of other challenges also. These include poor project planning capacity, lack of managerial talent (Siva 2012) , and older and traditional designs. Due to all these challenges, the development of smallscale industries could not reach a prestigious position. To face the above mentioned challenges, the Government is extending its support under different schemes and through many agencies but the awareness on these supports available to overcome the troubles is another major concern.

Therefore, the study focuses on these areas of concern to find out ways for the growth of SSI sector.


Small Scale Industries that are performing better make a great positive effect on economic growth of the State and the Nation. The acceptance of this conjecture is evidenced by the policy recommendations of the State and the country. This is mainly due to the initiatives taken by the State and the Central Governments to encourage the Small Scale Industrial sector. These aspects indicate that the Small Scale Entrepreneurs have been facing many problems though they acquire significant prosperity. Study on these aspects in Gujarat is very little, and hence this fact makes this study important.

The outcome of this study will guide the new small business promoters, practicing Small-Scale Entrepreneurs, and the Government for better performance of the Small Scale Industries so as to achieve economic development in the State and the country. The study will address various problems/challenges faced by the Small Scale Entrepreneurs and prospective areas for the Small Scale Entrepreneurs to capitalize on that to improve their performance. The study will also throw light on various forms of support and subsidy extended to the Small Scale Entrepreneurs and awareness level on these aspects among the Small Scale Entrepreneurs.

The study will elucidate greater opportunities for the new entrepreneurs to gain meaningful information about pros and cons of the Small Scale Industries. To the Government, the study will indicate the areas of concern to be addressed in Small Scale Industries which will facilitate the government to take policy decisions to improve the SSI performance in future.


The Small Scale Industrial sectors have recorded noteworthy growth and remarkable performance. This study focuses on identifying and evaluating the factors accountable for survival of the SSI, Providing required resources for their business, helping the Government in formulating policies for Small-Scale Industries and reviving the sick units and facilitating them to perform better.

The study area for this thesis is North Gujarat Area. It is considered as one of the industrially forward states in the country. The growth of SSIs in This area is high compared to other states. Nature has blessed this area with modest resources of mineral wealth and forest wealth. These have been ingeniously exploited for a long time to bring about economic prosperity. For centuries the area has been well known for its trade with its neighbouring areas and in export and import, well-supported by its Small Scale Industries.

The recent economic history of this area also reveals that the State has in many ways been the pioneer in economic planning and development. It has set up a planning system even before any state in India had thought of industrialization, communication, electrification and banking in rural areas. There are 33 districts and out of these 33 districts Patan, Banaskantha, Sabarkantha, Mehsana and Aravalli districts were taken as sample districts for this study. These are the leading districts in one way or other. The sample respondents are chosen from these districts only. As such 35 Small Scale Industry samples from each district totally 350 were contacted with the questionnaire. The study outcome will support the new, existing SSI units and the Government to plan for renewed supporting programmes for the Small Scale Industries to facilitate the economic growth of the State.


i. To study the theoretical framework of Small Scale Enterprises in general and in particular with reference to North Gujarat Region.

ii. To analyze the factors that influences the individuals to become Small Scale Entrepreneurs in North Gujarat Region.

iii. To identify the prosperity and the common problems faced by the Small Scale Entrepreneurs in North Gujarat Region.

iv. To suggest better ways and means to alleviate the problems faced by Small Scale Entrepreneurs in North Gujarat Region.


The small-scale industry sector has emerged over five decades as a highly vibrant and dynamic sector of the Indian economy. Today, this sector accounts for about 95 percent of industrial units and is contributing about 40 percent of value addition in the manufacturing sector, nearly 80 percent of manufacturing employment and about 35 percent of exports (both direct and indirect). More than 34 lakh units are spread all over the country producing over 7503 items and providing employment to more than 192 lakh persons. Definition of SSI The official definition of SSI in India was first evolved in 1950 in terms of the size of gross investment in fixed assets (plant and machinery, land, building etc.) as well as in terms of the strength of the workforce in the unit concerned. This criterion underwent several changes over a period of time. In the late fifties, a shift from a workforce-based definition to investment-based definition was affected. In 1966, the original amount invested in plant and machinery was adopted as the sole norm for defining a unit small-scale or otherwise. Other concepts, namely ancillary and tiny were introduced in 1960 and 1977 respectively. Industry related business-oriented service enterprises were classified for the first time as Small-scale Service Establishments (SSSEs) in 1985 and later in 1991 redefined as Small-scale Service and Business (industry related) Enterprises (SSSBES). The government in 1988 defined the term. In India small-scale industry refers to manufacturing activity. Recently, it has also come to include to a limited extent, servicing activities such as repair and maintenance shops and few community services. Table 1.1 shows the scope of small - scale industry in selected countries.

Table: 1.1 Scopes of Small Scale Industries in Selected Countries

Country Terminology Scope

Japan Small enterprise Manufacturing, Mining, Services, Trading, etc

India Small Scale Industry Manufacturing, repair, Maintenance

Korea Small Enterprises Manufacturing, Mining, Construction, commerce etc.

USA/Canada Small Businesses Manufacturing, Services, Trading, etc

UK Small firms Manufacturing, Commerce, Construction,  Mining, Transport, etc

Indonesia Small Industry Manufacturing services

Source: SIDBI report on Small-Scale Industry, 2000

1.7 Classifications of SSI

This sector covers a wide spectrum with two clearly identifiable segments traditional and modern small-scale industries, including tiny units and power looms and traditional Small industries like Khadi and Village Industries, Handlooms, Handicrafts Sericulture and Coir industry. Both the segments have their own special characteristics in terms of capital labour intensity, location, orientation, manufacturing process and skill requirements. Chart 1.1 on next page shows the classification of SSI:

According to the third SSI census, 62.13 percent of the units were engaged in manufacturing/assembling/processing, 7.54 percent in repairs and maintenance and 30.33 percent in service activities. Of the total SSI units 97.8 percent were tiny units, 0.67 percent were export-oriented units. Periodic Revision in the Definition of SSI Periodic revisions in the definition of SSIs made by the Government of India are listed in the Table 1.2.

Chart:1.1 Classification of SSI in India

Source: SIDBI report on Small-Scale Industry, 2000

In the table 1.2, we can see the data from year 1966 to 1999 for SSI sector in India. All the criteria which are applicable in India and the changes made in it are given here. In 1966 investment in Plant and Machinery in SSI is up to Rs.75 Lakh comes to Rs.100 Lakh in 1999. In between this duration, tiny business and ancillary business criteria are also given by the authority.

Table: 1.2 Original Value of Plant and Machinery Only


1966 Up to Rs. 75

lakh Up to Rs. 10 Lakh

1975 Up to Rs.10 Lakh Up to Rs. 15 Lakh

1977 Up to Rs. 10 Lakh Up to Rs. 1 Lakh Units located in rural areadtowns

with a maximum population of up

to 50000 as per 1971 census.

1980 Up to Rs. 20 Lakh Up to Rs. 25 Lakh Up to Rs. 2 Lakh Units located in rural areadtowns

with a maximum population of up

to 50000 as per 1971 census.

1985 Up to Rs. 35 Lakh Up to Rs. 45 Lakh Up to Rs. 2 Lakh Units located in rural areasltowns

with a maximum population of up

to 5 lakh as per 1981 census. The

SSSE classification suspended from 1991 and replaced by SSSBEs.

1991 Up to Rs. 60 Lakh Up to Rs. 75 Lakh Up to Rs. 5 Lakh Up to Rs. 75 Lakh Up to Rs. 5 Lakh @ The location specific condition

was removed.

1997 Up to Rs. 300 Lakh Up to Rs. 300 Lakh Up to Rs. 25 Lakh

1999 Up to Rs. 100 Lakh Up to Rs. 10 Lakh Up to Rs. 25 Lakh Up to Rs. 10 Lakh

Source: SIDBI report on Small-Scale Industry, 2000

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