DEFINITION OF SSIs

The definition for small-scale industrial undertakings has changed over time. Initially
they were classified into two categories- those using power with less than 50 employees
and those not using power with the employee strength being more than 50 but less than
100. However, the capital resources invested on plant and machinery buildings have been
the primary criteria to differentiate the small-scale industries from the large and medium
scale industries. An industrial unit can be categorized as a small- scale unit if it fulfils the
capital investment limit fixed by the Government of India for the small-scale sector.
As per the last definition which is effective since December 21, 1999, for any
industrial unit to be regarded as Small Scale Industrial unit the following condition
is to be satisfied: -
Investment in fixed assets like plants and equipments either held on ownership
terms on lease or on hire purchase should not be more than Rs 10 million.
YEAR INVESTMENT LIMITS
1960 Upto Rs 5 lacs in Plant & Machinery
1966 Upto Rs 7.5 lacs in Plant & Machinery

1975 Upto Rs 10 lacs in Plant & Machinery

1980 Upto Rs 20 lacs in Plant & Machinery

1985 Upto Rs 35 lacs in Plant & Machinery

1991 Upto Rs 60 lacs in Plant & Machinery

1997 Upto Rs 100 lacs in Plant & Machinery

1999 Upto Rs 100 lacs in Plant & Machinery

Year SSI Remarks

Gross Investment in Employment less than 50 Workers

1950 Fixed Assets: not Per Day (with the Use of
Exceeding Re. 0.5 Power) or Less than 100 Workers Per
Million Day (Without the Use
of Power)
Gross Investment in
1958 Fixed Assets: Employment less than 50 Workers
Less than Re. 0.5 Per Day (with the Use of
Million Power) or Less than 100 Workers Per
Day (Without the Use
of Power) except that the Criteria
based on the employment
‘per day’ was henceforth replaced by
a ‘per shift’ provision

196 Gross Invesment in

Employment less than 50 Workers
0 Fixed Assets: Per Day (with the Use of
Value of Machinery
Power) or Less than 100 Workers Per
(Original) Day (Without the Use
of Power) except that the Criteria
based on the employment
‘per day’ was henceforth replaced by
a ‘per shift’ provision
Gross Investment in employment condition was dropped
1959 Fixed Assets: from the definition
Value up to Re. 0.5
Million The

1960 Up to Re. 0.75 million No condition

1975 Up to Re. 1 million No condition

1977 No condition
Up to Re. 1 million
1980 Up to Rs. 2 million No condition

1985 Up to 3.5 million No condition

1991 Up to Rs.6 million No condition

1997 Up to Rs. 30 million No condition

 (Investment limit of SSIs)

CLASSIFICATION OF SSIs:
A common classification is between traditional small industries and modern small
industries.

Traditional small industries include khadi and handloom, village industries,

handicrafts, sericulture, coir, etc. Modern SSIs produce wide range of goods from
comparatively simple items t sophisticated products such as television sets,
electronics, control system, various engineering products, particularly as ancillaries
to the large industries..

The traditional small industries are highly labour-intensive while the modern
small-scale units make the use of highly sophisticated machinery and equipment.
For instance, during 1979-80, traditional small-scale industries accounted for only
135 of the total output but their share in total employment was 56%. As against
this, the share of modern industries in the total output of this sector was 74% in
1979-80 but their share in employment was only 33%. That means these industrial
units have higher labour productivity.

One special characterstic of traditional small-scale industries is that they cannot

provide full time employment to workers, but instead can provide only subsidiary
or part time employment to agricultural laborers and artisans. Among traditional
village industries, handicrafts possess the highest labour productivity, besides
handicrafts make a significant contribution to earning foreign exchange for the
country.
Nowadays Indian small-scale industries (SSIs) are mostly modern small-scale
industries. Modernization has widened the list of products offered by this industry.
The items manufactured in modern Small-scale service & Business enterprises in
India now include rubber products, plastic products, chemical products, glass and
ceramics, mechanical engineering items, hardware, electrical items, transport
equipment, electronic components and equipments, automobile parts, bicycle parts,
instruments, sports goods, stationery items and clocks and watches.
 TRENDS OF LENDING BY BANKING SECTOR TO SSI
Rs. in Crores
As at end March Total advances byTotal Advances toProportion
Banking Sector SSI Sector of SSI to
Total
Advances
1999 246203 42674 17.30
2000 292943 45788 15.63
2001 469153 56002 1.94
2002 536727 57199 10.66
2003 669534 60394 9.02
2004 764383 65855 8.62
2005* 972587 76114 7.83
Source : RBI Report on Trend and Progress of Banking in India
* Provisional

Micro, Small And Meduim Enterprises Developmet act

MSMED Act – 2006 and its Impact
Clause Salient Features Impact
1. Establishment of Specific representationStatutory Status, compact board and
National Small for Women quarterly meetings will address
and Medium Mandatory Quarterlyproblems of SMEs immediately to take
Enterprises Meeting corrective action
Board –
Maximum No. of
members 47
2. Concept ofClear-cut demarcation ofFacilitates SMEs to enter into service
Enterprises manufacturing/production enterprises aggressively
and rendering services
3. Definition ofSpecific ceiling limit forExisting small units can graduate into
Enterprises manufacturing/production Medium units and avail facilities under
and service enterprisethe act.
definition for Medium
enterprises
4. Filing ofReplacement ofFacilitates SMEs to avail the benefits of
memoranda optionalregistration withthe act immediately after setting up of
for Micro and Smallmemorandum the unit.
enterprises in
manufacturing and
service sector
Medium enterprises
in Service Sector but
mandatory for
Medium enterprises
in manufacturing
sector

Clause Salient Features Impact

5. Procurement Notification ofFacilitates opportunity for supply of
Policies preference policiesgoods/services without any hassles.
by central or State
Governments forPublic Procurement Policy under Section
goods and services11 of MSME Act, yet to be notified
provided by Micro
& Small enterprises
6. Delayed • Period ofSMEs can plan their cash flow/financial
Payment payment byrequirement
Penalty & the procuring
dispute organizations
resolution – 45 days
• Penal interest
200% of PLR
7. DisputeEstablishment
Resolution MSE facilitationhuman resources for chasing/follow up.
Council; 90 days
framework
dispute resolution
8. Delayed Payment –Deduction
allowable deductiondisallowed
under IT Act 1961
9. Closure ofStatutory
Business notification
scheme for closure
ofEasy financial planning and no waste of
for
This will encourage procurement
agencies to ensure timely payment to
SMEs.
Facilitates expedition of liquidation
of

10. Notification ofStatutory Mandatory on all facilitating development

guidelines or of SMEs ensuring fast growth
instructions for
promotion of SMEs
– wrt. To Funds
appropriation and
release
11. FacilitatingStatutory Mandatory on all providing credit.
Credit Guidelines for credit for 20% year on year
growth

ROLE OF BANKS IN DEVELOPMENT OF SSI’s

Now a days banks do not provide loan to ssi’s because if ssi’s are not able to stand
in the stiff compettion then banks can suffer a huge loss, so state government with
the help of central government in Maharashtra have started Maharashtra Small
Scale Industries Development Corporation, to help ssi’s.

Maharashtra Small Scale Industries Development Corporation was

established in 1962.The basic objective was to help the small scale Industries to
develop and grow to the fullest extent enabling them to play their role towards
realization of the national objective of accelerating the place of Industrial
Development, generation of employment and income.
 The main objective of assisting Small Scale Industries (SSI) Units in the
State. The Company failed to achieve fully its main objective of assisting SSI
units, as there was continuous decline in number of SSI units assisted during 1997-
2002.

(i) Aid, counsel, assist, finance, protect and promote the interests of SSI to
enable them to develop and improve their methods of manufacture, management,
marketing and techniques of production.

(ii) Enter into contracts for fabrication, manufacture, assembly and supply of
goods, materials, articles and equipment and to arrange for the performance of
such contracts by sub-contracting with small scale units.

(iii) effect co-ordination between large industries with a view to procure

orders for SSI and to enable them to manufacture parts, accessories, ancillaries,
components and other articles required by large industries. Pursuant to its
objectives, the Company undertook the following major Activities

a) Procurement and distribution of raw materials

b) Assistance in marketing of products
c) Commercial warehousing
d) Assistance in import of raw materials and export of products
e) Running of emporia for handicrafts and production centre.

However, the Company had not rendered any technical assistance to enable
SSI units to develop and improve their method of manufacture, marketing and
technique of production.
Highlights

1) Maharashtra Small Scale Industries Development Corporation was

established in October 1962 with the main objective of assisting Small
Scale Industries (SSI) Units in the State. The Company failed to achieve
fully its main objective of assisting SSI units, as there was continuous
decline in number of SSI units assisted during 1997-2002.

2) In the absence of proper documentation of the assets, the Company could

not avail the loan from SIDBI which could have been used to repay the
short term borrowings from Mumbai Metropolitan Regional Development
Authority and avoided penal interest of Rs.41.16 lakh.

3)Due to lack of orders from State Government Departments/Semi

Government Organisations to SSI units, Company’s sales dropped
drastically by nearly 31 per cent in 2000-01 as compared to 1997-98,
which was the major reason for Company’s loss during 2000-01.
 4) Under four schemes for raw material assistance to SSI units being
implemented by the Company, an amount of Rs.15.88 crore was
outstanding against 141 SSI units as on March 2002.

5) Under post dated cheque scheme, cases of irregular assistance to a unit

under liquidation, improper credit evaluations and unauthorized extension
of credit to units were noticed resulting in blocking of funds to the extent of
Rs.2.85 crore.

6) Under modified warehousing scheme, due to failure of the Company to

ensure safety of the material stored in the units. godown, two units
unauthorisely removed material worth Rs.4.71 crore.

7) Percentage of sundry debtors to sales increased every year and was 63.7 in
2000-01 due to severe drop in sales and slow process of realization of book
debts.

BIBLOGRAOHY

1. http://dcmsme.gov.in/publications/reserveditems/itemrese.htm
2. http://pib.nic.in/release/release.asp?relid=9408
3. www.textbooksonline.tn.nic.in/Books/11/Econ-EM/Chapter_07.pdf
4. http://www.education.nic.in/cd50years/15/8P/88/8P880402.htm
5. http://www.books.iupindia.org/overview.asp?bookid=IB1100165
6. http://www.smallindustryindia.com/ssiindia/reservitems.html#list2
7. http://dcmsme.gov.in/publications/reserveditems/itemrese.htm
8. http://dcmsme.gov.in/publications/reserveditems/itemrese.htm