NATIONAL SEMINAR ON ACADEMIC INDUSTRY INTERFACE

Problems of Small Scale Industry

UPENDRA YADU RAJWINDER SINGH RISHIKANT CHAUDHARY MBA SECOND SEMESTER INSTITUTE OF MANAGEMENT PT.RAVISHANKAR SHUKLA UNIVERSITY RAIPUR (CHHATTISGARH)

Abstract
The importance of small scale industry has been increasingly recognized in our Indian economy as a solution for the problem of scarcity of capital and widespread unemployment and poverty. But it has not served it purposes, started turning sick increasing numbers. The causes of sickness differ from industry to industry. The real or root causes have not been identified and corrective measures have been not taken on the basis of causes. By less capital intensive and high labour absorption natures sector has made significant contribution to employment generation and also rural industrialization. Under the changing economic scenario, SSI has to face number of diverse problems like vast population, large scale un-employment and underemployment and scarcity of capital resources and the like. Hence, the government has been providing some special facilities through different policies and programs to overcome the problems and for the growth and development of small scale industries. The efforts of the government have resulted in the phenomenal increase in the number of units in the small scale sector. The government also introduced various schemes and incentives for the promotion of SSIs. Constant support to SSI sector by the Govt. in terms of infrastructure development, fiscal and monetary policies have helped to emerge as dynamic and vibrant sector of Indian economy. Over the past five decades, Government policies and schemes have been to protect the interests of the SSIs and facilitate its rapid development from time to time.

Key words: Small-scale industries,Economy

Introduction
The role played by the small scale industry in the economic activity of advanced industrialized countries like Japan, Germany, Great Britain and the United States of America is significant. Many Nations, both developed and developing exteriorized that the small industry sector is a useful vehicle for growth, in the later for the creation of new employment opportunities on a wide scale in the shortest possible time.. Indian economy is an under developed economy. Its vast resources are either unutilized or underutilized. A major section of man power is lying idle. The per capita income is low. Capital is shy and scarce and investment is lean. Production is traditional and the technique is outdated. The output is insufficient and the basic needs of the people remain unfulfilled. The Small-scale industries find themselves at a loose end in competition with large scale industries with their large organization and resources. Paucity of capital, excessive dependence of agriculture and abundant supply of manpower are the characteristic features of our Indian economy. It has been strongly realized that agriculture is alone cannot meet their local requirements and therefore, that the pressure on land could be substantially reduced through the development of small scale industries, which are not only intensive but also do not demand massive capital resources, indeed small scale industries are the most suitable for the developing countries.

SIGNIFICANCE OF SMALL-SCALE INDUSTRIES

The small-scale sector has a high potential for providing employment, dispersal of industries, promoting entrepreneurship and earning foreign exchange to the country. The small-scale industries sector plays a vital role in the growth of the country. It contributes almost 40% of the gross industrial value added in the Indian economy.

Employment generation Less Capital Intensive Extensive Promotion & Support by Government Reservation for Exclusive Manufacture by small scale sector Funding - Finance & Subsidies Machinery Procurement Raw Material Procurement Manpower Training Technical & Managerial skills Reservation for Exclusive Purchase by Government Export Promotion Growth in demand in the domestic market size due to overall economic growth Increasing Export Potential for Indian products

Problems faced and offer remedial action to overcome the shortcoming

1. Problem of skilled manpower 2. Inadequate credit assistance 3. Irregular supply of raw material 4. Absence of organized marketing 5. Lack of machinery and equipment 6. Absence of adequate infrastructure 7. Competition from large-scale units and imported articles 8. Other problems It includes: poor project planning, managerial inadequacies, old and orthodox designs, high degree of obsolescence and huge number of bogus concerns. Due to all these problems the development of small-scale in the growth industries could not reach a prestigious stage.

Remedial and measures

1. Favoring the growth oriented and viable units satisfying the socioeconomic norms. 2. Offering timely and adequate financial assistance. 3. Appropriate managerial knowledge 4. Use of advanced technology 5. Proper and adequate marketing strategy 6. Grant of subsidies and tax concessions 7. Institutions established by the government machinery to promote Small Scale industries

ard (NISIET) Development (NIESBUD) Development Corporation (NRDC)

CONCLUSION
This paper focused on the Management and challenges faced by small scale industries in India. Small-scale industries play a critical role in the development of regions; but also helps to improve the standard of the life of the people. Because of liberalization policy the large scale industries gradually expanded, which in turn resulted in the decline of small scale industries. The significant place the SSI sector occupies in our economy, an appropriate environment needs to be created for the growth and sustenance of the small scale units. The government needs to re-draft their policy for the up-liftment of the small scale sector.

SMALL SCALE SECTOR: THE SWOT ANALYSIS

STRENGTHS
FLEXIBILITY IN PRODUCTION VOLUMES AND DESIGN CHANGES FASTER DECISION MAKING LOWER LABOUR COSTS LOWER OVERHEADS

WEAKNESSES
OFTEN LACK OF MANAGEMENT, MARKETING OR FINANCIAL SKILLS TECHNOLOGICAL OBOSOLENCE POOR FINANCING LACK OF MARKEYING STRENGHT

OPPURTUNITIES
LARGE COMPANIES ARE OUTSOURCING MORE TO REDUCE THEIR OWN COST PROMISING EXPORT MARKET HIGHERB INVESTMENT LILMITS MEAN COMPANIES CAN EXPAND AND MODERNISE BIG COMPANIES CAN TAKE A LARGER EQUITY STAKE IN SMALL ONES

Threats
WITH CONCESSION DISAPPEARING, IN EFFICIENT UNITS WILL DIE. WITH DERESERVATION , COMPETITON WILL COME FROM LARGE COMPANIES. WITH IMPORT LIBERLISATION, COMPETITION WILL COME FROM MNCS AND CHEAP INPUTS. SMALLER,LESS AGGRESSIVE COMPANIES WILL SUFFER.

BIBLIOGRAPHY
1 Business Environment, Aswathappa, Himalaya Publishing House 2. www.smallindustrialdevelopment.com

3. www.slideshare.net