SMALL SCALE INDUSTRY

Small business forms an important sector of the Indian

economy. Small scale industries accounted for 40 percent of
the value added by the whole manufacturing sector and 80
percent of the employment. Small industries have contributed
to the extent of 42 percent with regard to export.
The concept of small scale industry varies from one country
to another and from one time to another in the same country
depending upon the pattern and stages of development ,
government policy and administrative set up of the particular
country.

STEPS IN SETTING UP OF SMALL SCALE INDUSTRY

A Small entrepreneur has to follow certain procedure to set up
his unit . A large number of environment factors such as
economic ,political ,legal ,social factors etc. have great impact
on setting up of small scale industrial unit .And other steps to
be fallow as given below :-

 Idea of Self – Employment:- unemployment is biggest

problem of India, this problem is increasing to a great
extent day by day . One of the solution of this alarming
 problem is to motivate the educated unemployment youth
to opt self-employment programmers and take a decision
to own a small scale industry. He will became an owner ,
manager , and controller by setting up a new industrial
unit. Hence , be can become a job – creator than job
seeker some factors:-
1. Possession of knowledge , skill, experience and
entrepreneurial aptitude.
2. Easy availability of inputs.
3. Incentives / subsidies provided by government.
4. Assistance from banks and financial institutions.
5. Financial resources etc.

 Analysis of Entrepreneurial Environment:- the potential

entrepreneur should properly analyses the entrepreneurial
environment after taking the decision to be self-employed
. Entrepreneurial environment is greatly influenced by
administrative factor and legal factors . The potential
entrepreneur should study the opportunities and various
programmers initiated by small scale industries ,NSIC,
SIDBI, NIESBUD etc. along with incentives and concessions
provided by governmental agencies.
 Project Identification :- it is very crucial decision to be
taken by potential entrepreneur . Selection of right type of
project makes a great contribution in the success of
 enterprise . project identification refers to identify and
analysis of profitable opportunities for investment.
 Selection of the Product :- selection of product should be
based on market condition . The knowledge , skill ,
experience and creativity of an entrepreneur plays
dominant role in selecting the right choice of product . The
existing and potential market demand of product also
contributes in the choosing the product.
 Selection of Organization:- the selecting of organization
structure depends upon the available resources i.e. men,
money, material, method . The entrepreneurship has
options to choose organizational structure inform of sole
proprietorship , partnership firm , co-operative society or a
joint stock company .Every types of organization has its
own advantages and limitations.
 Preparation of Project Report:- it is an report comprising
all important information relating to proposed project .
The project report should cover the aspects relating to
introduction of proposed project, view of entrepreneurs to
set up the unit , types of unit , nature of unit, information
relating to promoters , information’s relating to product ,
manufacturing process , plant total capacity , plants
utilized capacity , types of raw material to be used , total
land required , total cost of project , methods of financing
etc.
 Location of Enterprise:- the site of unit is very crucial step
in the start-up process of an enterprise . The working and
future expansion of the unit depends upon the right type
of location of an unit . A large number of factors such as
easy availability of raw –material , power , nearness the
market , availability of transportation , warehousing and
communication facilities , supply of skilled labor ,
government incentives , existence of supplementary and
complementary industries ,land prices climate etc. play
dominant role in the choice of location of unit.
 Arrangement of Finance :- finance is the blood of every
type of entrepreneurial activity. No entrepreneurial
activity cannot be conducted without adequate finance . a
potential entrepreneur has to thoroughly analyses the
financial requirements i.e. fixed capital requirement and
working capital requirement .an entrepreneur can invest
his own fund in starting new venture.
 Provisional Registration :- provisional registration enables
the entrepreneur to convert his ideas into realty .the
entrepreneur has to submit application for Provisional
Registration to the District Industries Centre. DIC issues
.and many other provisions are followed .
 Acquiring Machinery and Technology:- this manufacturing
know-how is provided by various government agencies ,
research laboratories and other agencies . The small
 entrepreneurs can also acquire technical know-how from
foreign countries subject to the terms and conditions laid
down by government of India.
 Apply for Power and Water Connection
 Recruitment and Training of Workers
 Installation of Plant and Machinery:- the entrepreneur
should design a suitable and best suited layout for the
placement of new machinery in the unit .
 Marketing :- marketing is the process of creating new
customer for goods produced in industrial unit by
entrepreneur. Marketing plays a dominant role in
communicating the information relating to product
creating awareness of product , encourage the customer
to purchase product and finally to boost the sale .
 Permanent Registration:- the entrepreneur can apply for
permanent registration to District Industry Centers an
issue a certificate of permanent registration on proper
inspection of industrial units.
 Profits Generation :- Profit earning is the basic objective of
every type of entrepreneuring activity . Profits is essential
for the future growth and survival of an unit . Profit helps
the entrepreneur to replay the loans of various banks and
financial institution .
Fundamentals of Entrepreneurship

Mgt 301

Steps in Setting up of Small Scale Industry

Submitted To :- Dr. Babita

Submitted By :- Herman Khinda
Adm. No. :- L-2016 –H.SC-08-BFD