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Small Scale Industries are essential for the economy's growth, especially in developing countries like India. As per the Ministry of Statistics and Programme Implementation, the SSI provide employment to about 175 lakh persons. As India has labour-intensive industries, the small-scale industries which are a 95% of industrial units.
If you want the benefits of government schemes, subsidies and incentives in small-scale industries you must complete SSI registration and fulfil all the guidelines set by the Government of India. By setting up as an SSI, you can produce better quality products at affordable prices with the help of the latest technology. What more you can do by registering as an SSI is shared below.
Those industries which produce, manufacture or provide services on smaller levels are called Small Scale Industries. Basically, the Small Scale Industry came under the Micro, Small, and Medium Enterprises Act, of 2006. Examples of small-scale industries are Manufacturing business, bakeries, school stationery, beauty parlours, paper bag industry, and others. The maximum investment in machinery and plants should not exceed the limit of Rs. 1 crore.
The registration of SSI is voluntary, so many businesses don’t get SSI registration certificates. Among the total, there are only 13% of units are registered and these are considered the cream of the SSI sector. Remember, the registration in SSI sector is voluntary but the registration under Factories Act is mandatory.
The investment amount and the annual turnover of manufacturing and services enterprises are similar, so now there is no distinction between the enterprises of these two sectors. Check the merged criteria below:
Type of sector: Manufacturing sector and servicing sector
Micro Enterprises: Investment less than Rs. 1 crore and turnover less than Rs. 5 crores.
Small Enterprises: Investment less than Rs. 10 crore and turnover up to Rs. 50 crore.
Medium Enterprises: Investment less than Rs. 50 crore and turnover up to Rs. 250 crore.
In the growth of economy the small-scale industries play a crucial role. But how? Let’s check below:
The entrepreneurs of SSI should pass all the stages shared below to establish an SSI:
Choose SSI Ownership Structure: The very first step of establishing an SSI is to choose the ownership structure. There are six types of SSIs, manufacturing industries, ancillary industries, service industries, export units, cottage units, and village industries.
Location: The area of the factory must be decided on the basis of plot, area, market, structure of the land, and open area. After selecting the location, establish the SSI unit to start the business operations. The registered address of the unit becomes the address of the location.
Machinery and Equipment: The machinery and equipment required for the manufacturing units must be under the set cost. The latest technology machinery should be procured and installed in the SSI unit.
Recruitment of Manpower: For installed machinery, manpower is needed. After getting all the permission, hire manpower to run the installed machinery. The small-scale industries provide employment to most labourers in the country.
Quality of Product: Once the SSI get the raw material, they can start the production of the units. Sold the produced products in the market after manufacturing the desired units of the products. But before selling the products, obtain the quality certificate from the concerned authorities such as AGMARK, FSSAI, etc.
To promote the Micro, Small and Medium Enterprises (MSME) sector in India, the government has come up with different initiatives and schemes to support the sector and increase their contribution to the Make in India initiative. Check these schemes below:
The SSI is a priority sector for providing advances and 40% of banks must be on priority for these sectors. As per the rule of RBI, the bank can provide loans up to Rs. 5 lakhs without any collateral. The priority for loans is provided to small-scale industries in the finance sector.
The collateral-free loans work as a major source of support to small industries. In support of this, the Ministry of MSME has launched a Credit Guarantee Scheme (CGS) to create a smooth flow of credit. Every new or existing MSME with a maximum credit cap of Rs. 200 lakh is covered under the scheme. Maximum guarantee cover is 85% for micro-enterprises for credit up to Rs. 5 lakhs.
Equity support has been provided to entrepreneurs for starting new projects in the MSME sector. The support is only provided to those companies which fulfil the specified eligibility criteria. In the year 2002, the limit of loans increased to Rs. 10 lakhs and the project cost limit to Rs. 50 lakhs.
Entrepreneurs can need equity to expand their business, upgrade the technology and machines, and diversify the products from existing companies. For all these reasons, SSI requires equity. The SSI that look for loan from the banks has the benefit of lower interest rates. As you have a small-scale industry unit, you will be provided a loan on special concession rates, even some banks will even provide it on Prime Lending Rate for loans less than Rs. 2 lakhs.
The Small Industries Development Bank of India (SIDBI) has set up a TDMF scheme for direct assistance to SSI to scale their industrial units in the sector. Under the scheme, for the following reasons assistance provided:
Lastly, it can be stated that industries have expanded from organised large and medium industries to modern Small Scale Industries and unorganised traditional industries. Along with this, there are some government tenders that are only open to SSI. So, if you want to register as an SSI, visit the Udyam Registration Portal. Also, you can reach out to Registrationwala to obtain the MSME Registration License.
Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.
