Answer in brief.
1) State any four points of importance of Small Scale
Importance of Small Scale Industry.
→ Job opportunities
→ Regional Balance
→ Maximum use of Natural resources
→ Reduces migration
1. Job Opportunities: SSI is the second largest industry which creates huge employment opportunities because it can be operated with a minimum amount of capital. SSI can be run with basic and potential skills. This is a boost for a labour surplus country like India.
2. Regional Balance: In India, all regions are not developed due to the lack of industrialization. SSI can be set up with a minimum amount of capital. Small industries manufacture product using simple technologies, locally available resources, material and labour. Thus, they contribute significantly to the balanced development of the country.
3. Maximum use of Natural Resources: Small scale industries are labour intensive. They utilize available natural resources and raw materials from local areas. Such use of local natural resources minimizes the cost of production which result in reasonable price of goods.
4. Reduces Migration: Small Scale Industries can create employment in a rural area. SSI is also the best example of self-employment. Therefore, the migration of people from rural to urban can be reduced or minimize Industry/Business.
2) Write any four advantages of Small Scale Industry.
Advantages of Small Scale Industries.
→ Large Employment
→ Less Capital Requirement
→ Contribution to Export
→ Opportunities for Entrepreneurship
1. Large Employment: Small Scale Industries has huge potential to create employment opportunities. They are labour intensive and use more labour than other factors of production. Their gestation period is also low and can provide employment opportunities to a large number of people.
2. Less Capital Requirement: SSI requires less capital as compared to large scale industries. SSI can be started by small entrepreneurs with limited capital resources.
3. Contribution to Export: Nearly 40% of the industrial exports are contributed by SSI. A product such as hosiery, knitwear, gems and jewellery, handicraft, coir products, woolen garments, processed food, chemical, and allied products and a large number of engineering goods contribute substantially to India’s exports. Products produced by SSI are used in the manufacturing of products by large scale industries which are exported. It contributes directly and indirectly to exports and helps to earn valuable foreign exchange.
4. Opportunities for Entrepreneurship: Small Scale Industries provide opportunities for entrepreneurs with limited capital as it requires less capital and lower investment in technology and machines as compared to large scale enterprises.
Therefore, small entrepreneurs can start small scale industries easily.
3) State any four challenges before Small Scale Industries.
Challenges before Small scale industries.
→ Inadequate finance
→ Problem of raw material
→ Labour problem
→ Marketing problem
1. Inadequate Finance: SSI generally begins with a small amount of capital. Many of the units in the small sector raise funds from the capital market. These units frequently suffer from lack of adequate working capital.
2. Problem of Raw Material: Another major problem of Small Scale Industries is an inadequate supply of raw materials. Due to that SSI have to compromise on the quantity and quality of raw material, or pay more price for good quality of raw material.
3. Labour Problem: Small industries generally appoint unskilled and semi-skilled worker on daily wages. This creates the problem of low labour productivity, higher absenteeism and poor job commitment. The wages are low due to financial limitations. This leads to labour dissatisfaction and increases the problem of labour turnover. Improper shifts and lack of Job security makes employment in small industries unattractive and the talented workforce does not opt for such a job.
4. Marketing Problem: Marketing is a weaker part of small industries. SSI have to depend excessively on middlemen who at times exploit them by paying low prices and delayed payments. Further, the direct marketing may not be feasible for small business firms as they lack the necessary infrastructure.