CHAPTER 9
SMALL BUSINESS
There are several parameters to measure the size of business units. These include the number of persons employed in business, capital invested in business, volume of output or value of output of business and power consumed for business activities.
GOVERNMENT OF INDIA HAVE DESCRIBED SMALL INDUSTRIES IS BASED ON THE INVESTMENT IN PLANT AND MACHINERY.
Administrative SETUP FOR THE SMALL SCALE, AGRO AND RURAL INDUSTRIES
ROLE OF SMALL BUSINESS IN INDIA
The following points highlight their contribution to the socio-economic development of the country.
(i) Creation of employment opportunity:
Small industries in India account for 95 per cent of the industrial units in the country. They contribute almost 40 per cent of the gross industrial value added and 45 per cent of the total exports (direct and indirect exports) from India.
(iii) Supply Of variety of product:
Small industries in our country supply an enormous variety of products which include mass consumption goods, ready-made garments, hosiery goods, stationery items, soaps and detergents, domestic utensils, leather, plastic and rubber goods, processed foods and vegetables, wood and steel furniture, paints, varnishes, safety matches, etc.
(iv) Balanced regional development:
Since they can be widely spread without any location constraints, the benefits of industrialization can be reaped by every region. Therefore it contribute significantly to the balanced development of the country.
(v) Economic of skill:
Small industries also enjoy the advantage of low cost of production and enjoy their competitive strength.
(ix) Personal touch:
Last but not the least, small industries have inherent strength of adaptability and a personal touch and therefore maintain good personal relations with both customers and employees.
PROBLEMS OF SMALL BUSINESS
(i) Finance:
One of the severe problems faced by SSIs is that of nonavailability of adequate finance to carry out its operations. Generally a small business begins with a small capital base. As a result, they heavily depend on local financial resources and sometime they have to wait for the bulk of finance.
(ii) Raw materials:
Another major problem of small business is the procurement of raw materials. If the required materials are not available, they have to compromise on the quality and they also have shortage problem. Thus buying in bulk of assets, chemicals and attractive raw material in the economy.
(iii) Managerial skills:
Small business is generally promoted and operated by a single person, who may not possess all the managerial skills at the same time they are not in a position to afford professional managers.
(iv) Labor:
Small business firms cannot afford to pay higher salaries to the employees, which affects employee willingness to work hard and produce more. Also, unlike large organisations, division of labor cannot be practiced, which results in lack of specialization and concentration.
(v) Marketing:
Marketing is one of the most important activities as it generates revenue. Effective marketing of goods requires a thorough understanding of the customer’s needs and requirements. In most cases, marketing is a weaker area of small organisations.
(vi) Quality:
Many small business organisations do not adhere to desired standards of quality. They do not have adequate resources to invest in quality research and maintain the standards of the industry, nor do they have the expertise to upgrade technology.
(vii) Capacity utilization:
Due to lack of marketing skills or lack of demand, many small business firms have to operate below full capacity due to which their operating costs tend to increase.
(viii) Technology:
Use of outdated technology is often stated as serious lacunae in the case of small industries, resulting in low productivity and uneconomical production.
GOVERNMENT ASSISTANCE TO SMALL INDUSTRIES AND SMALL BUSINESS UNITS
Some of the intensives are -
(1) Raw Materials:
Units located in backward area get preferential treatment in the matter of allotment of scarce raw materials like cement, iron and steel, etc.
(2) Finance:
Subsidy of 10-15 percent is given for building capital assets. Loans are also offered at concessional rate.
(3) Land:
Every state offers development plots for setting up of industries. Some states don't charge rent in the initial years, while some allowed payment in installments.
(4) Power:
Power is supplied at a concessional rate of 50%, while some states exempt such units from payment in installment.
(5) Water:
Water is supplied on a no profit, no-loss basis or with 50% concession or exemption from water charges for a period of 5 years.
INSTITUTIONAL SUPPORT
1. National Bank for Agriculture and Rural Development (NABARD):
NABARD was setup in 1982 to promote integrated rural development. Apart from agriculture, it supports small industries, cottage and village industries, and rural artisans.
2. Small Industries Development Bank of India (SIDBI):
It provide direct/indirect financial assistance to SSI's.
It also coordinate the functions of other institutions.
3. The District Industries Centers (DICs):
The District Industries Centers Program was launched on May 1, 1978, with a view to providing an integrated administrative framework at the district level, which would look at the problems of industrialization in the district.
4. National Small Industries Corporation (NSIC):
This was set up in 1955 with a view to promote, aid and foster the growth of small business units in the country.
a) Supply indigenous and imported machines on easy hire-purchase terms.
b) Procure, supply and distribute indigenous and imported raw materials.
c) Mentoring and advisory services.
d) Creating awareness on technological up gradation.
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SMALL BUSINESS
There are several parameters to measure the size of business units. These include the number of persons employed in business, capital invested in business, volume of output or value of output of business and power consumed for business activities.
GOVERNMENT OF INDIA HAVE DESCRIBED SMALL INDUSTRIES IS BASED ON THE INVESTMENT IN PLANT AND MACHINERY.
Administrative SETUP FOR THE SMALL SCALE, AGRO AND RURAL INDUSTRIES
ROLE OF SMALL BUSINESS IN INDIA
The following points highlight their contribution to the socio-economic development of the country.
(i) Creation of employment opportunity:
Small industries in India account for 95 per cent of the industrial units in the country. They contribute almost 40 per cent of the gross industrial value added and 45 per cent of the total exports (direct and indirect exports) from India.
(iii) Supply Of variety of product:
Small industries in our country supply an enormous variety of products which include mass consumption goods, ready-made garments, hosiery goods, stationery items, soaps and detergents, domestic utensils, leather, plastic and rubber goods, processed foods and vegetables, wood and steel furniture, paints, varnishes, safety matches, etc.
(iv) Balanced regional development:
Since they can be widely spread without any location constraints, the benefits of industrialization can be reaped by every region. Therefore it contribute significantly to the balanced development of the country.
(v) Economic of skill:
Small industries also enjoy the advantage of low cost of production and enjoy their competitive strength.
(ix) Personal touch:
Last but not the least, small industries have inherent strength of adaptability and a personal touch and therefore maintain good personal relations with both customers and employees.
PROBLEMS OF SMALL BUSINESS
(i) Finance:
One of the severe problems faced by SSIs is that of nonavailability of adequate finance to carry out its operations. Generally a small business begins with a small capital base. As a result, they heavily depend on local financial resources and sometime they have to wait for the bulk of finance.
(ii) Raw materials:
Another major problem of small business is the procurement of raw materials. If the required materials are not available, they have to compromise on the quality and they also have shortage problem. Thus buying in bulk of assets, chemicals and attractive raw material in the economy.
(iii) Managerial skills:
Small business is generally promoted and operated by a single person, who may not possess all the managerial skills at the same time they are not in a position to afford professional managers.
(iv) Labor:
Small business firms cannot afford to pay higher salaries to the employees, which affects employee willingness to work hard and produce more. Also, unlike large organisations, division of labor cannot be practiced, which results in lack of specialization and concentration.
(v) Marketing:
Marketing is one of the most important activities as it generates revenue. Effective marketing of goods requires a thorough understanding of the customer’s needs and requirements. In most cases, marketing is a weaker area of small organisations.
(vi) Quality:
Many small business organisations do not adhere to desired standards of quality. They do not have adequate resources to invest in quality research and maintain the standards of the industry, nor do they have the expertise to upgrade technology.
(vii) Capacity utilization:
Due to lack of marketing skills or lack of demand, many small business firms have to operate below full capacity due to which their operating costs tend to increase.
(viii) Technology:
Use of outdated technology is often stated as serious lacunae in the case of small industries, resulting in low productivity and uneconomical production.
GOVERNMENT ASSISTANCE TO SMALL INDUSTRIES AND SMALL BUSINESS UNITS
Some of the intensives are -
(1) Raw Materials:
Units located in backward area get preferential treatment in the matter of allotment of scarce raw materials like cement, iron and steel, etc.
(2) Finance:
Subsidy of 10-15 percent is given for building capital assets. Loans are also offered at concessional rate.
(3) Land:
Every state offers development plots for setting up of industries. Some states don't charge rent in the initial years, while some allowed payment in installments.
(4) Power:
Power is supplied at a concessional rate of 50%, while some states exempt such units from payment in installment.
(5) Water:
Water is supplied on a no profit, no-loss basis or with 50% concession or exemption from water charges for a period of 5 years.
INSTITUTIONAL SUPPORT
1. National Bank for Agriculture and Rural Development (NABARD):
NABARD was setup in 1982 to promote integrated rural development. Apart from agriculture, it supports small industries, cottage and village industries, and rural artisans.
2. Small Industries Development Bank of India (SIDBI):
It provide direct/indirect financial assistance to SSI's.
It also coordinate the functions of other institutions.
3. The District Industries Centers (DICs):
The District Industries Centers Program was launched on May 1, 1978, with a view to providing an integrated administrative framework at the district level, which would look at the problems of industrialization in the district.
4. National Small Industries Corporation (NSIC):
This was set up in 1955 with a view to promote, aid and foster the growth of small business units in the country.
a) Supply indigenous and imported machines on easy hire-purchase terms.
b) Procure, supply and distribute indigenous and imported raw materials.
c) Mentoring and advisory services.
d) Creating awareness on technological up gradation.
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