Small Scale Industries in India: Characteristics, Definition

small scale industries

The definition of small scale industries is that they provide services, manufacturing facilities and any other services which are related to industrial work. In this type of industries, the production is done on a very small scale or we can see it is done on a micro-scale. Let me explain it to you with an example, tissues, napkins, water bottles, papers, pen, small, toilet papers, napkin and any other small item which is manufactured by small industries come and small scale industries.

These are the type of industries which does play a vital role in the economics and social development of the country India. These industries do an investment which is only one time and it is for the plants, machinery and any other item which takes only one-time investment. These can be on the basis of leaves, hire purchases and ownership basis.

For the small scale industries in the cost should not exceed the limit of Rupees 1 crore. If the costing exceeds the mark of 1 crore then they do not come in the small scale industries. Now let us discuss more it down below.

Features of Small Scale Industries

As I told you about in a small scale industry we need small machinery and few workers and employees which can work in the industry to create and produce small products. The Enterprises like these should fall under the guidelines which are provided by the government of India.

Those Guidelines are:

✔️ The investment done for the manufacturing of goods should be between 25 lakhs to 5 crores.
✔️ If the company is providing any kind of service then the investment in the machinery should be between 10 lakhs to 2 crores.

We all know that India is a developing country and you should know that this kind of small scale industries is the real lifeline of the economy of India. These industries are generally labor incentive to create a large amount of employment for people. This is a sector which is a very important part of our economy when will look at it as the social as well as the economic view.

Now let me give you some examples which would be ideal for small scale industries in India.

✔️ Candles
✔️ Water Bottles
✔️ Paper Bags
✔️ Printing and Xerox
✔️ School Stationeries
✔️ Bakeries
✔️ Photography
✔️ Beauty Parlor
✔️ T-Shirt Printing
✔️ Small toys

Now let me tell you the characteristics of the small scale industries

1. Ownership

These are the type of industries which are under single ownership and generally there is not any kind of partnership in these kinds of industries.

2. Management

Management is generally controlled by the owner itself and there is not any kind of third person environment in these kinds of industries.

3. Limited reach

The area of operation in these kinds of industries is generally restricted so that they could meet the local as well as the regional demand of the public.

4. Labor Intensive

There is generally the use of Manpower as well as labor for the activities of production and the dependence on the technology and this area is actually pretty limited.

5. Flexibility

These are the units which are very adaptable to the changes in the environment of business and if there is any kind of sudden changes as well as unexpected development then they are flexible enough that they will be able to adapt at and carry on with their work. In the case of large Industries it is difficult for them to adapt to these kinds of changes very easily can a very short period of time.

6. Resources

The resources are usually readily available to the locals and this is usually a great help which helps in the utilization of the resources which are natural and there is very less wastage as well.

What is the role of small scale industries in the economy of India?

1. Economy

20 of the type of Enterprises which does have 40% account of the total goods and services which are produced all over India. Please help in the growth as well as the strengthening of the economy of India.

2. Employment

Many people in India are getting employed because of the small scale industries. These are the type of industries which provide a lot of livelihood to the workers in India.

3. Contribution to the Export

If you look we will find that around half of the goods that are manufactured in India are exported and are produced in these small scale industries. About 15% of these are indirect exports and around 35% of these are direct Exports. You will notice that in the case of export business small scale industries play a very vital role.

4. Welfare of public

These are the industries which help in the development as well as social growth of the country. These are the type of industries which focuses on the lower as well as the middle-class public in the country and help in the employment of other people and give them an opportunity to earn money.


There are many different types of small scale industries in India and a lot of people are working in these industries. These are the backbone of Indian economy.

I hope this article was helpful to you and if you have any suggestions then you can mention the name in the comment down below and if you have any kind of question then you can mention it in the comments as well.