Table Of Content

  • What are small scale industries?
  • Type of small scale industries
  • List of small scale industries in India
  • Characteristics of small scale industries in India
  • Objectives of Small Scale Industries (SSI)
  • Role Of Small Scale Industry In Indian Economy
  • Registration of small scale industries in India
  • Benefits of small scale industry’s registration
  • Government Scheme for small scale industries

Small Scale Industries hold an important position in India, in terms of contributing to the country’s economy. As per the Ministry of Statistics and Programme Implementation, Government of India,

  • The small scale industry sector constitutes ~95% of the country’s industrial units
  • It employs more than 175 lakh individuals.
  • SSIs contribute around 33.4% of manufacturing output in India and contribute over 30% of the GDP. They have become the backbone of the Indian economy.

For developing countries like India, such industries play an important role due to their trade contributions and look after public welfare. Several initiatives such as Make in India have been launched by the Central Government to support the industrial sector in managing the demands and exploring growth opportunities.

Also Read: 5 Best And Fast Small-Business Loans

What are Small Scale Industries?

As per the guidelines issued by the Government of India, small scale industries are those industries where the production, manufacturing, and rendering of services is done on a small scale. As per the Micro, Small and Medium Enterprises Act of 2006, the eligibility criteria to identify small industries are:

  • The investment in the plant, machinery, and equipment should not exceed INR 10 crore; and
  • The annual turnover should not be above INR 50 crore.

The main characteristics of small scale industries include sole ownership or a small partnership, concentrated management with control resting in the hands of the owner, more flexibility towards changing demands of businesses, labor-intensive industry and limited operation reach, thereby fulfilling the local demands.

Also Read: Need Money Fast? 4 Options For Small Business Owners

Types of Small Scale Industries

There are 6 types of small scale industries in India

Manufacturing Industries:

These industries specialize in producing finished goods for human consumption or are used further in processing industries. Usually, such industries have a single ownership structure.

Ancillary Industries:

These industries act as feeder units to the bigger manufacturing industries. Large or medium-scale industries generally do not produce all the parts of their products. They buy the required parts from such small scale industries.

Service Industries:

Such industries are not involved in any type of manufacturing or production, rather are only involved in offering repair and maintenance services.

Village Industries:

A village industry is a modest-scale enterprise established in rural regions with constrained resources. These industries rely entirely on human labor for their production processes.

Also Read:- 8 Profitable Rural Business Ideas for Village Areas in India

Cottage Industries:

Cottage units are classified as Small Scale Industries (SSIs) when they operate without a dedicated facility and are conducted within the living spaces or residences of their owners.

Export Units:

An Small Scale Industry (SSI) is recognized as an export unit when over 50% of its production is directed towards exports.

Apart from these major types of industries, other small scale industries examples include village industries, cottage units, export units, mining or quarries, etc.

List of Small Scale Industries in India

Here is a complete small scale industries list given below:-

Food processing unitsEngineering unitsPower looms
Agarbatti productionSugar candy productionWood production
Rice mill productionPotato chips makingliquid soap
Toy MakingRearing of Honey beesDetergent powder production

Products include rice mills, agarbatti production, sugar candy manufacturing, toys, detergent powder, spices, chocolates, honey processing, biodiesel production, etc are also covered under small scale industries list

Characteristics of Small Scale Industries in India


Typically, the owner or owners hold both management and control responsibilities, resulting in their active engagement in the daily operations of the business.


Small scale industries (SSIs) exhibit greater adaptability to fluctuations in their business environment. Consequently, they possess the flexibility to adjust and persist in the face of alterations or unforeseen circumstances, distinguishing them from larger industrial counterparts.

Resources Utilization

They utilize local resources that are easily accessible, thereby aiding the economy in efficiently utilizing natural resources while minimizing waste.

Limited Reach

Small scale industries operate within limited geographical boundaries, enabling them to fulfill local and regional market needs efficiently.


Generally, SSIs are typically owned by a single entity, which may take the form of a sole proprietorship or occasionally a partnership firm.

Objectives of Small Scale Industries (SSI)

The Small Scale Industries mainly strive to achieve the following objectives:

  • Attain self-reliance
  • Provide more employment opportunities to the working class
  • Balance out the regional economic and employment disparities
  • Improve the standard of living of the people
  •  Ensure optimum utilization of the resources with minimal wastage
  • Produce better quality products at affordable prices by adopting the latest technologies.

Role of Small Scale Industry in Indian Economy

Public Welfare

Apart from economic factors, these sectors play a crucial role in fostering the social advancement and development of our nation. Typically initiated by individuals from the lower or middle-class segments of society, these industries offer avenues for wealth creation and employment generation. This, in turn, facilitates equitable income distribution and bolsters social advancement.

Contribution in Export

Roughly 45-55% of India’s exported goods originate from small enterprises. Specifically, small-scale industries contribute approximately 35% to direct exports and 15% to indirect exports. Therefore, the growth and progress of India’s export sector heavily hinge on the performance of these small industries.

Employment Opportunities

Small-scale industries play a significant role in generating employment nationwide. With the formal sector unable to accommodate the entire workforce, labor-intensive industries serve as a vital source of livelihood for a substantial portion of workers.

Also Read: Need Money Fast? 4 Options For Small Business Owners

Registration of Small Scale Industries in India

The Government of India offers different schemes, incentives and subsidies to registered small-scale industries. Though such registrations are voluntary. The registration process falls under the purview of the Ministry of Micro, Small and Medium Enterprises through the Directorate of Industries of the State Government.

Follow the guide below to register your Small Scale industry through the official government portal ‘UDYAM’. Any registration through a private body shall not be recognized as a Small Scale Industry.

  • Visit the official government registration portal – UDYAM.
  • On the given page, select the tab ‘For New Entrepreneurs who are not registered yet as MSME or those with EM-II”.
  • On the following page, enter your Aadhaar number and your name for verification. You will receive OTP on your registered mobile number.
  • After verification, the PAN Verification page opens up. Enter your PAN details and click on the “Validate PAN” tab.
  • Next, the UDYAM Registration page opens up. Proceed to fill in all the required details and then select the option of “Submit and Get Final OTP” tab.
  • Now, after successfully registering yourself on the MSME portal, you will receive a notification acknowledging the receipt of your application with a reference number. Once your registration is verified, you will receive your MSME registration certificate.

You can also register for more than one industry on the platform using the same Aadhaar and PAN details. No registration fees are levied for such registration.

Benefits of Small Scale Industry’s Registration

The Government of India offers various incentives to Small-scale industries to promote the Make in India scheme and entrepreneurship among the citizens. Some benefits are:

  • Tax rebates
  • Easy access to credit under specific government tenders
  • A credit for Minimum Alternate Tax is allowed to be carried forward up to 15 years
  • Concessions on cost of acquiring patent, setting up plants and offices
  •  Higher preferences to registered industries for government licenses and certification.

Also Read: Factors That Affect The Eligibility For Small Business Loans.

Also Read: Reasons Indian Businesses Faces Rejection For Small Business Loans

 Government Schemes for Small Scale Industries

To promote the MSME sector in India, the Government has come up with various initiatives to support the upcoming industries and businesses in this Sector. Various announcements have been made under the ‘Atmanirbhar Bharat’ scheme, such as collateral-free automatic loans up to INR 3 lakh, disallowing global tenders to offer better opportunities to the MSMEs, and clearing of the MSME dues by the PSUs within 45 days.

The Credit support initiativeInitiatives for the development of Khadi, village and coir industries
Prime Minister Employment Generation ProgrammeMarket promotion and development scheme
Credit Guarantee Trust Fund for Micro and Small EnterprisesRevamped Scheme of Fund for Regeneration of Traditional Industries
Credit Linked Capital Subsidy for Technology UpgradationCoir Vikas Yojana
A Scheme for Promotion of Innovation, Rural Industries and Entrepreneurship (ASPIRE)


1 What defines a Small Scale Industry (SSI) in India?

SSIs are defined based on their investment in plant and machinery, with specific limits varying across sectors. As of 2022, micro-enterprises have investment limits up to Rs. 1 crore, small enterprises up to Rs. 10 crores, and medium enterprises up to Rs. 50 crores.

2 What are some popular small scale industries in India?

Small scale industries in India cover a wide range of sectors including textiles, food processing, leather, handicrafts, electronics, chemicals, and more. Popular businesses include garment manufacturing, food products, IT services, and handicrafts.

3 Are there any special incentives for women entrepreneurs in small scale industries?

Yes, the government provides special incentives and schemes to promote women entrepreneurship in SSIs. These include reduced interest rates on loans, dedicated support through MSME development programs, and reservations in certain sectors.

4 What is the present status of entrepreneurship in small scale industries in India?

It is projected that the whole SSI sector includes 1,05,21,190 units scattered across the country. Approximately 55% of these units were located in rural India. Over 44 lakhs (42.26%) of the entire SSI sector were SSIs, while the remainder 61 lakhs (57.74%) were SSSBEs.

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