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What Is A Small Scale Enterprise? Types Of Small Scale Enterprises And Small Scale Business Registration Process

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What is a Small Scale Enterprise or SSI

Small Scale Enterprise manufactures, offers service, and produces goods with minimal manpower and fewer machines, i.e., they offer services on a small scale. Usually, these industries make a one-time investment of less than Rs.10 crore on equipment and plant. The annual turnover of these micro enterprises doesn’t cross Rs.50 crore. The one-time investment shouldn’t exceed Rs.1 crore with an annual turnover of less than Rs.50 crore for micro-scale industries.

Like many other fortune companies or larger enterprises, small scale enterprises or industries create numerous employment opportunities. Hence, it plays a vital role in the nation’s economy. These micro-enterprises take support from government tax policies and other business functionalities.

Some examples of the small scale industries include paper, toothpicks, pens, bakeries, candles, native or local chocolates, water bottles, toys, beauty parlors, photography, leather belts, bags, and a lot more.

Characteristics of a Small Scale Enterprises/ Industries

  • Mostly, the Small Scale Enterprises are under single ownership. In rare cases, it comprises partnership deals.
  • The micro-industry owner is actively involved in the various activities of the unit throughout the day.
  • The micro-enterprises use more laborers as they use minimal technical support. Hence, they support the nation’s employment.
  • The micro-enterprises use nearby resources or readily available resources, ensuring minimal wastage. Also, these industries meet the regional requirements as they are confined to limited zones.
  • As the micro industries run on a small scale, they can adapt any amendment in the policies or laws. At the same time, the large business units struggle to change the working environment based on the amendments.

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Classification of Small Scale Industries

Small scale industries (SSI) are categorized and classified based on several criteria. There are over 10 types of micro-enterprises based on goods and services. Let’s dwell more about them in detail.

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10 Types of Micro and Small Scale Industries

Here are 10 types of micro and small scale industries based on goods and services.

1. Small Scale Industry Before 2006

According to the MSMED Act, micro or small-scale industries are those whose investments are fixed and don’t exceed one crore. The micro-enterprises were solely involved in the manufacturing, export improvements, and modernization and used a total amount of about Rs.5 crore.

2. Ancillary Small Scale Industry

Large enterprises manufacture finished products from the tools provided by the ancillary industries. The ancillary small-scale industries are the manufacturers for medium or large-sized enterprises producing machinery components and other standard products. Ancillary industries supply at least 50% of their products to other large or medium-sized businesses or the parent unit.

3. Export Oriented Industrial Units

The export-oriented industrial unit is pretty similar to the ancillary industries. However, these export-oriented industries export over 50% of their products to other companies. These industrial units get accessed to various grants and bonuses from the Indian Government.

4. Small Scale Industries Run by Women

The small-scale industries owned by women with at least a share capital of 51% are eligible to opt for several grants from the Government like low-interest loans and other perks.

5. Village Industries

These are the industries located in the rural regions and don’t belong to the organized sector. Also, these produce goods and services without the consumption of electricity. The fixed investment on workers, laborers, or other equipment doesn’t exceed Rs. 50,000.

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6. Micro Business Enterprises or Industries

The industries whose total expenditure or investment on equipment and plant doesn’t exceed Rs.1 lakh are known as micro business industries.

7. Small Scale Services & Business

The small scale services and business units fixed investment doesn’t exceed Rs.10 lakh. Some examples of this unit include beauty parlor, dry cleaning, industrial testing labs, marketing & ads agencies, auto repairs, garages, xerox centers, photography, and many more.

8. Tiny Industrial Units

These are small scale enterprises with a total planned expenditure of less than Rs. 25 lakh.

9. Cottage Industries

The cottage industries are also popularly known as traditional or rural industries and don’t cover the capital investment criterion. These are classified based on the set of features as mentioned below.

  • The cottage industries use private resources and employ laborers within the locality or family.
  • It has less capital investment and manufactures simple products.
  • They use meager and native technologies.
10. Trading Units

The trading business units include small retailers.

Read more about – Which Business Comes Under MSME? Explore the Complete List of MSME Businesses

Role of Small Scale Enterprises in Indian Economy Objectives

Small scale enterprises play a significant role in the nation’s development. It supports colossal employment, high production rate, Make in India scheme, and contributes to exports. One of the significant features of these small scale industries is that it meets the requirements of regional people and contributes to public welfare.

  • As these small-scale industries use minimal technology, it becomes the primary source of employment. In a developing country like India, these industries are the primary source of employment.
  • Do you know the small-scale industries’ products and services contribute almost 40% of the entire nation’s goods production? Hence, these are the backbone of the Indian economy.
  • As these small scale enterprises use regional resources, they are a perfect example of the Make in India initiative. They primarily focus on the production using Indian goods and export worldwide.
  • The micro industries meet the necessity of the local public. Hence, these industries are the primary reason for social growth and development.

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Business Registration Process for Small Scale Enterprises

The Ministry of Micro, Small, and Medium Enterprises is offered small scale enterprise registration under the provision of the Directorate of Industry of the State Government. To obtain the numerous schemes, subsidies, and grants, one should opt for small-scale industry registration. You can even opt for online registration through Udyam Registration.

Read more about – What Is MSME Udyam Registration? Step-By-Step Process Of MSME Registration

Let’s dive into the complete step-by-step procedure.

  • Visit “Udyam Registration Portal.” Tap on the “For New Entrepreneurs who are not registered yet as MSME or EM-II.”
  • Now, enter “Aadhar Number,” “Entrepreneur Name,” and click on the button, “Validate & Generate OTP.”
  • You get an OTP to the number that’s linked to your Aadhar card. Enter OTP and fill out the PAN details and validate it.
  • Next, fill in all the personal details as required, including industry name, address, bank account details, etc.
  • Submit the form and get the final OTP. Finally, you receive the successful registration message with a reference number. After the verification process, shortly, you’ll receive the MSME Registration Certification.

Learn more about – What Is An MSME Certificate? How To Apply For Udyam Registration Certificate?

In this process, no registration fee is required. If you’d like to register more than one industry, then opt for individual small-scale industry registration.

  • Required Document: PAN Card, Aadhar Card.
  • Registration Fee: 0 INR.
  • Eligibility: Small scale industries with one-time investment, less than Rs.10 crore on equipment and plant with annual turnover less than Rs.50 crore. The one-time investment shouldn’t exceed Rs.1 crore with an annual turnover of less than Rs.50 crore for micro-scale industries.

This is all about the small scale enterprise and complete registration process. Hope you found this article helpful. If you’ve any queries, feel free to contact us.

DKS

 

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