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ROLE OF SMALLBUSINESS

INTURBULENT

ECONOMY

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Production The small-scale industries sector plays a vital role in the growth of the country. It contributes

almost 40% of the gross industrial value added in the Indian economy.

It has been estimated that a Rs. 1 million of investment in fixed assets in the small scale sectorproduces 4.62 million worth of goods or services with an approximate value addition of tenpercentage points.

The small-scale sector has grown rapidly over the years. The growth rates during the variousplan periods have been very impressive. The number of small-scale units has increased froman estimated 0.87 million units in the year 1980-81 to over 3 million in the year 2000.

When the performance of this sector is viewed against the growth in the manufacturing and theindustry sector as a whole, it instills confidence in the resilience of the small-scale sector.

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Export Substitution The small businesses contribute around 40% of GDP.

So, small business, if promoted, can have the potentialto produce high quality goods.

By this, our economy will have an opportunity toimport less and use indigenous goods.

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EmploymentAfter agriculture, SME sector provides highest number

of employment.

If small businesses are promoted, then theemployment opportunities will increase.

This will help the economy to stabilise.

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Export 45%-50% of the Indian Exports is contributed by Small

Businesses.

It would surprise many to know that non-traditional productsaccount for more than 95% of the Small Scale Industry exports.

The exports from SSI sector have been increasing on a steadypace since a few years. It has been mostly fuelled by theperformance of garments, leather and gems and jewellery units

from this sector.

The product groups where the SSI sector dominates in exports,are sports goods, readymade garments, woollen garments andknitwear, plastic products, processed food and leather products.

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Opportunity The opportunities in the small-scale sector are enormous due to the following

factors:

Less Capital Intensive Extensive Promotion & Support by Government Funding - Finance & Subsidies Machinery Procurement Raw Material Procurement Manpower Training Technical & Managerial skills Reservation for Exclusive Purchase by Government Export Promotion Growth in demand in the domestic market size due to overall economic growth Increasing Export Potential for Indian products