Q.Discuss the problems faced by small scale industries.

Small scale industries are at a disadvantage compared with large ones, and most of their problems flow from their small size. …

Small scale industries face a number of problems, most of which arise from their small size:

1. Finance. Non-availability of adequate finance; a small capital base, poor creditworthiness, dependence on moneylenders, shortage of working capital and the inability to provide collateral or margin money to banks.
2. Raw materials. Difficulty in procuring good-quality raw materials at reasonable prices; low bargaining power due to small purchases and no storage for bulk buying.
3. Managerial skills. Run by a single person who may lack some managerial skills, and cannot afford professional managers.
4. Labour. Inability to pay high wages leads to low productivity, high turnover and difficulty in attracting talent; no division of labour and hence little specialisation.
5. Marketing. A weak area; excessive dependence on middlemen who may exploit them, and little scope for direct marketing.
6. Quality. Failure to maintain quality standards for lack of resources and expertise, which hurts them most in global markets.
7. Capacity utilisation. Operating below full capacity for want of demand or marketing skill, which raises costs and can lead to sickness.
8. Technology. Use of outdated technology, causing low productivity and uneconomical production. …