Role of Small Business in India

Small scale industries occupy a distinct place in India because of their contribution to the socio-economic development of the country. A student preparing CBSE Class 11 small business questions and answers should be able to explain the following points, which highlight that contribution.

(i) Small industries account for about 95 per cent of the industrial units in the country. They contribute almost 40 per cent of the gross industrial value added and around 45 per cent of the total exports (direct and indirect) from India.

(ii) They are the second largest employers of human resources after agriculture. Because they generate more employment per unit of capital invested than large industries, they are more labour-intensive and less capital-intensive — a boon for a labour-surplus country like India.

(iii) They supply an enormous variety of products — mass-consumption goods, readymade garments, hosiery goods, stationery, soaps and detergents, domestic utensils, leather, plastic and rubber goods, processed foods and vegetables, wood and steel furniture, paints, varnishes and safety matches, among others. They also make sophisticated items such as electric and electronic goods (televisions, calculators, electro-medical equipment, overhead projectors, air-conditioning equipment), drugs and pharmaceuticals, and agricultural tools and other engineering products. Special mention must be made of handlooms, handicrafts and other traditional village products because of their export value. The major industry groups that come under small industries are listed in Box A below.

Box A — Major Industry Groups in the Small Scale Sector

• Food Products
• Chemical and Chemical Products
• Basic Metal Industries
• Metal Products
• Electrical Machinery and Parts
• Rubber and Plastic Products
• Machinery and Parts except Electrical Goods
• Hosiery and Garments — Wool Products
• Non-metallic Mineral Products
• Paper Products and Printing
• Transport Equipment and Parts
• Leather and Leather Products
• Miscellaneous Manufacturing Industries
• Beverages, Tobacco and Tobacco Products
• Repair Services
• Cotton Textiles
• Wool, Silk, Synthetic Fibre and Textiles
• Jute, Hemp and Mesta Textiles
• Other Services

(iv) They make a noteworthy contribution to the balanced regional development of the country. Because small units use simple technologies and locally available material and labour, they can be set up almost anywhere without locational constraints, so the benefits of industrialisation reach every region.

(v) They provide ample scope for entrepreneurship. The latent skills and talents of ordinary people can be turned into business ideas and made real with little capital and almost no formalities — as Amar, Akbar and Anthony showed in the opening story, a small business can be started if one has the determination to achieve.

(vi) They enjoy the advantage of a low cost of production. Locally available resources are cheaper, and establishment and running costs are lower because overheads are low. This low cost of production is a real competitive strength.

(vii) Because of their small size, decisions can be taken quickly and in good time, without consulting many people as happens in large organisations, so new business opportunities can be captured at the right moment. …