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Understanding the Dynamics of Small Scale Industry: a Case Study of Indian Context

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Understanding the Dynamics of Small Scale Industry: a Case Study of Indian Context Journal of Critical Reviews ISSN- 2394-5125 Vol 7, Issue 7, 2020 UNDERSTANDING THE DYNAMICS OF SMALL SCALE INDUSTRY: A CASE STUDY OF INDIAN CONTEXT Waseem Khan1 1Institute of Business Management, GLA University, Mathura. Email: [email protected] Received: 19.02.2020 Revised: 21.03.2020 Accepted: 24.04.2020 Abstract This paper aims at analyzing the performance and status of small scale industries using data from ministry of ministry of MSME and RBI. To find out the performance of small scale industries with respect to units establishment, production, employment generation and export, five years compound annual growth rate has been calculated. Government has been given special focus on the promotion of small scale industries. Therefore, results reveals that in post 2000, a very sharp increment has been recorded in the unit establishment, production, employment and export of small scale industries. Study has some policy implication for future development of SSIs. Keywords: Small Scale Industry, Industrial Policy, Development, Rural Employment. © 2020 by Advance Scientific Research. This is an open-access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/) DOI: http://dx.doi.org/10.31838/jcr.07.07.186 INTRODUCTION number of factors play a vital role in expansion of small-scale History shows that the industrialization is the engine of industries such as availability of raw materials, affordable economic development of a country. The highly developed electricity, technical advice, organized marketing support for countries of the West like, U.S.A., Britain, Australia, New Zealand, their produce, and protection from the foreign competitors. and also Japan and China in Asia are the great example. It cannot be denied that small scale enterprises play a significant role in REVIEW OF LITERATURE nation’s economy. In manufacturing sector, small scale Cherunilm (1982) in his research article states that the village enterprises are those which have plants value between twenty and small industries with their low capital output ratio and high five lakh rupees to five crore, while in services sector it refers employment potential as well as high export potential of their whose enterprises which have more than ten lakh rupees but products occupied a very important place in the Indian economy. does not exceed two crore rupees. These industries have inherited artistic skills and local technologies. Small scale Das and Sirajuddin (1991) In their evaluation of report found enterprises provide vast economic opportunities to the that there is a need to take effective measures to expedite the underprivileged sections of the society, the poor, the middle class growth of khadi and Village industries and also for the all round etc. through employment and income generating. These units are development of this sector. A committee was constituted under boon especially for low income and technologically backward the chairmanship of the Prime Minister of India which proposed districts. Generally, small enterprises produces unique products an action plan for the development of Khadi and Village and services however producers have to face various obstacle to Industries. compete with large producers of organized sector. At times, Singh, Garg and Deshmukh, (2010) has discussed the strategy production of such goods involve the traditional artisans and for the development of small scale industry development in skilled craftsmen who learn the art of production form from their India. Small scale industries facing the pressure in sustaining in ancestors. Their goods produced by these units include dress highly globalized business environment. The objective of this fabrics such as khadi, wool, muslin, leather, silk, cotton etc, & study to analyzed the issue and constraint competitive priorities, many precious items like jewellery, ornaments, statues, idols, investment areas capability development and their relationship gems, stones, etc and also edible items like spices, oils, honey, with the performance of small scale industries. They have taken and these goods have huge demand in Indian as well as foreign data from 75 small scale industries and t-test and correlation markets. analysis has done to analyze the collected data. They found that Small scale and cottage industry is back bone of Indian economy cost reduction, improvement in quality and timely delivery of the due to its employment generation ability and high share in products are major challenges before the small scale industries. export and secondary sector output. Therefore government Study reveals that market research, employee welfare and R & D taken several measure to promote these industries. Due to were the major investing areas. Proper use IT, training of the reduction in the trade barriers, Indian small and cottage industry employee and R & D have a significant relationship with has gone through a very tough internal and external competition. performance of SSI. Study suggest that strategies should be Many time small scale industry and cottage industry are used develop after analyzing the business environment. interchangeably. However, general pereption is that cottage Gupta (2012) According to the present study the pre requisite industry are small family based business run by the family for overall well-being of the economy is depend on the members only while in SSI hired labour involved in the entrepreneurship development. Growth of a country is reliant on production process. These both kind of industry the generally the skilled entrepreneurs but the entrepreneurial activity is agricultural based and running their business operations in rural determined the ease of doing business in the country. The small areas. Therefore they are important source of livelihood in rural scale industries play an instrumental role in the creation of an areas. industrial climate i.e. entrepreneurs so as to it helps in proving Small scale industry (SSI) are specifically suited for the well- their competence to enhance a country’s economic development. organized deployment of local resources and to attain self- In the post-independence era, industrial development occupied reliance in the production of essential consumable items such as an important place in Indian economy particularly in the second food, handicraft items, cloth and tools use for agricultural. A five year plan. In the state of Assam where a large part of the Journal of critical reviews 1018 UNDERSTANDING THE DYNAMICS OF SMALL SCALE INDUSTRY: A CASE STUDY OF INDIAN CONTEXT population living in rural areas are yet to be industrially time many industrial resolutions has been passed to develop the developed. It further necessitates the implementation of various industrial sector and a significant thrust has been put on the rural development and welfare programmes like social, poverty expansion and growth of SSIs. There have been several studies eradication and employment etc. and also to organize this sector. on the topic of business environment of SSIs but a very limited literature has been found to identify the business environment Pradhan and Das (2012) analyzed the export of Indian for export oriented business units. Considering the limitation on manufacturing Small and medium enterprises. They analyzed the this topic, it is imperative examine the performance small scale determinants of export from manufacturing SMEs. He has taken industries for policy making perspective, as it would guide the CMIE data for 8486 Indian manufacturing firms ranging between policy makers to understand external and internal business during 1991 to 2008. They found that contribution of SMEs in environment of SSIs export and it would also helpful to develop organized manufacturing export was 7 percent in 2000-08 it was the marketing strategies and international trade policy for 8.8 percent in early 1990s. Study found that in SME product from the small scale enterprises. manufacturing product export concentrated in southern states followed by western Indian states. During 2000–08, Karnataka accounted 38 percent of countries export while Maharashtra was OBJECTIVES OF THE STUDY on second spot with 24 percent of total SMEs export from India. The primarily aim of this study is to examining over the year Further they build a regression model to analyzed the changes in small scale enterprises and analyze the business determinants of export. The regression model was estimated environment for the export of products from small scale through the Censored Quantile Regression. He has taken total 29 enterprises. Specific objectives are as follows: variable under five construct namely Region-specific variables, Input-related factors, other regional factors, Firm-specific • To analyze the policy changes to strengthen the small variables, Industry-specific variables and Policy variable. scale enterprises over the years. Analysis reveals that SMEs export was significantly affected by • To analyze the internal business environment of small some state specific factor like availability of port, credit scale enterprises export units. availability, association with foreign firms, technological • To analyze the performance of small sale industries in specialization. Study indicated that firm age and size significantly India. determine the export of SME. Further, analysis found that • To suggest the growth strategies for export units of variable like availability telecommunication and foreign small scale enterprises. technology found to the significant determinants
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