K.V.S. Sarma'

Immediately after independence the development of Small Scale Industries have been pursued as a conscious policy by government as a part of comprehensive' policy for industrial development. The industrial Policy Resolution of 1948 called for a dynamic national policy by highlighting the importance of the development for Small Scale Industries based on Gandhian economic policy side by side' with giant industries. The Ford Foundation Team visited India in 1953-54 and it also suggested a positive programme for the development of modern Small Scale.' Industries in India. The leading Indian economists like Prof. Wadia, Prof. K.T. Merchant, Prof. Lakadawala also made useful suggestions and recommendations to government, which have been instrumental to give proper shape to the Small Scale Industries in the present economic structure of India.

The Industrial Policy Resolution of 1956 also emphasised the importance and utility of the Small Scale Industries in providing numerous employment opportunities both for the educated and uneducated. The Industrial Policy statement of December 1971 emphasised on priority of place to Small Scale Village and Tiny Industries in the future strategy of Indian Industrialisation. It helped in extending the industrial activity from large metropolitan towns like Bombay, Calcutta, Delhi and Madras to semi-urban towns percolating even to rural villages. The Government also reserved about 850 items for small-scale sector controlling the activity of the big business by the licensing process.

Definition and Scope of Small Scale Industries: -

In the concept of Small Scale Industry some allied concepts also come within it. All these can broadly be called Small Scale Industries. The following units come under the purview of small-scale industrial units.

(1) SS1 unit

(2 Tiny Unit

(3) Ancillary Unit.

(4) Gramudyog Unit

(5) Women Entrepreneurs' Unit

(1) Small Scale Industrial Unit: -SSI sector broadly comprises of any Industrial undertaking engaged in manufacturing, processing, preservation, and mining and Quarrying and servicing and repairing of certain specified types of machinery / equipment. An undertaking unit having investment in fixed assets in plant and machinery whether held on ownership terms or by lease or by hire- purchase not exceeding Rs. three crores will qualify as Small Scale Industrial Unit. (SS1 Unit),

Under the SSI classified unit, in calculating the value of plant and machinery, the original price paid by the owner, irrespective of whether the plant and machinery are new or second-hand will be taken into account. Further, the cost of equipment such as jigs, tolls and fixtures, dies moulds and spare-parts for maintenance and cost of consumable stores will be excluded in computing value of plant and machinery. Similarly, the cost of installation of plant and machinery also will be excluded while taking into account. The cost of generating sets, if any, installed also will be excluded. Because as per the definition cost towards such items does not include investment in land, building and rectification.

(2) Tiny Unit: -An undertaking having investment in fixed assets in plant and machinery not exceeding Rs. 5 lakhs will qualify as Tiny unit.

(3) Ancillary Unit: -An undertaking having investment in plant and machinery not exceeding Rs. 75 lakhs and engaged in (i) manufacturing parts, components sub-assembling, tooling or intermediates, or (ii) rendering or proposing to supply or render 50% of their production or the total services, as the case may be to other units for production of other articles, will qualify as Ancillary Unit, provided that no such undertaking shall be subsidiary of, or owned or controlled by any other undertaking.

(4) Gramudyog Unit: -An undertaking established in a village having less than ten thousand population and having Investment not exceeding Rs. 15,000/- will qualify as Gramudyog unit.

(5) Women Entrepreneurs' Unit: -Any woman setting up an enterprise; owned and administered by her having a minimum of 51% of the share capital and employing atleast 50% women has been considered to be a woman entrepreneur. Such Units will qualify as Women Entrepreneurs' Unit.

The government provided number of benefits and incentives to SSI Units. In order to claim all these benefits the SSI Units have to register their names with industrial department of the concerned government.

From the above definition we find that this type of business can be conveniently carried on by a Partnership Firm or by a Private Limited Company. An individual will be too small and a Public Limited Company will be too big to run a SSI or its allied entities.

Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.

Partnership is a form of business organisation, where two or more join together for jointly carrying on some business. It is an improvement over the 'Sole- trade business', where one single individual with his own resources, skill and effort carries on his own business. Due to the limitation of the resources of only a single person being involved in the sole trade business, a larger business requiring more investment and resources than available to a sole-trader, cannot be thought of in such a form of business organisation. In a partnership on the other hand, a number of persons could pool their resources and efforts and could start a much larger business, than could be afforded by any of these partners individually. In case of losses also the burden gets divided amongst various partners in a partnership.

Any two or more persons can join together for creating partnership. The Companies Act, 1956 imposes a limit as to the maximum number of persons in a partnership. In a partnership for the purpose of carrying on banking business there can be a maximum of 10 partner whereas if the partnership is for carrying on any other business there can be maximum of 20 partner. If the number of members in any association exceeds the above stated limits, that must be registered as a company under the Companies Act, 1956, otherwise that will be considered to be an illegal association. As against partnership, where the maximum number of partners can be 10 or 20, depending on the nature of the partnership, there could be possibly much larger number of in a company. In a private company there can be maximum of 50 members, whereas in case of a public company there is no such limit to the maximum number. Therefore if a much larger business than could be afforded by only 10 or 20 persons is sought to be carried on a company works out to be a better form of business organisation than partnership. A company is an artificial person, distinct from its members, and as much longer life than that of a partnership whereas the partnership being nothing but an aggregate of all the partners. In the case of a company the liability of a member is limited to the extent of the amount of shares purchased by him, whereas in case of partnership the liability of every partner is not only unlimited but also joint and several.

A SSI is also an Industry and though in its initial stages, Labour, Industrial and Factories Act may not be applicable but after certain growth they will come within the ambit of all those laws. .

There are number of Rules and Acts which are supposed to be observed by SSI Units. The following are few of such Acts:

(1) Indian Electricity Act, 1910.

(2) Indian Smoke Nuisance Act, 1912.

(3) Employees State Insurance Act, 1948.

(4) Food Products Order, 1955.

(5) Iron and Steel Control Order, 1956.

(6) The Medical and Toilet Preparation (Excise Duties) Act, 1955.

(7) Minera1 Development and Regulation Act, 1957.

(8) Package Commodities (Regulation) Order, 1955.

(9) Drugs and Cosmetic Act, 1940.

(10) Paper control of production Order, 1974.

(11) Payment of wages Act, 1939.

(12) Minimum wages Act, 1948. etc.,

The above list is illustrative but not exhaustive.

A manufacturing or business entity may at once be Factory or an Industry or a Company and these concepts may be defined as follows:

According to Section 2 (M) of the Factories Act, 1948 "Factory means any Premises", here the manufacturing is being carried on by employing (a) ten or more persons, if power is used, or twenty or more persons, if power is not used.

According to Section 2 (j) of the Industrial Disputes Act, 1947 Industry "means any business, trade undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen."

Though an entrepreneur wishing to start SSI unit is not required to take a licence or permission under the Government's compulsorily, since he has to follow certain State and Central Government Rules and regulations, it has been found essential to register his unit with the Director of Industries. The Provisional Registration for the entrepreneurs proposed activity is given on presenting the following documents:

Two xerox copies of each of the following documents should accompany the application for a provisional registration:

(1) Rental receipt or rental contract for the proposed factory site/ purchase deed/ lease deed/ letter of allotment of the plot/ receipt for house tax and water rate.

(2) Partnership deed or certificate of incorporation t

(3) NOC from corporation/ Municipal council/ panchayat, clearly stating the description of the site, the Industry and name of the proposed unit

(4) A separate project report for approval if the end product is based on imported raw materials.

(5) N.A. order for industrial use, from the Revenue Department, if the proposed factory is to be erected on agricultural land/land having a survey No.

(6) The approval of the Town planning department, if the proposed factory falls in the metropolitan region, but out of the corporation area and city area.

(7) A separate scheme for approval in the prescribed form, if the end product is of an electronic nature.

For getting permanent registration of SSI Unit an entrepreneur has to comply with the following formalities:

The xerox copies of each of the following documents should accompany the application for a permanent registration:

(1) Rental receipts/lease deeds/purchase deed/Municipal tax receipt.

(2) Shop Act License/factories Act licence/ (Whichever is applicable).

(3) Municipal licence/Industrial licence ( if in a Municipal or Corporation area).

(4) Partnership deed/ Certificate of incorporation

(5) Income -tax assessment order

(6) Sales tax Registration (APGST & CST)

(7) Other essential licences like Central Excise Licence/Drug Control Licence/NOC from the Water Pollution Board (Whichever is applicable)

(8) Bills for machinery purchased together with the list of machinery certified by a chartered accountant.

(9) A sanction for Electricity /power or a electricity bill -

(10) Extracts from the purchase register of the preceding fifteen days (11) The first three sale notes/Cash Memos

(12) Extracts from the production register of the preceding fifteen days

(13) Extracts from worker's muster roll of the preceding one month.

That there are numerous government and non-governmental organisations which are dealing in the mission of imparting training suitable to the setting up the small scale industries. Even a non-governmental organisations like Rotary Clubs are also conducting such programmes for the benefit of the would be entrepreneurs. The Entrepreneurship Development Institute of India (EDII) is a national organisation which has been promoted by all Indian financial institutions and actively supported by the Government of Gujarat.

The following agencies are the important agencies which will guide the would be entrepreneurs:

(1) District Industry Centre.

(2) Directorate/Commissioner of Industries.

(3) State Financial Corporation

(4) Technical Consultancy Organisation

(5) Chamber of Commerce

(6) Agencies conducting Enterpreneurship Development Programmes

(7) Development Education International society.

There are some financial institutions which are helping to the young and educated entrepreneurs. Some of them are state Financial Corporation, Small Industries Development Bank of India, Industrial Credit and Investment Corporation of India.

Suggestions:

(1) For an establishment of SSI in rural and backward areas the government may liberally grant sizeable and suitable sites.

(2) Forward and backward linkages may be conveniently provided for the smooth running of the industry.

(3) In respect of industrial licences in urban and metro areas the ecological I protection must be ensured. I

(4) Innovative projects of low cost Information Technology should be encouraged keeping the needs of the present generation.

(5) The technical know-how for setting up and nursing the industry be made available at a cheap and expeditious way. (6) Ministry exclusively for promoting the SSI may be introduced. I

(7) Wide publicity through the media may be given in respect of the business areas available exclusively for Small Scale Industries.

(8) Awareness should be created among the educated youth for starting SSI units. It can be made through the electronic media i.e., Radio and T.V.

(9) Symposiums and Seminars may be organised by Government and educational institutions with the participation of non-governmental organisations in every district atleast once in three months at different places in the district to create awareness among the unemployed youth about the starting of SSI units.

(10) Training Programmes should be organised.