Small Scale Industries (SSI) are those industries in which the

manufacturing, production and rendering of services are done on a

small or micro scale. These industries make a one-time investment in
machinery, plant, and equipment, but it does not exceed Rs.10 crore
and annual turnover does not exceed Rs.50 crore.

Introduction of SSI
Essentially the small scale industries are generally comprised of those
industries which manufacture, produce and render services with the
help of small machines and less manpower. These enterprises must fall
under the guidelines, set by the Government of India.

The SSI’s are the lifeline of the economy, especially in developing

countries like India. These industries are generally labour-intensive, and
hence they play an important role in the creation of employment. SSI’s
are a crucial sector of the economy both from a financial and social
point of view, as they help with the per capita income and resource
utilisation in the economy.

Characteristics of SSI

Ownership
SSI’s generally are under single ownership. So it can either be a sole
proprietorship or sometimes a partnership.

Management

Generally, both the management and the control is with the

owner/owners. Hence the owner is actively involved in the day-to-day
activities of the business.

Labor Intensive

SSI’s dependence on technology is pretty limited. Hence they tend to

use labour and manpower for their production activities.

Flexibility

SSI’s are more adaptable to their changing business environment. So in

case of amendments or unexpected developments, they are flexible
enough to adapt and carry on, unlike large industries.

Limited Reach

Small scale industries have a restricted zone of operations. Hence, they

can meet their local and regional demand.

Resources Utilisation
They use local and readily available resources which helps the
economy fully utilise natural resources with minimum wastage.

Role in the Indian Economy

Employment

SSI’s are a major source of employment for developing countries like

India. Because of the limited technology and resource availability, they
tend to use labour and manpower for their production activities.

Total Production

These enterprises account for almost 40% of the total production of

goods and services in India. They are one of the main reasons for the
growth and strengthening of the economy.

Make in India

SSI’s are the best examples for the Make in India initiative. They focus
on the mission to manufacture in India and sell the products worldwide.
This also helps create more demands from all over the world.

Export Contribution
 India’s export industry majorly relies on these small industries for their
growth and development. Nearly half of the goods that are exported
from India are manufactured or produced by these industries.

Public Welfare

These industries have an opportunity to earn wealth and create

employment. SSIs are also important for the social growth and
development of our country.

Seedbed for Large Scale Industries

SSI acts as the seedbed for Large Scale Industries (LSI) as it provides
conducive conditions for the development and growth of entrepreneurs.
Small enterprises require low investment and simple technology and
use local resources to meet local demands through personal contacts.
Thus, it creates scope for the growth and development of LSI.

Objectives of SSI
The objectives of the small scale industries are:

 To create more employment opportunities.

 To help develop the rural and less developed regions of the economy.

 To reduce regional imbalances.

 To ensure optimum utilisation of unexploited resources of the country.

 To improve the standard of living of people.

 To ensure equal distribution of income and wealth.

 To solve the unemployment problem.

 To attain self-reliance.

 To adopt the latest technology aimed at producing better quality products

at lower costs.

Types of SSI
SSI are primarily categorised into 3 types, based on the nature of work
carried out, which are as follows:

Manufacturing Industries

The manufacturing industries manufacture finished goods for

consumption or used further in processing. Some examples of such
SSIs are food processing units, power looms, engineering units, etc.

Ancillary Industries

Ancillary industries manufacture components for other manufacturers.

These manufacturers then assemble the final product. Big companies
manufacture finished goods, but they do not generally make all the parts
themselves. The vendors of such big companies are ancillary industries.

Service Industries

Service-based industries are not involved in any kind of manufacturing

products. They provide services such as repair, maintenance and
upkeep of the products after-sales.

Other types of SSIs are as follows:

Export Units

An SSI is considered as an export unit when the exporting is more than

50% of its production.

Cottage Units

The cottage units are considered as SSIs when they do not involve a
dedicated facility and are carried out within living spaces or houses of
the owners.

Village Industries

An SSI is considered village industries when they are established in

rural areas and are not part of the organised sector. Typically, these
industries solely depend on human labour for production.
 Examples and Ideas of SSIs
in India

 Bakeries

 School stationeries

 Water bottles

 Leather belt

 Small toys

 Paper Bags

 Photography

 Beauty parlours

 Spinning and weaving industry

 Coconut oil making

 Cashew nut processing

 Clay products

 Agarbatti making

 Chalk making

 Biodiesel production

 Rice mill

 Toys making
 Honey processing

 Slippers making

 Detergent powder making

 Spices making

 Chocolate making

 Water bottles manufacturing

 Toothprick making

 Xerox and printing

 Pickle manufacturing industry

 Incense stick manufacturing industry

 Paper plate manufacturing industry

 Candle manufacturing

Pre-requisites for
Establishing SSI
An entrepreneur should pass through the following stages for the
establishment of an SSI:

 Decision on the Ownership

 An entrepreneur wishing to establish an SSI must first decide on the
ownership structure of the SSI. The SSI can be established as a sole
proprietorship firm, partnership or company.

 Product Selection

Next, entrepreneurs must decide whether the SSI will venture into
manufacturing or provide service, the product/product range that needs
to be manufactured and the quantity of production of products or the
service that will be provided.

 Location

The location must be selected where the unit is to be established. The

size of the plot, exact site, covered and open area must be decided.
Once the location is finalised, the SSI unit should be established in that
location and the business operation can start. The location of the
established unit will be the registered address/primary address of the
SSI unit.

 Registration

After the unit is established at the decided location, the SSI must obtain
the Shop and Establishment Act registration, company registration, or
partnership firm registration, as applicable. Once the registration is
obtained, the establishment can start its business.

 SSI Registration
 SSI/MSME registration can be applied at any time after the unit obtains
the Shop and Establishment Act registration, company registration, or
partnership firm registration. If SSI registration is applied before
production, the turnover and investment details must be mentioned as
zero in the registration application. If SSI registration is applied after the
SSI units start production, then the turnover and investment details will
be automatically filled in the registration application from the ITR of the
unit.

 Machinery and Equipment

The machinery and equipment required for manufacturing the chosen

products or providing services have to be decided. The machinery and
equipment with the latest technology must be procured and installed in
the SSI unit.

 Power and Water Connection

The plot where the enterprise is located or SSI unit is established

should have adequate power and water connections. If pollution board
permissions are required, all such permissions from the respective
authorities must be obtained for the SSI unit.

 Recruitment of Manpower

Once the machines and equipment are installed on the unit and the
required permissions are obtained, the need for manpower arises to run
 them. The required manpower must be employed for starting and
running the business unit.

 Procurement of Raw Materials

Raw materials are important for running an enterprise. The manpower

will require raw materials to work upon the installed machinery or
equipment to manufacture or provide service.

 Production

After procuring the raw materials, the SSIs can start production of the
products of the units. The products manufactured by the SSI can be
sold in the market after considerable units are produced.

 Marketing

When the products are manufactured or services can be provided, the

entrepreneurs must market their products or services to gain customers
and grow business.

 Quality Assurance

Before marketing the products, the product quality certification from the
respective authorities such as BIS, AGMARK, HALLMARK, FSSAI, etc.,
must be obtained.
 Registration of SSI
SSI registration is a registration provided by the Ministry of MSME. A
business should obtain SSI registration in order to be eligible for a
number of schemes, subsidies and other incentives provided by the
Government to such SSI’s. SSI registration can be obtained online too.

Overview of SSI Registration

SSI registration is provided by the Ministry of Micro, Small and Medium

Enterprises (MSME) through the Directorate of Industries of the State
Government. The main logic behind the SSI registration is to set up new
SSI businesses in India. SSI registration helps the business to be
eligible for a number of subsidies given by the Government. We can
also get SSI/MSME registration online through Udyam Registration.
Let’s look at the process of SSI/MSME registration online:

 Visit the Udaym Registration portal and click on the “For New
Entrepreneurs who are not Registered yet as MSME or those with EM-II”.

 Fill in your “Aadhaar Number” and “Name of the Entrepreneur” and click
on the “Validate and Generate OTP” button.
 You will receive OTP to your mobile number. Enter OPT on the PAN
verification page will open. Enter PAN details and click on the “PAN
Validate” button.

 The Udyam Registration page will open. Fill in all the personal details and
industry details such as industry name, address, bank account details and
some common information and click on the “Submit and Get Final OTP”
button.

 With this the MSME registration is complete and a message of successful

registration with a reference number will appear. After verification of
registration, the MSME Registration Certificate is issued.

If a person wants to get registration for more than one industry then also
he/she can opt for an individual SSI registration. The documents
required for the SSI registration are the Aadhar number and PAN
number. No registration fees are required for the registration.

Eligibility Criteria for SSI

Registration

SSI registration can be obtained for enterprises that are considered as

micro and small enterprises under the MSME Act, 2006.
 A micro enterprise is an enterprise whose investment in plant,
machinery and equipment does not exceed Rs.1 crore, and turnover
does not exceed Rs.5 crore.

A small enterprise is an enterprise whose investment in plant,

machinery and equipment does not exceed Rs.10 crore, and turnover
does not exceed Rs.50 crore.

Benefits of obtaining SSI

Registration

 There are various tax rebates offered to SSI’s.

 A credit for Minimum Alternate Tax (MAT) is allowed to be carried forward

for up to 15 years instead of 10 years.

 There are many government tenders that are only open to the SSI.

 Easy access to credit as banks and financial institutions offer many loan
schemes for small businesses.

 Once registered the cost of acquiring a patent, or the cost of setting up the
industry reduces as many rebates and concessions are available.

 Businesses registered as SSI are given a higher preference for

government licenses and certification.

 SSIs can obtain collateral-free automatic loans for the purchase of raw
materials, fulfilling operational liabilities or restarting the business.
 There are several government schemes that provide support to SSIs.
These schemes are listed below:

 Credit Guarantee Fund Trust for Micro and Small Enterprises

(CGTMSE) provides institutional credit to small scale industries.

 Credit Linked Capital Subsidy Scheme (CLCSS) is an extension of

credit for the upgradation of technology in SSIs.

 Market Promotion and Development Scheme (MPDA) helps SSIs to

set up marketing complexes or khadi plazas to expand the marketing
network of Khadi and Gram Udyog products.

 Coir Vikas Yojana (CVY) scheme envisages a wide range of activities

like skill development of artisans, mahila coir yojana, upgrading and
establishing a new unit under Coir Industry Technology Upgradation
Scheme (CITUS), promoting the domestic as well as an export
market, providing of trade and industry-related functional support
services, and welfare of coir workers.

 International Cooperation Scheme arranges for delegations to other

countries for exploring technology upgradation, facilitating buyer-
seller meets in foreign states.

 Marketing Assistance Scheme allows for arranging overseas

exhibitions, campaigns and other promotional activities.

 Procurement and Marketing Support Scheme aims at improving the

domestic markets and promoting new market access.
  Entrepreneurship Skill Development Programme scheme aims to
develop entrepreneurial skills in youth who are keen on setting up
SSIs.

Administrative Bodies for

SSIs
Several administrative bodies were established under the Ministry of
Small Scale Industries and the Ministry of Agro and Rural Industries to
help sustain and encourage SSIs. However, after these two Ministries
merged into the Ministry of MSME, all of the SSIs are administered by
the Ministry of MSME. The following are the government administrative
bodies that are operating under the Ministry of MSMEs to provide help
to the SSIs:

 Office of Development Commissioner (MSME)

 Khadi Village Industries Commission (KVIC)

 Coir Board

 National Small Industries Corporation Limited (NSIC)

 National Institute for Micro, Small and Medium Enterprises (NIMSME)

Are SSI and MSME the same?

Yes. Earlier industries that manufactured goods, produced goods and

provided services on a small scale or micro-scale were granted Small
Scale Industries (SSI) registration. Subsequently, the government
passed the MSME (Micro, Small and Medium Enterprises) Act in 2006.
The small and micro industries came under the MSME Act. Thus, both
SSI and MSME are the same. The government broadened the scope of
the SSI and termed it as MSME.

What are the documents required to

apply for SSI registration?

The Ministry of MSME issues the SSI/MSME registration for small and
micro industries. An individual must apply on the Udyam Registration
portal to obtain SSI/MSME registration. Only the PAN card of the
proprietor and the Aadhaar card is required for SSI registration.

When did SSI and MSME become one?

On 9 May 2007, subsequent to an amendment of the Government of

India (Allocation of Business) Rules, 1961, the Ministry of Small Scale
Industries and the Ministry of Agro and Rural Industries were merged to
form the Ministry of Micro, Small and Medium Enterprises. Thus, the
SSIs are included under the Ministry of MSME now.

Do I need a GST registration to apply for

SSI registration?

It is not mandatory to have a GST registration for obtaining an

MSME/SSI registration when the enterprise is not covered under the
GST act. If the enterprise requires GST registration under the GST Act,
then such businesses need to mandatorily obtain GST registration for
applying to SSI/MSME registration.

What are the fees for SSI registration?

There are no fees for applying to the SSI registration. The MSME/SSI
registration is free of cost.