Economic Indicators of Small Businesses in India

Posted on February 7, 2011 by

The small-scale industries (SSI) in India have a very important role in the growth of the country. Production, employment, and exports act as economic indicators. A contribution of 40% of the gross industrial value is added to the Indian economy by the small businesses. When a million rupees of investment is made on fixed assets in small-scale sector, it is estimated to produce 4.62 million worth of goods or services. It has also been estimated that an approximate value addition of ten percentage points could be produced by them.

Several opportunities such as less capital intensive, manpower training, machinery procurement, export promotion, funding, and growth in demand in the domestic market help in the growth of small-scale industries.

Next to agriculture, it is the small-scale industry sector which provides a large-scale of employment opportunities for Indian population. It has been estimated that employment for four persons can be given when an investment of Rs. 100,000 is made in fixed assets in small-scale sector. The highest per unit employment rate was found in metropolitan areas (10) and the lowest was found in rural areas (5).

SSI sector in India also has a major role in exports. A contribution of 45%-50% of the Indian exports is through SSI sector. About 35% of the total exports are from the direct exports from SSI sector and 15% of them are through indirect exports of small-scale industries. More than 95% of the SSI exports are constituted by the non-traditional goods. An excellent growth rate had been seen by the performance of gems, jewelry, and garments units of SSI sector. Most of the exports of SSI sector include woolen garments, readymade garments, plastic products, and processed food and leather products.

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