Small-Scale Industries (SSI): Types, Benefits and Registration Process

India is a country of culture, tradition, beauty, art, and taste. Individuals of all ages, castes, races and religions from all nooks and corners of the country work to cherish and propagate their respective art as far as they can. These attempts give rise to businesses and an industry that, even though small, are large in impact; financial, cultural as well as sentimental.This industry is identified as a Small-Scale Industry.

An industry or a sector is a group of companies, partnerships or enterprises that generally carry out business in similar products or services, or ones that are related to each other. These industrial sectors in India are divided into 3 categories based on the size of production and investment in the business. They are classified as:

1. Micro or Small Scale
2. Medium scale
3. Large Scale

In a general sense, small, micro, and medium scale industries are clubbed together as Micro, Small and Medium Enterprises (MSMEs) . Endearingly called the ‘Cottage Industry’, businesses in this industry are labour intensive and more artistic and skill based. The capital requirement in these businesses is low and they may provide products or services.Even though the reach of these businesses is relatively local, their benefits are extensive; for the people involved in the industry, their customers as well as the country’s economy. Especially in a developing country like India, these MSMEs are not only a big source of circulating currency and creating revenue, but also of providing employment to often uneducated individuals who have a skill and an expertise in the skill.‘Small’, however, by no means describes the reach of these enterprises as some of them reach as far as exporting to other countries. Village based industries sending their goods to the cities or to different states as well as selling it to tourists who happen to visit, as a part of the local heritage is the biggest source of earning for the industry.

• Beauty Parlours
• Bakeries
• Food processing such as jams, pickles, papads
• Rug weaving
• Hand-knit sweaters
• Garments embroidered or designed based on a local traditional method
• Jewellery, accessories making
• Candle making units
• Small toy manufacturers

Also Read: 5 Big Differences Between a Business Loan and an MSME Loan

The capital investment needed to be made in a smallscale enterprise is considerably low considering the fact that they are labour intensive, use minimal machinery and all locally sourced resources. Ownership and management: As these enterprises are usually solely owned by individuals, the management structure is simple because of which decision making is quicker and easier. Flexibility: Smaller scale of operation makes it easier for the business to adjust to the ever-changing demands of the customer base as well as the economy. Local support: Most, if not all, materials used in the sector are locally sourced. This increases the circulation of finances in the area. Apart from that, being a labour-intensive sector, it helps provide employment opportunities for local individuals.

Based on their function and the product that they deal in, small scale businesses are classified into four categories:

1. Manufacturing sector: This is the sector that deals with the production and supply of finished goods either for the purpose of further processing or of consumption. These are mostly individually owned and examples of it include products like certain clothing, school stationery, small toys, baked goods, or processed food like pickles or jam.
2. Service sector: This sector deals with the supply of services; independent as well as product related. Businesses like beauty parlours, repair shops, local bands and event management services, maintenance units, etc.
3. Ancillary sector: Businesses that undertake manufacturing of goods that are specifically used by other manufacturers for the processing and production of other finished goods are included in this sector. For example, textile looms that create fabric and embroidery for garments, packaging gear for foodstuffs, etc.
4. Export units: Small scale enterprises who export 50% or more of their product are classified as export units. Examples of these include pickles, jams, imitation jewellery, artistic garments, rugs, etc.

Also Read: Top 6 Government Loan Schemes for Small-Scale Industries

The government of India provides businesses belonging to this sector with several concessions, subsidiaries, and schemes; provided that the business proves that it belongs to the SSI. Even for this, the government has a set of limits and guidelines for what qualifies as a small scale business and how to register for it.The registration of a small scale business can be done under one of two categories:

1. Manufacturing unit: Enterprises that produce finished goods intended for further processing or consumption.
2. Service unit: Enterprises that provide services related to, or independent of, other products or services.

The government of India has specified the terms and conditions regarding which business is to be considered a small business. According to the MSMED Act, 2006 the revised regime set by the Finance Ministry w.e.f. July 2020 sets the limits as:

The digitisation of most processes, governmental or otherwise, has made everything much quicker, easier, and more convenient to complete. Including registering for a new business.The registration of an MSME can be done online on GOI’s Udyam Registration portal over on the official website: https://udyamregistration.gov.in/Government-India/Ministry-MSME-registration.htm On the website, there are options for entrepreneurs who are registering for the first time as well as for those wanting to re-register with the Udyam scheme .The process is easy to follow with the instructions for each step available on the website. Here is a basic look at the steps for first time registration of the MSME unit: Step 1: Open the official Udyam Registration website and select the option for New Entrepreneurs Step 2: Enter the initial details and generate the OTP Step 3: Fill in the registration application and submit it along with the necessary documents. On submitting it, you will receive a registration number. Step 4 : On successfully completing the application, the business will be registered within 1-2 business days. The registration certificate will be delivered to the applicant’s registered email address on completion of the process.And in these few simple steps, a new business can be registered as an MSME under the Ministry of MSME. Online registration of an MSME is paperless and totally free of cost.

To verify the authenticity of the applicant and of the business, the registration process requires a few documents to be submitted. These include but aren’t limited to:

1. Aadhaar card
2. PAN card
3. Any relevant certificates (handicap, OBC, SC/ST, etc.)
4. Proof of address of applicant as well as business
5. Account number and IFSC
6. Proof of type of business (sole ownership, partnership, Hindu Undivided Family, etc.)

One of the biggest advantages of registering as an MSME is the support the business gets from the government and, subsequently, from other relevant organizations. Some of the benefits that the government extends to MSMEs include:

1. Easier access to loans
2. Loans at lower rates than generally available
3. Preference while issuing any government tenders or contracts.
4. Tax benefits (in the form of concessions, exemptions, rebates, etc. as is applicable to the business)
5. Special schemes or loans for female entrepreneurs

Starting a business may be a dream to a lot of individuals. Especially in recent times, as the importance of starting local businesses and cherishing our heritage and artistic culture through them is coming to light, it is providing even more impetus to younger individuals to venture into entrepreneurship.The Government Of India is extending the help and ease of access of means to realise this dream of budding entrepreneurs. No matter the age, region or type of business, anyone can start a business of their own and live their dream through easily registering as an MSME.