Question

State the problem faced by Small Scale industries.

Point out three important problems faced by small scale industries.

Answer 1

Problems faced by Small Scale Industries:

1. Outdated Technology: Traditional methods of productions are used due to lack of finance and knowledge about the latest technology. This results in the poor quality of production with a low output.
2. Problems of Infrastructure: Problems of infrastructure faced by small businesses are power cuts, improper transport facilities, problems like congestion, bottlenecks, strikes, a rise in freight charges, inadequate space, bad repair of premises, unsuitable location, high rent, etc. These problems definitely affect the smooth working of small business.
3. Underutilization of Capacity: Small Scale Industries cannot utilize optimum resources and capacity ' due to lack of marketing skills, lack of demand, etc. This lead to an increase in the cost of product and wastage of resources.
4. Lack of Capital: Nationalised and Cooperative banks are not ready to provide finance without securities. Owners of Small Scale Industries don’t have any option other than borrowings funds from landlords and money lenders where they have to pay a very high rate of interest.
5. Problem of Skilled Labourers: Mostly unskilled and semi-skilled labourers are available to Small Scale Industries as they cannot afford the wages to the highly skilled labourer. This affects the quality and quantity of output, resulting in a lower price for sales.

Answer 2

Three Problems of SSIs

1. Small-scale industries lack capital resources.
2. They have to face high competition from large scale industries.
3. SSIs face marketing challenges due to a lack of a distribution network and expert sales personnel.