Question

Attempt the following.

Explain the meaning of Small Scale industries.

Answer 1

Small Scale Industries are those industries where fixed assets i.e. plant and machinery which is owned or hired or taken on lease basis, do not exceed more than one crore. MSMED has classified Small Scale Industries into the manufacturing sector and services sector, and further into three categories of business i.e. Micro business, Small business, and Medium business.

Subsequently, over a period of time, a new definition was introduced by the MSMED Act, 2006 (Micro Small and Medium Enterprises Development) is as follows:

(A) Manufacturing Enterprises:

1. A micro enterprise, Where the investment in plant and machinery is less than Rs. 25 lakh.
2. A small enterprise, where the investment is more than Rs. 25 lakh but less than Rs. 5 crores.
3. A medium enterprise, where the investment in plant and machinery is more than Rs. 5 crores but less than Rs. 10 crore.

(B) Service Enterprises:

1. A micro enterprise, where the investment in equipment is less than Rs.10 lakh.
2. A small enterprise, where the investment in equipment is more than Rs. 10 lakh but less than Rs. 2 crores.
3. A medium enterprise where the investment in equipment is more than Rs. 2 crores but less than Rs. 5 crores. An industrial unit can be categorized as a small business if it fulfills the above capital investment criteria.