Small Scale Industries in India – Types, Registration, and Benefits

March 06, 2025

11 min read

Small scale industries are labour intensive yet require little capital. Small scale industries can be either manufacturing industries or service providers. Small scale industries comprise of small enterprises that manufacture goods or provide services with the help of smaller machines and a few workers and employees.

The enterprise must fall under the guidelines set by the Government of India. Small scale industries in India are the lifeline of the Indian economy, and they offer several job opportunities for skilled laborers. After all, small scale industries are essential for the economy from a financial and social point of view.

For a developing country like India, these industries bloom because of huge demand and opportunity. Some small-scale industries are also exporting goods, thereby bringing foreign currencies in India. In India, nearly half of the products (45-55%) shipped are from Small scale and mid-scale industries. Some small-scale industries are created because of the demand of vendors for multinational companies.

Characteristics of SSI (Small Scale Industries)

Small Capital Investment

As opposed to large scale industries, SSIs (small Scale Industries) typically run on lean capital. The companies operating under this industry often require minimal capital to set up as the targeted scale of production, labour employment, and footprint in the market is fairly limited, which allows the entrepreneur to operate the business on lesser capital as compared to the large scale industries.

Limited Production Capacity

The companies operating in the small scale industries are usually in the initial phase of the business. Which means that the company is operating on limited capital, and is yet to transition into a company which operates at a much larger scale. This contributes to the limited production capacity of the small scale businesses.

Simple Organizational Structure

Since small businesses operate on fairly limited resources, it allows them to have limited stakeholders. Also, due to the fact that these companies run at a smaller scale, the organization can be managed with a fairly limited number of employees, with an efficient oversight structure. Hence micro and small enterprises often have a fairly simple organizational structure, often with an absence of board of directors.

Use of Local Resources

Ample of SSI Units (Small scale businesses) make use of local resources. Due to cost constraints, and lean operations, the businesses often look for easy to acquire resources, which helps in easier management, and lower costs.

Limited access to Capital or Credit

This is one of the most common characteristics among the list of small scale industries in India. Limited access to capital and credit essentially is a limiting factor which makes it difficult for small scale businesses to grow into larger operations. This issue is something which is actively tracked, and efforts are being taken to tackle the limited access to capital or credit in the form of government run schemes, easier capital availability in the form of MSME loans, among many more.

The Government of India has some guidelines for small scale industries in terms of investment the company is making and the revenue it has generated. Small scale industries are categorized into three parts: manufacturing/production, ancillary, and service industries.

Manufacturing Industries

Units that produce finished goods either for consumption or used in processing industries. These types of small scale industries are generally individually owned. Manufacturing small scale industries examples are as follows:

Food & Beverage Manufacturing : Companies under these categories after registration of SSI, also have to go through additional certification from relevant health & safety departments like FSSAI, however, once all the regulations are complied with, the companies operating can be hugely popular due to the fact that the target market is fairly big, and the raw material is easily available at a favorable price due to India being big on agriculture
Textile Manufacturing : This is one of the most famous forms of SSI in India. Textile manufacturing using traditional methods also forms a part of the small skill industry in the country, and regular efforts are being put to ensure preservation of the skill.
Leather Goods manufacturing : India has been on the forefront of leather manufacturing for a long time now. The industry is booming, and experts suggest that although veganism and non-cruel alternatives are on the rise, the traditional high quality craftsmanship should not be impacted much.
Furniture Manufacturing : Furniture manufacturing meets almost all the characteristics and objectives of SSI, these businesses boost local craftsmanship, can be operated on a fairly slim model
Paper & Paper products manufacturing : Due to the ongoing effort towards replacing plastic, products at smaller levels like straws are being replaced by alternatives made out of paper.Paper products industry almost always shines among the industry names with positive environmental impact and good returns on investment while being fairly easy to run and less capital intensive.

Ancillary Industries

Big companies or MNC manufactures finished goods, but they don’t generally make all the parts themselves. Vendors of these companies are ancillary industries. Ancillary industries can also be identified as those companies which make machines for multinational companies or medium scale industries.

Service Industries

Repair shops and maintenance services
Tourism & Hospitality Services : Tourism and Hospitality makes for a major chunk in the micro industries segment. Players such as travel agents, Tour Guides, event planning companies, transportation makes up for a huge portion of the total tourism industry.
Education & Training Services : Education & Training services are one of those businesses that are highly specialized and run on an efficient small scale industries model.
Beauty & Wellness Services : The businesses operating under this subsector of the small scale businesses require a highly trained hand, however run on a highly profitable model.
Professional Services : Services like tax planning, legal consultancy, accounting, although are professionally relayed services which often have some big players, however small players make for a majority of business done in the industry. These are often described as best small scale industries participants due to the fact that they are highly specialized, irreplaceable, and have a good future scope.
Cleaning & Sanitation Services : Professions such as housekeeping services, office cleaning, waste management businesses and recycling services are a part of the cleaning & sanitation services in the small scale industry. These can be highly lucrative from the profits point of view as the overheads are usually less.

Other than these types of industries, there are feeder industries and mining or quarries.

Registration for Small Scale Industries

In India, registration of small industries is fairly simple. One can own or invest in small scale industries with minimal documentation and little investment. Small scale industry registration is hassle free, and the government also supports with finance for you to invest in small scale industries. Under the Udyog Aadhar scheme, you can even fill the online registration form to get the registry done. SSI registration is free of cost, and you do not have to pay for processing. You will get the certificate on your registered email id after the document verification and processing by the executives. Contact details, Bank/account details, additional details of the business, employees and investment are the mandatory part to fill the registration form. You may also have to submit a scanned copy of the documents in which the Aadhar card is compulsory. Micro and small scale industries registration has been made so easy under several schemes provided by the government of India.

Small Scale Industries In India %E2%80%93 Types Registration And Benefits Visual Selection

Benefits of SSI/MSME registration

The banks and financial institutions provide loans for the business after SSI registration, and it becomes hassle-free. Once the booking is made, tax rebate can be availed. To participate in government tenders, it becomes mandatory to have the registration done beforehand. As a lot of concessions and discounts are available, it becomes smooth, and the cost of setting up the industry reduces.

Also Read: Best Profitable Small-Scale Industries in India

Classification of Small Scale Industries:

As per the MSMED Act 2006: Classification of the Manufacturing process

An industry is a small enterprise of investment in plant and machinery is more than 25 lakhs but does not exceed five crores.

As per the MSMED Act 2006: Classification of Service enterprises

An industry is a small enterprise if investment in equipment is more than ten lakhs but does not exceed two crores

Ancillary small industrial unit: Minimum 50% of the production is to be supplied to the parent unit and investment in plant and machinery should not exceed one crore.

Small-scale industries owned and managed by women entrepreneurs: Women entrepreneurs have share capital not less than 51 % (individual or jointly)

List of Small Scale Industries

In small scale industries, manufacturing industries grow very fast due to the natural supply of raw materials and huge demand in public. In south India, the summit held where KSSIA (Karnataka Small Scale Industries Association) was also present in January 2019, had a motive to discuss the key issues and find a solution to them at the same time provide the right environment for the growth and development. The major Small scale industries in Tamilnadu and small scale industries in Kerala are spinning and weaving, coconut oil making, cashew nut processing, clay products etc. Small scale ancillary industries in Hyderabad have a vast number of employment due to various multinational companies. Foreign investment is as essential as it creates a huge no. of ancillary small scale industries and thereby creating work.

Some examples of small scale industries are: Agarbatti making, Chalk making, Biodiesel production, Sugar candy manufacturing, Wood making, Rice mill, Potato chips making, Toys making, Microbrewery, Liquid soap making, Honey processing, Slippers making, Detergent powder making, Fruit juice production plant, Spices making, and Chocolate making.

Also Read: Best profitable small scale industries in India

These are some of the ideas from a different industry and a variety of products.

Administrative Bodies for Small Scale Enterprises

There are government bodies set up for the welfare of the members of small-scale industries. The Ministry of small scale industries designs policies, schemes and programs to promote the small scale industries. The Ministry of Agro and rural industries coordinate and help in the development of villages and khadi industries, micro and tiny industries in rural and urban areas.

Tips to Keep in Mind to Avoid Problems in Handling Small Scale Enterprise

Shortage of funds and raw materials – The most severe problem and money management should be done at all levels
Marketing problems – Proper advertisement to run the show every time
Quality – To fulfil the demand, one should not compromise with the condition.
Technology – Be on par with the latest technology. It helps to reduce the cost of investment and increases the quality
Managerial skills – To handle the labour class and get the work done from them.

Frequently Asked Questions

What are small scale industries?

Small Scale Industries are industries that manufacture products in a small scale.

What kind of manufacturers are called small scale industries?

Industries like leather manufacturers, bakeries, photo studios, parlours and the like come under small scale industries.

What are the characteristics of a small scale industry?

The characteristics of small scale industries are: ownership, labour intensive, flexibility, management, reach, and resource utilisation.

What industries can be registered under SSI?

Manufacturing Enterprises and Service Enterprises can registered as SSI.

Small Scale Industries News

Tamil Nadu Small-Scale industry workers and farmers demand rain relief

Due to the intense heavy rainfall this year which lasted longer than usual, many small-scale industry workers and farmers have demanded compensation from the State Government for the loss suffered.

The Centre of Indian Trade Units (CITU) has demanded a yearly interim rain relief of Rs 5000 for workers in sectors directly affected by the rains, especially the appalam makers and Weavers.

The appalam industry has been hit hard by the heavy rainfall as they are dependent on sunlight for drying the flattened dough. With moisture in the air and lack of sunlight, they are not able to proceed with appalam making.

Weavers have lost their livelihood due to rains. The seeping rainwater into their houses has covered the loom pits with water, soaked the wooden looms, and destroyed the raw materials.

Farmers and agricultural workers have demanded a compensation of Rs.10000 and also requested for implementation of a gold loan waiver announced by the Government.

Updated Date: 21-12-2021