Role and performance of small scale industries in India

Pages: 550-553
Sunil Kumar (Department of Business Administration, Chaudhary Devi Lal University, Sirsa)

Small and medium enterprises play a very important role in the economy of any country and it is more so in a developing country like India. They play a role in boosting the economy of a country. The role of small and medium enterprises in the economic and social development of the country is well established. SME s emerges leaders during the period of recession, restoring jobs and business activity lost during the time despite a slow and fragile economy. The small-scale industries sector plays a vital role in the growth of the country. It contributes almost 40% of the gross industrial value added in the Indian economy. It has been estimated that a million Rs. of investment in fixed assets in the small scale sector produces 4.62 million worth of goods or services with an approximate value addition of ten percentage points. The small-scale sector has grown rapidly over the years. The growth rates during the various plan periods have been very impressive. The number of small-scale units has increased from an estimated 0.87 million units in the year 1980-81 to over 3 million in the year. When the performance of this sector is viewed against the growth in the manufacturing and the industry sector as a whole, it instills confidence in the resilience of the small scale sector. This paper would study the role of SME s in Indian Economy and its contribution to the economic development of the country as a whole. FDI plays an important role in any country’s economical activities. Companies big or small cannot solely depend on the conventional source of finance all together. For financial and technological support they have to depend on foreign resources. For big companies getting FDI is not difficult issue because of financial security, reach in global market and business experience but in SME/SSI it still an unsolved puzzle or a buzzword. The paper is concerned with one of the ways of contributing to strengthening the indigenous SME sector in a situation of resource scarcity. Specifically, the paper is concerned with the potential role of foreign direct investment (FDI) in relation to the long term competitive development and inter-nationalisation of the SME sector in transition and developing countries.