SMALL BUSINESS The definition used by the Government of India to describe small industries is based on the investment in plant and machinery. This measure seeks to keep in view the socio-economic environment in India where capital is scarce and labour is abundant. One more important point to note is that a definition exists only for small and tiny units but not for large and medium units. Medium and large sized enterprises are not defined.
Anything that does not fall under the definition of small can be large or medium. Taking capital invested as the basis the small business units in India can fall under any of the following categories: (i) Small scale industry: A small scale industrial undertaking is defined as one in which the investment in fixed assets of plant and machinery does not exceed rupees one crore. However, to cater to the needs of small industries whose thrust is on export promotion and modernisation, investment ceiling in plant and machinery is rupees five crores. (ii) Ancillary small industrial unit: The small scale industry can enjoy the status of an ancillary small industry if it supplies not less than per cent of its production to another industry, referred to as the parent unit.
The ancillary small industry can manufacture parts, components, sub- assemblies, tools or intermediate products for the parent unit. Apart from catering to the needs of the parent unit, it can do business on its own. Ancillary units have the advantage of assured demand from parent units. Normally, the parent unit assists the ancillary unit by giving technical guidance as well as financial help.
(iii) Export oriented units: The small scale industry can enjoy the status of an export oriented unit if it exports more than per cent of its production. It can avail the incentives like export subsidies and other concessions offered by the government for exporting units. (iv) Small scale industries owned and managed by women entre- preneurs: An enterprise promoted by women entrepreneurs is a small scale industrial unit in which she/they individually or jointly have share capital of not less than per cent. Such units can avail the special concessions offered by the government, like low interest rates on loans, etc.
(v) Tiny industrial units: A tiny unit is defined as an industrial or business enterprise whose investment in plant and machinery is not more than Rs. lakhs. (vi) Small scale service and business (Industry related) enterprises: A small scale service and business enterprise is one whose investment in fixed assets of plant and machinery excluding land and building does not exceed Rs. lakhs.
(vii) Micro business enterprises: Within the tiny and small business sector, micro enterprises are those whose investment in plant and machinery does not exceed rupees one lakh. (viii) Village industries: Village Industry has been defined as any industry located in a rural area which produces any goods, renders any service with or without the use of power © NCERT not to be republished