1. PROBLEMS & GROWTH OF COTTAGE AND SMALL SCALE INDUSTRIES

2. Problems faced by cottage and small scale industries
Problem of Raw Material:
These industries do not get raw material in adequate quantity. whatever raw material they get is poor in quality and high in price. It increases the cost of production and the goods produced are of inferior quality.
Lack of power:
These industries do not get regular power supply. There are frequent power-cuts. Small industries do not have alternative source of energy , so their production process suffers on account of shortage of power.

3. Old Methods of Production:
Problem of Finance:
These industries do not get adequate loan facilities , as they cannot offer good security because of poverty. They get very little financial accomodation from commercial banks and industrial co-operative societies. So they largely depend on private moneylenders for finance the latter change exorbitant
rate of interest in some cases compel the debtors to sell their finished products to them at cheap price. In this way, these industries are subjected to double exploitation.
Old Methods of Production:
These industries make use of old machines of production mostly. Old tools and equipments , like oil expellers and handlooms, are still in use. The result is fall in quantity of output and the goods produced are of inferior quality. Such goods have very little demand.

4. Problems of marketing:
These industries have to face a lot of difficulties in selling their goods at fair prices and in sufficient quantity. For eg.
Because of high cost of production, price of the finished product increases very high.
Outward appearance of the product is not so appealing, the goods also lack in uniformity.
Tastes of the people are also undergoing change, like earthen pottery is being replaced by aluminium and steel utensils. People like goods with ever changing designs. These industries fail to produce such goods.
These industries have no sales-promotion organisation of their own. They have to depend upon middlemen and brokers.

5. High cost of production:
Due to lack of funds, these industries, cannot afford to bear advertisement and promotion costs. So their goods are not so popular.
High cost of production:
Cost of production is high in these industries. It is due to high cost of raw material, old methods of production, unskilled labour and high per unit fixed costs because of small quantity of production.
Competition with Large-scale industries:
One of the main problems of these industries is that they have to face competition with large-scale industries. Finished products of large-scale industries are relatively cheap and are of good quality. So they cannot compete with large-scale industries.

6. More importance to Artistic Goods:
Cottage industries of India have so far, concentrated their attention on the production of artistic goods. Demand of these goods is limited, so these industries cannot increase their production.
Lack of Able Entrepreneurs:
These industries face shortage of competent entrepreneurs to run them. Workers are mostly illiterate, ignorant and orthodox. Due to lack of education, they are ignorant of new equipments and modern techniques of production. They are therefore unable to organise their industries efficiently.

7. Lack of Standardisation:
There is no standardisation of finished products produced by small-scale industries. So these industries do not get remunerative prices of their goods.
Sick units:
In India, about 85,187 small-scale units were sick in the year the sick units are running under loss.

8. EMPLOYEMENT GENERATION
SSI Sector in India creates largest employment opportunities for the Indian populace, next only to Agriculture. It has been estimated that a lakh rupees of investment in fixed assets in the small scale sector generates employment for four persons.
According to the SSI Sector survey conducted by the Ministry and National Informatics Centre with the base year of , the following interesting observations were made related to employment in the small scale sector.

10. Generation of Employment - Industry Group-wise Food products industry has ranked first in generating employment, providing employment to 4.82 lakh persons (13.1%). The next two industry groups were Non-metallic mineral products with employment of 4.46 lakh persons (12.2%) and Metal products with 3.73 lakh persons (10.2%).

11. In Chemicals & chemical products, Machinery parts and except Electrical parts, Wood products, Basic Metal Industries, Paper products & printing, Hosiery & garments, Repair services and Rubber & plastic products, the contribution ranged from 9% to 5%, the total contribution by these eight industry groups being 49%. In all other industries the contribution was less than 5%.

12. Production The small scale industries sector plays a vital role for the growth of the country. It contributes 40% of the gross manufacture to the Indian economy. It has been estimated that a lakh rupees of investment in fixed assets in the small scale sector produces 4.62 lakhs 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.

14. The number of small scale units has increased from an estimated 8
The number of small scale units has increased from an estimated 8.74 lakhs units in the year to an estimated lakhs in the year From the year this sector has exhibited a comparatively lower growth trend (though positive) which continued during the next two years. However, this has to be viewed in the background of the general recession in the economy. The transition period of the process of economic reforms was also affected for some period by adverse factors such as foreign exchange constraints, credit squeeze, demand recession, high interest rates, shortage of raw material etc.

15. Export contribution SSI Sector plays a major role in India's present export performance. 45%-50% of the Indian Exports is being contributed by SSI Sector. Direct exports from the SSI Sector account for nearly 35% of total exports. The number of small scale units that undertake direct exports would be more than 5000.

17. Opportunities Small industry sector has performed exceedingly well and enabled our country to achieve a wide measure of industrial growth and diversification. By its less capital intensive and high labour absorption nature, SSI sector has made significant contributions to employment generation and also to rural This sector is ideally suited to build on the strengths of our traditional skills and knowledge, by infusion of technologies, capital and innovative marketing practices.

19. The opportunities in the small scale sector are enormous due to the following factors : - Less Capital Intensive - Extensive Promotion & Support by the Government - Reservation for Exclusive Manufacture by small scale sector - Project Profiles - Funding - Finance & Subsidies - Machinery Procurement

20. - Raw Material Procurement - Manpower Training - Technical & Managerial skills - Tools & Tools utilization support - Reservation for Exclusive Purchase by Government - Export Promotion - Growth in demand in the domestic market size due to overall economic growth - Increasing Export Potential for Indian products - Growth in Requirements for ancillary units due to the increase in number of Greenfield units coming up in the large scale sector

21. Economic Indicators The Small Scale Industry today constitutes a very important segment of the Indian economy. The development of this sector came about primarily due to the vision of our late Prime Minister Jawaharlal Nehru who sought to develop core industry and have a supporting sector in the form of small scale enterprises. Small Scale Sector has emerged as a dynamic and vibrant sector of the economy. - Today, it accounts for nearly 35% of the gross value of output in the manufacturing sector and over 40% of the total exports from the country. - In terms of value added this sector accounts for about 40% of the value added in the manufacturing sector. - The sector's contribution to employment is next only to agriculture in India. It is therefore an excellent sector of economy for invest