In India, 'small and medium enterprises' (SME) is a generic term used to describe small scale industrial (SSI) units and medium-scale industrial units. Any industrial unit with a total investment in its fixed assets or leased assets or hire-purchase asset upto Rs10 million is considered as a SSI unit and investment upto Rs. 100 million is considered as a medium unit. In addition, an SSI unit should neither be a subsidiary of any other industrial unit nor can it be owned or controlled by any other industrial unit.

The SME sector produces a wide range of industrial products such as food products, beverage, tobacco and tobacco products, cotton textiles, wool, silk, synthetic products, jute, hemp & jute products, wood & wood products, furniture and fixtures, paper & paper products, printing publishing and allied industries, machinery, machines, apparatus, appliances and electrical machinery. SME sector also has a large number of service industries.#

The small scale sector in India comprises of a diverse range of units from traditional crafts to high-tech industries. The number of SSI working units (registered & unregistered) in India totaled 11.4 million in 2003-04-80.5 per cent of which are proprietary concerns and 16.8 per cent are partnership firms and private limited companies.


Importance of SSIs in India

SSI is one of the significant segments of the Indian economy, contributing about 7 per cent to the Indian GDP and providing employment to over 28 million people. The Indian SME segment's current production value is almost Rs 816,000 crore. It contributes to around 40% of industrial production & exports. It manufactures more than 8,000 diverse products, ranging from low-tech items to technologically-advanced products. The SSI sector targets both domestic as well global markets. SSIs sector is recognized as the engine of growth, accounting for about 70% of employment and contributes a significant amount for the growth of GDP. Globally, 99.7 per cent of all enterprises in the world are SME's and the balance 0.3 per cent are large-scale enterprises. By contrast, the SSI sector in India accounts for 95 per cent of all industrial units.

According to the Ministry of Small Scale Industries, the number of registered SSI units in India has increased from 11 million units in 2002-03 to 11.4 million units in 2003-04, up 3.6 per cent. The fixed investment grew by 5.04 per cent from Rs. 162,533 crore in 2002-03 to Rs. 170,726 crore in 2003-04. About 8,000 products are manufactured in the small-scale sector. The production of SSI units in India increased from Rs.311,993 crore in 2002-03 to Rs.357,733 crore in 2003-04.The industry groups-with a large share in the total production of SSIs such as textile products, wood, furniture, paper, printing, and metal products-have recorded high growth rates.

The exports grew at a faster rate than production in 2002-03. While production at current prices grew by about 10.53 per cent and exports rose by 20.7 per cent from Rs. 71,244 crore to Rs. 86,013 crore between 2001-02 and 2002-03. The industry groups with a large share in exports are hosiery and garments (29.0%), food products (21.4%) and, leather products (18%).

The SSI units continue to create employment. The number of employed in the SSI sector went up from 260.13 lakh in 2002-03 to 271.36 lakh in 2003-04. This sector is next only to agriculture in employment.