Pic - :: One TO Ten Ten Major Problems faced
by the Small Scale Industries of India
In this subject
matter , there are certain arena where one has to lay importance on the
difficulties and the problems that surfaces the Indian Small Scale Industries,
and the heads or the areas of the concerns , where they are to be heeded and
needed to be addressed to save the anamolies and put the SSI units to the place
of growth and development.
There are major
problems that surmounts the Indian Small Scale Industries and even with all the
aid and the help coming to them , these industries have never been able to
sustain themselves and the end result of it was that most of them, after
showing good results to start with , have dwindled to the fate of absurdity and
anonymous .One shall discuss them in detail-:
Major problems faced by the small scale industries are : (1)
Finance (2) Raw Material (3) Idle Capacity (4) Technology (5) Marketing (6)
Infrastructure (7) Under Utilisation of Capacity (8) Project Planning!
Small
scale industries play a vital role in the economic development of our country.
This sector can stimulate economic activity and is entrusted
with the responsibility of realising various objectives generation of more employment
opportunities with less investment, reducing regional imbalances etc. Small
scale industries are not in a position to play their role effectively due to
various constraints. The various constraints, the various problems faced by
small scale industries are as under:
(1) Finance:
Finance is
one of the most important problem confronting small scale industries Finance is
the life blood of an organisation and no organisation can function proper у in
the absence of adequate funds. The scarcity of capital and inadequate
availability of credit facilities are the major causes of this problem.
Firstly,
adequate funds are not available and secondly, entrepreneurs due to weak
economic base, have lower credit worthiness. Neither they are having their own
resources nov are others prepared to lend them. Entrepreneurs are forced to
borrow money from money lenders at exorbitant rate of interest and this upsets
all their calculations.
After
nationalisation, banks have started financing this sector. These enterprises
are still struggling with the problem of inadequate availability of high cost
funds. These enterprises are promoting various social objectives and in order
to facilitate then working adequate credit on easier terms and conditions must
be provided to them.
(2) Raw Material:
Small
scale industries normally tap local sources for meeting raw material
requirements. These units have to face numerous problems like availability of
inadequate quantity, poor quality and even supply of raw material is not on
regular basis. All these factors adversely affect t e functioning of these
units.
Large
scale units, because of more resources, normally corner whatever raw material
that is available in the open market. Small scale units are thus forced to
purchase the same raw material from the open market at very high prices. It
will lead to increase in the cost of production thereby making their
functioning unviable.
(3) Idle Capacity:
There is
under utilisation of installed capacity to the extent of 40 to 50 percent in
case of small scale industries. Various causes of this under-utilisation are
shortage of raw material problem associated with funds and even availability of
power. Small scale units are not fully equipped to overcome all these problems
as is the case with the rivals in the large scale sector.
(4) Technology:
Small
scale entrepreneurs are not fully exposed to the latest technology. Moreover,
they lack requisite resources to update or modernise their plant and machinery
Due to obsolete methods of production, they are confronted with the problems of
less production in inferior quality and that too at higher cost. They are in no
position to compete with their better equipped rivals operating modem large
scale units.
(5) Marketing:
These
small scale units are also exposed to marketing problems. They are not in a
position to get first hand information about the market i.e. about the
competition, taste, liking, disliking of the consumers and prevalent fashion.
With the
result they are not in a position to upgrade their products keeping in mind
market requirements. They are producing less of inferior quality and that too
at higher costs. Therefore, in competition with better equipped large scale
units they are placed in a relatively disadvantageous position.
In order
to safeguard the interests of small scale enterprises the Government of India
has reserved certain items for exclusive production in the small scale sector.
Various government agencies like Trade Fair Authority of India, State Trading
Corporation and the National Small Industries Corporation are extending helping
hand to small scale sector in selling its products both in the domestic and
export markets.
(6) Infrastructure:
Infrastructure
aspects adversely affect the functioning of small scale units. There is
inadequate availability of transportation, communication, power and other
facilities in the backward areas. Entrepreneurs are faced with the problem of
getting power connections and even when they are lucky enough to get these they
are exposed to unscheduled long power cuts.
Inadequate
and inappropriate transportation and communication network will make the
working of various units all the more difficult. All these factors are going to
adversely affect the quantity, quality and production schedule of the
enterprises operating in these areas. Thus their operations will become
uneconomical and unviable.
(7) Under Utilisation of
Capacity:
Most of
the small-scale units are working below full potentials or there is gross
underutilization of capacities. Large scale units are working for 24 hours a
day i.e. in three shifts of 8 hours each and are thus making best possible use
of their machinery and equipments.
On the
other hand small scale units are making only 40 to 50 percent use of their
installed capacities. Various reasons attributed to this gross under-
utilisation of capacities are problems of finance, raw material, power and
underdeveloped markets for their products.
(8) Project Planning:
Another
important problem faced by small scale entrepreneurs is poor project planning.
These entrepreneurs do not attach much significance to viability studies i.e.
both technical and economical and plunge into entrepreneurial activity out of
mere enthusiasm and excitement.
They do
not bother to study the demand aspect, marketing problems, and sources of raw
materials and even availability of proper infrastructure before starting their
enterprises. Project feasibility analysis covering all these aspects in
addition to technical and financial viability of the projects, is not at all
given due weight-age.
Inexperienced
and incomplete documents which invariably results in delays in completing
promotional formalities. Small entrepreneurs often submit unrealistic
feasibility reports and incompetent entrepreneurs do not fully understand
project details.
Moreover,
due to limited financial resources they cannot afford to avail services of
project consultants. This result is poor project planning and execution. There
is both time interests of these small scale enterprises.
(9) Skilled Manpower:
A small
scale unit located in a remote backward area may not have problem with respect
to unskilled workers, but skilled workers are not available there. The reason
is Firstly, skilled workers may be reluctant to work in these areas and
secondly, the enterprise may not afford to pay the wages and other facilities
demanded by these workers.
Besides
non-availability entrepreneurs are confronted with various other problems like
absenteeism, high labour turnover indiscipline, strike etc. These labour
related problems result in lower productivity, deterioration of quality,
increase in wastages, and rise in other overhead costs and finally adverse
impact on the profitability of these small scale units.
(10) Managerial:
Managerial
inadequacies pose another serious problem for small scale units. Modern
business demands vision, knowledge, skill, aptitude and whole hearted devotion.
Competence of the entrepreneur is vital for the success of any venture. An
entrepreneur is a pivot around whom the entire enterprise revolves.
Many small
scale units have turned sick due to lack of managerial competence on the part
of entrepreneurs. An entrepreneur who is required to undergo training and
counseling for developing his managerial skills will add to the problems of
entrepreneurs.
The small
scale entrepreneurs have to encounter numerous problems relating to
overdependence on institutional agencies for funds and consultancy services,
lack of credit-worthiness, education, training, lower profitability and host of
marketing and other problems. The Government of India has initiated various
schemes aimed at improving the overall functioning of these units.
Well , that is it and That sums it all.
Regards and Thanks
Pics
Shyamal Bhattacharjee
Mr Shyamal Bhattacharjee, the author was born at West Chirimiri Colliery at District Surguja, Chattisgarh on July 6th 1959 He received his early education at Carmel Convent School Bishrampur and later at Christ Church Boys' Higher Secondary School at Jabalpur. He later joined Hislop College at Nagpur and completed his graduation in Science and he also added a degree in B A thereafter. He joined the HITAVADA, a leading dailies of Central India at Nagpur as a Sub-Editor ( Sports ) but gave up to complete his MBA in 1984 He thereafter added a Diploma In Export Management. He has authored THREE books namely Notable Quotes and Noble Thought published by Pustak Mahal in 2001 Indian Cricket : Faces That Changed It published by Manas Publications in 2009 and Essential Of Office Management published by NBCA, Kolkatta in 2012. He has a experience of about 35 years in Marketing .
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