Small scale industries in India enjoy a distinct position in view of their contribution to the socio-economic development of the country. The following points highlight their contribution :
1. Small industries in India account for 95 percent of the industrial units in the country. They contribute almost 40 per cent of the gross industrial value added and 45 per cent of the total exports from India.
2. Small industries are the second largest employers of human resources, after agriculture. They generate more number of employment opportunities per unit of capital invested compared to large industries.
3. Small industries in our country supply an enormous variety of products which include mass consumption goods, ready-made garments, hosiery goods, stationery items, soaps and detergents, domestic utensils, etc.
4. The contribution of small industries to the balanced regional development of our country is noteworthy. Small industries which produce simple products using simple technologies and depend on locally available resources, both material and labour, can be set up anywhere in the country. Since they can be widely spread without any locational constraints, the benefits of industrialisation cem be reaped by every region. Thus, they contribute significantly to the balanced development of the country.
5. Small industries provide so many opportunities for entrepreneurship.
6. Small industries also enjoy the advantage of low cost of production. Locally available resources are less expensive. Establishment and running costs of small industries are on the lower side because of low overhead expenses. In fact, the low cost of production which small industries enjoy is their competitive strength.