CBSE Class 11 - Business Studies - Small Business - Meaning and Nature (#cbsenotes)(#eduvictors)

Small Business - Meaning and Nature

Concept Points

1. In India, the ‘village and small industries sector’ consists of both ‘traditional’ and ‘modern’ small industries. This sector has eight subgroups. They are handlooms, handicrafts, coir, sericulture, khadi and village industries, small scale industries and powerlooms. The last two come under the modern small industries, while the others come under traditional industries.


2. The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 addresses these issues relating to definition, credit, marketing and technology upgradation. Medium scale enterprises and service related enterprises also come under the purview of this Act. The MSMED Act, 2006 came into force w.e.f., October, 2006. Accordingly, enterprises are classified into two major categories viz., manufacturing and services.




3. Manufacturing
In the case of enterprises engaged in the manufacture or production of goods pertaining to any
industries specified in the first schedule to the Industries (Development and Regulation) Act,
1951, there are three types of enterprises:

• Micro enterprise: investment in plant and machinery does not exceed twenty-five lakh rupees.
• Small enterprise: investment in plant and machinery is more than twenty-five lakh rupees but does not exceed five crore rupees.
• Medium enterprise: investment in plant and machinery is more than five crore rupees but does not exceed ten crores rupees.

4. Services
In the case of enterprises engaged in providing or rendering of services there are three types of enterprises:

• Micro enterprise: investment in equipment does not exceed ten lakh rupees.
• Small enterprise: investment in equipment is more than ten lakh rupees but does not exceed two crore rupees.
• Medium enterprise: investment in equipment is more than two crore rupees but does not exceed five crore rupees.

5. Village Industries
Industry located in a rural area which produces any goods, renders any service with or without the use of power and in which the fixed capital investment per head or artisan or worker is specified by the central government, from time to time.


6. Cottage Industries
Cottage industries are characterised by certain features like the following:

• these are organised by individuals, with private resources;
• normally use family labour and locally available talent;
• the equipment used is simple;
• capital investment is small;
• produce simple products, normally in their own premises;
• production of goods using indigenous technology

	Type of Industries	Investment Limit (₹)	Features
1.	Small Scale Industries	1 Crore	For specific production it can be 5 Crore
2.	Ancillary Small Industrial Unit	1 Crore	50% of output supplied to permanant unit.
3.	Export Oriented Unit (EOUs)	1 Crore	Exports more than 50% of its production. Can sell 25% in domestic market.
4.	Tiny Industrial Unit	25 Lakhs	Investment limit in plant and machinery is not more than 25 lakhs
5.	Women Enterprises	Any of the above	Owned and managed by woman and have capitalnot less than 51%
6.	Micro Business Enterprise	One Lakh	Investment in plant and machinery does not exceed 1 Lakh.