Small Scale and Cottage Industries

Small scale and cottage definition according to fiscal commission in 1950 “a cottage industry is one which is carried on holly or primarily with the help of the members of the family, either as a whole or a part-time occupation. A small scale industry, on the other hand, is one which is operated mainly with hired labour, usually 10 to 15 hands” the basis of distinction between the large scale, medium scale and small scale industries is generally the size, capital resources and labour force of the individual unit.
According to the committee of economic development (USA) a small business is one which posses at least 2 of the following 4 characteristics;
1. Management of the firmest independent. Usually the managers are also the owners.
2. Capital is supplied and the ownership is held by an individual or a small group.
3. The area of operation is mainly local, with the workers and owners living in one home community. However, the markets need not be local.
4. The relative size of the firm within its industry must be small when compared with the biggest units in its field. These measures can be of sales volume, number of employees or other significant comparisons.
According to this definition, the industries development and regulation (IDRA) act, 1951 gave exemption to units employing less than 100 workers without power, from registration .this exempted sector has come to be know as the “small scale sector”
Another criterion of differentiation between small-scale and large scale industries is the amount of ‘fixed capital investment in a unit”. This limit has been continuously raised upwards. From 1975 on wards, the small scale had been ascribed to units with fixed assets not exceeding Rs.10 lacks 1980 and in the case of ancillary units Rs.15 lakes. The industrial policy statement of July 1980 revised upwards the ceiling on investment in plant and machinery from Rs.10 lakes to Rs.20 lakes in small-scale industries and from Rs.15 lakes to Rs.25 lakes in ancillary units.
It is this sector which holds much promise for the emergence of sub-contracting as a major strategy for competitive positioning of Indian industry. Small scale service establishment/enterprises are those engaged in personal or household services in rural area and towns with population of 15 lakes or less and having investment in plant and machinery not exceeding Rs.2 lakes.