Small Scale Industries (SSIs) are entities that are involved in the manufacturing, production, and services of products on a micro or small scale. The maximum investment in machinery, plants, and industries by Small Scale Industries cannot exceed Rs. 1 crore. Small Scale enterprises must come under the guidelines of the Government of India.
Small Scale Industries (SSI) are industries that manufacture, produce and render services on a small or micro scale level. In India, several SSIs exists in various fields such as handicrafts, toys, weaving, pickle making, food products, etc. These industries make a one-time investment in machinery, plant, and equipment, but it does not exceed Rs.10 crore and annual turnover does not exceed Rs.50 crore.Earlier industries that manufactured goods and provided services on a small scale or micro-scale basis were granted Small Scale Industries (SSI) registration by the Ministry of Small Scale Industries. However, after the government passed the MSME (Micro, Small and Medium Enterprises) Act in 2006, the small and micro-scale industries came under the MSME Act.
On 9 May 2007, subsequent to the amendment of the Government of India (Allocation of Business) Rules, 1961, the Ministry of Small Scale Industries and the Ministry of Agro and Rural Industries were merged to form the Ministry of Micro, Small and Medium Enterprises. Thus, the SSIs are included under the Ministry of MSME.
Currently, the SSIs are classified as small or micro-scale industries based on the turnover and investment limits provided under the MSME Act and they need to obtain MSME registration. The government provides many benefits to the small scale industries having MSME registration at present.
Enterprise Registration under Small Scale Industry (SSI)
The small scale industries are generally comprised of those industries which manufacture, produce and render services with the help of small machines and less manpower. These enterprises must fall under the guidelines, set by the Government of India.
The SSI’s are the lifeline of the economy, especially in developing countries like India. These industries are generally labour-intensive, and hence they play an important role in the creation of employment. SSI’s are a crucial sector of the economy both from a financial and social point of view, as they help with the per capita income and resource utilisation in the economy.
Ministry of Micro, Small, and Medium Enterprises (MSMEs) with the help of the Ministry of Small Scale Industries facilitates the registration process for Small Scale Industries. It is essential to obtain SSI registration to avail benefits of numerous government schemes, subsidies, and incentives. SSI registration form is available online for the applicant to fill and submit to get the registration number. According to the Ministry of Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, MSMEs are classified into two types:
1. Manufacturing Enterprise
2. Service Enterprise
Characteristics of SSI
Ownership- SSI’s generally are under single ownership. So it can either be a sole proprietorship or sometimes a partnership firm.
Management- Generally, both the management and the control is with the owner/owners. Hence the owner is actively involved in the day-to-day activities of the business.
Labor Intensive- SSI’s dependence on technology is pretty limited. Hence they tend to use labour and manpower for their production activities.
Flexibility- SSI’s are more adaptable to their changing business environment. So in case of amendments or unexpected developments, they are flexible enough to adapt and carry on, unlike large industries.
Limited Reach- Small scale industries have a restricted zone of operations. Hence, they can meet their local and regional demand.
Resources Utilisation- They use local and readily available resources which helps the economy fully utilise natural resources with minimum wastage.
Benefits of SSI Registration
- Loans at low or concessional interest rates
- SSIs can avail various tax rebates, after SSI registration
- SSI units are granted carry forward of credit for Minimum Alternate Tax (MAT) for up to 15 years
- Only SSIs are allowed to have access to certain government tenders
- Acquiring government licenses and certifications becomes easier once a unit receives a permanent registration
- As many concessions and rebates are available, therefore the cost of setting up of industry reduces
SSI Registration Eligibility Criteria
SSI registration can be obtained by both manufacturing units and service rendering enterprises. However, the registration eligibility criteria differ for SSI units in manufacturing and SSI units in service rendering as follows:
SSI registration can be obtained for manufacturing units if the investment in plant and machinery (excluding land & buildings) is within any of the following levels:
- Micro Enterprises: Investment of up to Rs.25 lakhs in plant and machinery
- Small Enterprises: Investment of up to Rs.5 crores in plant and machinery
- Medium Enterprises: Investment of up to Rs.10 crores in plant and machinery
SSI registration can be obtained for service rendering units if the investment in equipment (excluding land & buildings) is within any of the following levels:
- Micro Enterprises: Investment of up to Rs.10 lakhs in equipment
- Small Enterprises: Investment of up to Rs.2 crores in equipment
- Medium Enterprises: Investment of up to Rs.5 crores in equipment
Pre-requisites for Establishing SSI
- Decision on the Ownership – An entrepreneur wishing to establish an SSI must first decide on the ownership structure of the SSI. The SSI can be established as a sole proprietorship firm, partnership or company.
- Product Selection -Next, entrepreneurs must decide whether the SSI will venture into manufacturing or provide service, the product/product range that needs to be manufactured and the quantity of production of products or the service that will be provided.
- Location – The location must be selected where the unit is to be established. The size of the plot, exact site, covered and open area must be decided. Once the location is finalised, the SSI unit should be established in that location and the business operation can start. The location of the established unit will be the registered address/primary address of the SSI unit.
- Registration – After the unit is established at the decided location, the SSI must obtain the Shop and Establishment Act registration, company registration, or partnership firm registration, as applicable. Once the registration is obtained, the establishment can start its business.
- SSI Registration- SSI/MSME registration can be applied at any time after the unit obtains the Shop and Establishment Act registration, company registration, or partnership firm registration. If SSI registration is applied before production, the turnover and investment details must be mentioned as zero in the registration application. If SSI registration is applied after the SSI units start production, then the turnover and investment details will be automatically filled in the registration application from the ITR of the unit.
- Machinery and Equipment – The machinery and equipment required for manufacturing the chosen products or providing services have to be decided. The machinery and equipment with the latest technology must be procured and installed in the SSI unit.
- Power and Water Connection- The plot where the enterprise is located or SSI unit is established should have adequate power and water connections. If pollution board permissions are required, all such permissions from the respective authorities must be obtained for the SSI unit.
- Recruitment of Manpower- Once the machines and equipment are installed on the unit and the required permissions are obtained, the need for manpower arises to run them. The required manpower must be employed for starting and running the business unit.
- Procurement of Raw Materials- Raw materials are important for running an enterprise. The manpower will require raw materials to work upon the installed machinery or equipment to manufacture or provide service.
- Production – After procuring the raw materials, the SSIs can start production of the products of the units. The products manufactured by the SSI can be sold in the market after considerable units are produced.
- Marketing – When the products are manufactured or services can be provided, the entrepreneurs must market their products or services to gain customers and grow business.
- Quality Assurance- Before marketing the products, the product quality certification from the respective authorities such as BIS, AGMARK, HALLMARK, FSSAI, etc., must be obtained.
How to get Online SSI Registration in India
Step 1: Provisional SSI Registration
To obtain SSI registration the business must first apply for Provisional SSI Registration Certificate (PRC). Provisional Registration Certificate is given when the unit is in a pre-operative period and helps the SSI unit obtain term loans and working capital from financial institutions/banks under priority sector lending. In addition to helping obtain a bank loan, the provisional SSI registration certificate also helps the business obtain facilities for accommodation, land, other approvals etc. and obtain various necessary NOCs and clearances from regulatory bodies such as Pollution Control Board, Labour Regulations etc.
Provisional SSI registration can be applied for by a business at any time and an industrial license is not required. Once an application is made for Provisional SSI registration, the provisional registration is provided and no field enquiry is done. Provisional SSI registrations are valid for five years and if the entrepreneur is unable to set up the unit in this period, a fresh application for provisional registration can be made at the end of five years period.
Step 2: Start the Business
Start the business with the provisional SSI registration certificate. Commence activity or production.
Step 3: Permanent SSI Registration
Once the business commences production or activity, the business can apply for and obtain permanent SSI registration. Obtaining permanent SSI registration will help the business obtain the following benefits:
- Income-Tax exemption and Sales Tax exemption as per State Government Policy
- Incentives and concessions in power tariff as per State Government Policy
- Price and purchase preference for goods produced
- Availability of raw material depending on existing policy
Permanent SSI registration will be provided only if the following conditions are satisfied by the SSI unit: i) the unit has obtained all necessary clearances whether statutory or administrative, ii) the unit does not violate any restrictions in force, iii) value of plant and machinery is within prescribed limits and iv) the unit is not owned, controlled or subsidiary of any other industrial undertaking as per notification.
FAQs
What is the primary use of SSI registration?
SSI registration can be used in getting concessions and rebates from the government.
What is the maximum investment that can be done by SSI?
The maximum investment allowed for SSI is up to Rs. 1 crore.
