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Practice each question, then open the answer or worked solution.
What are the different parameters used to measure the size of a business?
Some of the important parameters that are used to measure the size of business are listed below:
1. Capital invested in the business
2. Number of units produced by the business
3. Total number of persons employed by the business
4. Value of output of the goods produced
5. Power consumed by the business
What is the definition used by the Government of India for small scale industries?
As per the Government of India, small scale industries are those industries where manufacturing, rendering and production of services are done on a small scale. Here the investment is one time and the value is around 1 crore. The investment is done on machinery and plants. However, some export oriented units make use of modern machinery for production and the costs can go up to 5 crore for the same.
How would you differentiate between an ancillary unit and a tiny unit?
| Basis of Comparison | Ancillary industrial units | Tiny units |
| Definition | Units supplying 50% of production to the parent industries are known as ancillary units. | Industries that invest less in their machinery till 25 lakh are known as tiny units. |
| Investment limit | Investment can go up to 1 crore | Investment can be till 25 lakh |
| Obligation | These units supply 50% of their production to the parent company. | There exist no such rules or obligations |
| Examples | Examples of such industries will be those involved in production of tools, machine spare parts, utilities for primary industries. | Example of such units are shops selling stationery, photocopy centres. |
State the features of cottage industries.
Cottage industries are characterised by the following features:
1. These industries are owned by individuals who have invested their resources into these units.
2. Such type of industries do not hire much labour, it is mostly operated by family members.
3. Skills required for maintaining a cottage industry is often available within particular families.
4. The amount of capital invested is very less.
5. Production techniques are indigenous which requires labour-intensive work.
6. The production is primarily for consumption by self and family, while some portion of it is sold in the market to earn some money.