Chapter 9: Small Business and Entrepreneurship

Small scale industries contribute to socio-economic development in the following ways:

1. Small scale industries constitute the largest share of industries in India. It accounts for around 45% of total exports. Some of the most prominent industries are gems and jewellery, sports goods, handicrafts, etc.

2. Small scale industries employ the second most number of people only after agriculture and also generate more opportunities for employment as per capital invested.

3. Manufacturing simple products with minimum capital investment, they benefit the people of the region and help eradicate regional imbalances with respect to industrial development.

4. By ensuring rapid decision making it enables faster implementation of projects that results in enhanced output.

5. It requires very less capital to start, thereby providing a means to interested citizens to become self-employed

6. Custom-made products for customers who are looking for customised solutions.

Small scale businesses help the economy in the following ways:

1. Small scale industries, especially rural and cottage industries, play a major role in providing employment opportunities to the population in rural areas. It is very helpful for people who are economically weak.

2. Small scale industries play a key role in distribution of income by providing the opportunity to set up industries all across the country.

3. As small scale businesses are active throughout the year, they provide employment opportunities round the year, and hence help in combating seasonal unemployment and improve conditions of the rural people.

4. Small scale businesses help drive the growth of economy. It accounts for 45% of overall exports, which greatly contributes to economy.

5. It helps in developing rural areas, and stops the inflow of rural population into urban areas in search of employment.

Small scale industries face the following problems:

1. There exists a lack of funds for people starting in this sector as investment is mostly self-financed and the other source of funds can be from moneylenders or local financial agencies or agents.

2. Small industries often face shortage of raw materials due to unavailability of finance. Also, the lack of a proper supply chain and logistics in rural areas results in shortage of raw materials that hinders proper functioning.

3. As the wages are less, they are able to hire semi-skilled labourers, which results in lack of talented manpower that impacts their efficiency.

4. The small scale industries are unable to spend significantly on marketing due to lack of funds

5. The products need to be sold in the market and this is done with the help of middlemen, that leads to eating away of profit.

6. There are many small scale industries that make use of outdated and also obsolete machinery. This lowers productivity and renders operations non-feasible.

These are some steps taken by the government for promoting business in small scale:

1. Established National Bank for Agriculture and Rural Development (NABARD) so that rural development can be promoted. This organisation is mainly involved in providing easy and cheap credit facility to small scale industries, cottage industries and rural industries.

2. SIDBI or Small Industries Development Bank of India was set up to help in providing financial assistance to small scale industries.

3. World Association for Small and Medium Enterprises or WASME is an international non-governmental organisation that helps address the problems of medium and small-sized enterprises. It has started a committee for Rural Industrialisation for designing a model for the growth and development of rural industries.

4. The government set up NSIC or National Small Industries Corporation in 1955 to promote, foster and aid the growth of small business in the country.

5. NCEUS or The National Commission for Enterprises in the Unorganised Sector was formed in September 2004 with the primary objective of improving the small scale industries and enhance their global competitiveness. It focuses on solving problems faced by small enterprises in the unorganised sector.

The following incentives are offered by the Government in backward and hilly areas:

1. Land: The government has offered lands at reduced rates in order to encourage setting up of small industries.

2. Banking and Finance: The Government is offering subsidies in loans, amounting up to 10-15% for establishing business in backward areas. This is done to encourage business, as capital is essential to start any business.

3. Raw Materials: Availability of raw materials for setting up industries in hilly or backward areas is very scarce, so the government has made sure to provide the raw materials such as cement, steel and iron to expedite industry set up.

4. Tax exemption: The Government has encouraged new business by promising tax exemption for industries in backward areas.

5. Power: Electricity is essential for a business and to operate machinery, so to help more businesses to start, the government is providing electricity at 50% discounted rate.

Cover the concepts below to answer all the questions from Chapter 9 of NCERT Class 11 Solutions Business Studies –

• Small business
• Nature of small scale industries
• Administrative setup for small scale
• Role of small business in India
• Role of small business in rural India
• Problems of small business in India
• Government assistance and special schemes for industries in rural backward and hilly areas
• NABARD – National Bank for Agriculture and Rural Development
• RSBDC – The Rural Small Business Development Centre
• NSIC – National Small Industries Corporation Ltd
• SIDBI – Small Industries Development Bank of India
• RWED – Rural and Women Entrepreneurship Development

Class 11 Business Studies of NCERT Solutions Chapter 9 provides a broad range of illustrative examples, which help the students to comprehend and learn quickly. The above-mentioned are the illustrations for the Class 11 CBSE syllabus. For more solutions and study materials of NCERT Solutions Class 11 Business Studies, visit BYJU’S or download the app for more information and the best learning experience.