HPAS/Allied Mains 2022 Answer Writing Challenge Day 29: Model Answer

Question: List out the challenges faced by the Cottage and Small Scale Industries? (4 marks, 60 words)

Answer: 

Introduction:

• Most of the small scale industrial units are small in size and have limited financial resources.
• The entrepreneur himself is the owner and performs all managerial functions.
• There is no denying the fact that the contribution of small scale industries to Indian economy in terms of employment generation, industrial production and exports has been remarkable.
• However, despite various measures taken by government, the small scale units are still facing many problems in our country which lead to many small units turning sick and a number of them closing down.

BODY

• The challenges faced by small scale industries may be broadly classified into two categories as internal and external problems.
• The internal problems are : absence of technical know- how, old and obsolete plant and machinery and production methods, locational disadvantages, poor debt collection, low quality and ineffective marketing methods etc.
• The external problems, on the other hand, are : non availability of raw materials, power shortage, infrastructural bottlenecks, lack of coordination among promotional agencies, labour unrest, etc.
• Shortage of raw materials: The non-availability of raw materials at reasonable prices has always been a pressing problem faced by small scale entrepreneurs
• Lack of credit and finance: Inadequate arrangement for finance and credit is the main obstacle in the development of small scale units
• Low technology and skill: The methods and techniques of production in most of the SSI units are based on obsolete technology
• Problem of marketing: In the absence of proper marketing organisation, most of these industries are forced to restrict their sales to local market only.
• Shortage of power: The small producers are also affected by the problem of shortage of power
• Problem of technical assistance: Low level of technology and shortage of trained and experienced supervisory personnel have hampered the development of small scale industries
• Problem of sickness: The growing incidence of sickness is one of the most serious problems being faced by small scale sector in India.