The small scale industries plays an important role in job creation and employment. It further gives competition to large monopoly players and lay the foundation of sound economy.
The government has been following a policy of reservation of items for exclusive development in the small scale sector.
The rapid growth of small scale industries has a great relevance in the national economic policies of India.
Owing to the dearth of capital, India cannot easily build up large scale industries. So, the small scale industries can offer the large volume of employment. The farmers may be employed in the small and cottage industries during the idle season with a view to improving their economic conditions.
India has accepted the ideals of socialistic pattern of society. In order to attain this goal, it is necessary to prevent the rise of monopolistic units of production. This objective can be achieved by promoting the small scale and cottage industries.
The cottage and small scale industries are able to produce goods with artistic design and the cost of production is very low. Besides, these industries provide good opportunities for self employment.
India is a land of agriculture. About 70% of the total population depends on agriculture for their livelihood. This results in endless sub-division and fragmentation of holdings. The cottage and small scale industries should be promoted so that the surplus people can depend on them.
Moreover there is no need of foreign exchange resources for the development of small scale and cottage industries. Hence these industries may be able to solve the balance of payment difficulties and also check the inflationary pressure in India.