Medium Scale Industries in India
Economic development is one of the most common terms used in commerce, and it refers to the transformation of the economy from the condition of underdevelopment to the condition of development. Economic development or improvement consists of a constant decrease in the farming portion in GNP and a comparative increase in the portions related to exchange, businesses, administrations, and banking development. The process of industrialization involves raising capital in the process of production.
The country’s economic development eventually culminates in a better quality of life for the majority of its citizens. Various factors are used for measuring and determining the quality of life and it includes education, life expectancy, nutritious food, and life expectancy. Here we will have a brief look at the Medium Scale Industries in the country.
What is a Medium Scale Business?
Before understanding the different aspects related to the Medium Scale Business, it is important to understand the concept of Medium Scale Business. As per the government of India, any business or company can be referred to as Medium Scale that has an overall investment between 5 to 10 crores. The Medium Scale Industries and businesses contribute considerably to the employment, exports, and manufacturing output of the country. As per one of the estimations, this sector has a contribution of 45% in manufacturing production and approximately 40% of the total exports in India.
Understanding the Medium Scale Industries in Brief
The MSME sector presents the maximum opportunities for jobs and self-employment, away from the agricultural sector. The sheer scale of the industry and its inclusiveness is highlighted by the fact that underprivileged groups of society own about 50% of the MSME. The government has formulated various policies in recent times for making this industry one of the significant sectors in the global marketplace.
The Medium Scale Industries have a significant role in the overall economic development of India. The SME industries have contributed considerably towards bringing employment and equality to the workforce in the country. The Medium Scale Industries tend to be labour intensive and thus provide a massive platform for more employment for each unit of the capital employed.
Medium Scale enterprises tend to emulate the output from the low capital of entrepreneurship. There has been a rapid explosion and growth of Medium Scale Industries in India over the years. The Medium Scale Industries have a big role in meeting the sales and production requirements of small-scale as well as large-scale industries.
Employment: Medium-scale enterprises are labour intensive and thus create more employment per unit of capital employed. In all spheres of production in a developing economy, medium scale industries help enlarge the volume of employment with only scarce capital. Medium enterprises emulate output from low capital and entrepreneurship.
Role of Medium Scale Industries in India
The above table shows the fixed capital that is spent on employees by a small and medium enterprise.
Equality: It suggests that the income generated in a large number of medium enterprises is dispersed more widely in the community than the revenue generated in a few large enterprises. Medium enterprises bring about greater equality of income distribution. As most of the medium enterprises are either proprietary or partnership concerns, the relations between the workers and the employees are more harmonious in medium enterprises than in large enterprises.
Growth of Medium Scale Industries in India
There has been a phenomenal increase in the number of medium-scale industries in India. With the growth in large scale industries, the medium sector has witnessed development. The medium and ancillary industry acts as a supplementary for large-scale and small-scale industries. The large scale and small-scale industry are dependent on the medium scale industries for meeting their production and sales requirements.
FAQs on Scales of Business: Features and Classifications
1. What are the different scales of business operations as per the CBSE syllabus?
In business studies, operations are generally classified into three main scales: small-scale, medium-scale, and large-scale industries. This classification helps in understanding the magnitude of operations, capital required, and the overall impact of the business on the economy. Each scale has distinct features, challenges, and contributions to industrial development.
2. How are businesses in India classified into micro, small, and medium enterprises (MSMEs)?
As per the latest government guidelines for the 2025-26 session, businesses are classified as MSMEs based on a composite criterion of investment in plant and machinery and annual turnover. The classifications are:
- Micro Enterprise: Investment does not exceed ₹1 crore and turnover does not exceed ₹5 crore.
- Small Enterprise: Investment does not exceed ₹10 crore and turnover does not exceed ₹50 crore.
- Medium Enterprise: Investment does not exceed ₹50 crore and turnover does not exceed ₹250 crore.
3. What are the defining features of a medium-scale industry?
Medium-scale industries possess several unique features. They are typically more labour-intensive than large-scale industries, creating significant employment opportunities. They often serve as ancillary units, supplying components and services to both large-scale and small-scale sectors. Furthermore, they help promote a more equitable distribution of income and regional development compared to a few large-scale corporations concentrated in urban areas.
4. Can you give some examples of medium-scale industries in India?
Examples of medium-scale industries are prevalent across various sectors in India. Some common examples include auto components manufacturing, chemical and pharmaceutical production, textile and garment manufacturing units, food processing plants, and software development companies that have grown beyond the small-scale level but haven't yet reached a large corporate scale.
5. What is the primary difference between a small-scale and a large-scale business?
The primary difference lies in the magnitude of operations and resources. A small-scale business operates with limited capital, employs fewer people, and serves a local or niche market. In contrast, a large-scale business requires massive capital investment, employs a large workforce, utilises advanced technology, and often operates in national or international markets. Their management structures are also different, with large businesses having formal, complex hierarchies.
6. How does the scale of a business influence its ability to compete in the market?
The scale of a business significantly impacts its competitive ability. Large-scale businesses can achieve economies of scale, leading to lower production costs per unit, which allows them to offer competitive pricing. They also have larger budgets for marketing, research, and development. Small and medium-scale businesses often compete by offering specialised products, greater flexibility, and superior customer service, targeting specific market segments that larger firms may overlook.
7. Why is it important for a country's economy to have a healthy mix of different scales of business?
A healthy mix of small, medium, and large businesses is crucial for a balanced and resilient economy. Large-scale industries drive major infrastructure projects and mass production. Medium-scale industries bridge the gap by creating widespread employment and supporting large industries. Small-scale businesses foster entrepreneurship, innovation, and cater to local needs. This diversity ensures job creation at all levels, promotes equitable wealth distribution, and reduces dependency on a few large corporations.
8. Beyond capital and turnover, what other factors can define a business's scale?
While investment and turnover are official criteria, other factors also indicate a business's scale. These include:
- Number of Employees: A key differentiator between small, local shops and large corporations.
- Market Reach: Whether the business operates locally, regionally, nationally, or internationally.
- Technology Level: The sophistication and automation of its production processes.
- Organisational Structure: The complexity of its management hierarchy and departmentalisation.
9. How does the government support the growth of small and medium-scale industries?
The government supports small and medium-scale industries (SMEs) through various policies and schemes. This support often includes providing financial assistance through subsidised loans, offering technical and managerial training, creating industrial estates with ready-to-use infrastructure, and implementing policies like procurement preference, where government departments are encouraged to buy goods and services from SMEs. These measures help them compete with larger players and contribute to economic growth.
