Small Scale Industries play a very important role in the socio-economic development of India. These industries account for 95 per cent of industrial units in the country, contributing up to 40 per cent of the gross industrial value added and 45 per cent of the total exports.

MSME are the second largest employers of human resources after agriculture. They generate more employment opportunities per unit of capital invested compared to large industries. Being more labour intensive and less capital intensive, they are a boon for a labour surplus country like India. The sector offers employment to nearly 60 million people through 28.5 million enterprises.

These industries contribute significantly to the balanced regional development of the country. Since MSME can be set up anywhere using simple technologies and locally available resources, they can be widely spread without locational constraints. This ensures that the benefits of industrialisation reach every region.

Small industries provide ample scope for entrepreneurship development. They enjoy the advantage of low cost of production, quick decision making, and quick adaptability. They are best suited to customised production and are complementary to large industries as ancillary units.

MSME prevent migration of rural population to urban areas in search of employment. They contribute to other socio-economic aspects such as reduction in income inequalities, dispersed development of industries, and linkage with other sectors of the economy. They act as a vital link in the industrialisation process.