Impact of Globalization on Small Scale Industries in India
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International Journal of Advanced Research in Commerce, Management & Social Science (IJARCMSS) 234
ISSN : 2581-7930, Impact Factor : 5.260, Volume 03, No. 02, April - June, 2020, pp 234-238
IMPACT OF GLOBALIZATION ON SMALL SCALE INDUSTRIES
Dr. Kiran Kumari
ABSTRACT
Remember the ancient time when people was limited to their own area which could be a city or
a state of probable a country, for their trade and service, in all material respect that is for Gods and
services they deal, the finance as well as the labour which they suppose to use for their business. What
was the impact of it? The whole business was limited to particular span. The globalization gives an
opportunity for cross boarder movement of trade & Services, capital and finance. To define the
globalization, the better words will be, share of knowledge, Technology, information, and finance, through
cultural integration of two or more economies with intention to go cross border. It converts the small
market into a huge one by making it international and by removing the all Trade Barriers. It also results in
the form of availability of several things to several people. However looking into so many numbers of
positive traits we forgot to look into the darkest part of the Globalization for India. India’s business
industry is still dominated by the Small scale industries. Around forty five percent portion of total business
including exports is through small scale industries and same for employment generation through
industries. However due to the process of globalization an unequal competition has generated between
the Giant MNC’s and small scale industries. Hence a study becomes essential need to find out the
impact of Globalization on small scale industries. This research paper light the impact of Globalization on
small scale industries in respect to employment, production, investment and exports.
___________________________________________________________________________________
Keywords: Globalization, Cross Boarder Competition, Employment Effect, Empirical Evaluation.
___________________________________________________________________________________
Introduction
Globalization is a process of increasing the interdependence and interconnectedness of
economies of various countries with each other. It is an advanced stage of the development of business.
In globalisation to whole world opens for exchange of capital, Technologies, Labour, Information,
transportation and the most I important the marketing without any barriers or hindrances. It helps in
bringing the world closer to economies of the world which helps in removing the differences of
developing and developed countries. Globalization takes place in three modes which are exchange of
Trade of Goods and services, movement of capital and Flow of finance through exchange of capital of
the world. In common parlance the globalization is limited up to integration of world economies, however
the real meaning of Globalization was defined by the Economic policy of India introduced in 1990.
In all developing countries, the small scale industries play a significant role. Since the resources
available and the amount of the capital to be invested in businesses are quite low, hence establishment
and development of large size industries is not an easy task for such economies. Since India is a
developing country, the role of small sector is not need to justify. It just do not contribute to the GDP of
the country, but the other indirect role of small scale industry is it provides huge employment opportunity.
The Small Scale Industries contributes for around forty five percent of the manufacturing output and
around forty percent of the total export of the country in addition to generating employment in the
country. However over the period, the share of small scale industry is slightly decreasing but, During the
year 2002-03, the small scale sector contributed for about thirty nine percent of the total industrial
production and accounted for about thirty eight percent of the industrial production in the year 2007-08.
Village & Post- Mohaddipur, Nalanda, Bihar, India.
ISSN : 2581-7930, Impact Factor : 5.260, Volume 03, No. 02, April - June, 2020, pp 234-238
IMPACT OF GLOBALIZATION ON SMALL SCALE INDUSTRIES
Dr. Kiran Kumari
ABSTRACT
Remember the ancient time when people was limited to their own area which could be a city or
a state of probable a country, for their trade and service, in all material respect that is for Gods and
services they deal, the finance as well as the labour which they suppose to use for their business. What
was the impact of it? The whole business was limited to particular span. The globalization gives an
opportunity for cross boarder movement of trade & Services, capital and finance. To define the
globalization, the better words will be, share of knowledge, Technology, information, and finance, through
cultural integration of two or more economies with intention to go cross border. It converts the small
market into a huge one by making it international and by removing the all Trade Barriers. It also results in
the form of availability of several things to several people. However looking into so many numbers of
positive traits we forgot to look into the darkest part of the Globalization for India. India’s business
industry is still dominated by the Small scale industries. Around forty five percent portion of total business
including exports is through small scale industries and same for employment generation through
industries. However due to the process of globalization an unequal competition has generated between
the Giant MNC’s and small scale industries. Hence a study becomes essential need to find out the
impact of Globalization on small scale industries. This research paper light the impact of Globalization on
small scale industries in respect to employment, production, investment and exports.
___________________________________________________________________________________
Keywords: Globalization, Cross Boarder Competition, Employment Effect, Empirical Evaluation.
___________________________________________________________________________________
Introduction
Globalization is a process of increasing the interdependence and interconnectedness of
economies of various countries with each other. It is an advanced stage of the development of business.
In globalisation to whole world opens for exchange of capital, Technologies, Labour, Information,
transportation and the most I important the marketing without any barriers or hindrances. It helps in
bringing the world closer to economies of the world which helps in removing the differences of
developing and developed countries. Globalization takes place in three modes which are exchange of
Trade of Goods and services, movement of capital and Flow of finance through exchange of capital of
the world. In common parlance the globalization is limited up to integration of world economies, however
the real meaning of Globalization was defined by the Economic policy of India introduced in 1990.
In all developing countries, the small scale industries play a significant role. Since the resources
available and the amount of the capital to be invested in businesses are quite low, hence establishment
and development of large size industries is not an easy task for such economies. Since India is a
developing country, the role of small sector is not need to justify. It just do not contribute to the GDP of
the country, but the other indirect role of small scale industry is it provides huge employment opportunity.
The Small Scale Industries contributes for around forty five percent of the manufacturing output and
around forty percent of the total export of the country in addition to generating employment in the
country. However over the period, the share of small scale industry is slightly decreasing but, During the
year 2002-03, the small scale sector contributed for about thirty nine percent of the total industrial
production and accounted for about thirty eight percent of the industrial production in the year 2007-08.
Village & Post- Mohaddipur, Nalanda, Bihar, India.
Dr. Kiran Kumari: Impact of Globalization on Small Scale Industries 235
Objective of Study
The study have been conducted with the view to achieve following objectives:
To find out the growth and development of small scale industries before and after the
globalization,
To find out the impact of globalisation on employment generation in small scale industries,
To assess the available opportunities and threats of Small scale industries in India during the
globalization period.
To provide with the recommendations on improvement of small scale industries,
To provide with the recommendations on how small scale industries can be developed and
grow in era of Globalization.
Review of Literature
Rajy Lakshmi, N. (2004) Keeping the base of Visakhapatnam district of Andhra Pradesh state,
he has conducted a study to review the productivity in small scale industries at the micro level and has
find out that how small scale industries owners measures the productivity in their units. The whole study
was conducted using the personal interview technique for round two hundred selected units. He
observed that from the point of capital intensity, the chemical units found more intensive compare to
Food and agro units.
Biswanath (1988) he has conducted a study of small scale industries to analyze whether the
productivity level of these industries is up to their optimum level or not. He observed that small scale
industries have very lower labour productivity; however capital productivity is very high. He overall
productivity is found to be very low.
Ramsingha (1987) while his study is related to small scale industry development and growth,
the object is far boarder than the object of similar studies and research. The object of study was to find
out value added on the fixed investment made in the business. His observation clearly stated that value
added by small scale industries on fixed investment made is at least three times as compare to large
sized industries.
Sudan, F. K. (2005) the researcher has conducted the study through various questions related
to Micro and small enterprises, to describe the challenges in Micro and small scale enterprises
Development and policies. His study explained the meaning, Advantage and other options of Medium,
small enterprises. He concluded that the nature of policies as adopted by Government of India were put
forward with the view to prepare and develop a dynamic micro small enterprise sector and a diversified
economy with more opportunities for employment can be established, so that new employment
opportunities can also be generated to absorb the new generation unemployment.
Shetty M.C (2008) Researcher has conducted the study on selected sample of Household
manufacturing units of few small town and villages of Maharasthra state. At the conclusion of his
research, he concluded that the biggest cause of constraint on the efficiency of such small scale
industries is shortage or lack of capital specially the working capital.
Ghanshyam Panda (2008) the object of the study was to find out whether the small scale
industries effectively uses the working capital facility obtained by them specially by those units which are
in the backward area. The final conclusion of his study found that these units specially their industries in
the backward area misutilises the funds provided to them and do not use the same for the purpose for
which they obtained it. This becomes the reason for non development of such industries.
Rakesh Basant, Sebastain. Morris (2006) their conclusion has given a new thought to find out
the reason of non development of the small scale industries along with the increased globalisation. They
stressed that the major problem faced by the small scale industries is their inefficiency to deal with
government policies and framework, to satisfy the requirements of Laws and Regulations.
Rational of Study
After going through with the literature review, it is observed that many Researchers and authors
have conducted studies with their best efforts on the analyzing the impact of globalization on small scale
industries, but the actual impact is still not certainised. The reason being, globalization is impacted by
number of factors which globally generated. The second thing is, the studies which have been conducted
till date, do not provide recommendations for improvement in the efforts to be made to develop the small
scale industries in pace with globalization. Hence a study was needed to enlighten the above aspects.
This research paper is undertaken to find out the answer of these question along with proposed
recommendations.
Objective of Study
The study have been conducted with the view to achieve following objectives:
To find out the growth and development of small scale industries before and after the
globalization,
To find out the impact of globalisation on employment generation in small scale industries,
To assess the available opportunities and threats of Small scale industries in India during the
globalization period.
To provide with the recommendations on improvement of small scale industries,
To provide with the recommendations on how small scale industries can be developed and
grow in era of Globalization.
Review of Literature
Rajy Lakshmi, N. (2004) Keeping the base of Visakhapatnam district of Andhra Pradesh state,
he has conducted a study to review the productivity in small scale industries at the micro level and has
find out that how small scale industries owners measures the productivity in their units. The whole study
was conducted using the personal interview technique for round two hundred selected units. He
observed that from the point of capital intensity, the chemical units found more intensive compare to
Food and agro units.
Biswanath (1988) he has conducted a study of small scale industries to analyze whether the
productivity level of these industries is up to their optimum level or not. He observed that small scale
industries have very lower labour productivity; however capital productivity is very high. He overall
productivity is found to be very low.
Ramsingha (1987) while his study is related to small scale industry development and growth,
the object is far boarder than the object of similar studies and research. The object of study was to find
out value added on the fixed investment made in the business. His observation clearly stated that value
added by small scale industries on fixed investment made is at least three times as compare to large
sized industries.
Sudan, F. K. (2005) the researcher has conducted the study through various questions related
to Micro and small enterprises, to describe the challenges in Micro and small scale enterprises
Development and policies. His study explained the meaning, Advantage and other options of Medium,
small enterprises. He concluded that the nature of policies as adopted by Government of India were put
forward with the view to prepare and develop a dynamic micro small enterprise sector and a diversified
economy with more opportunities for employment can be established, so that new employment
opportunities can also be generated to absorb the new generation unemployment.
Shetty M.C (2008) Researcher has conducted the study on selected sample of Household
manufacturing units of few small town and villages of Maharasthra state. At the conclusion of his
research, he concluded that the biggest cause of constraint on the efficiency of such small scale
industries is shortage or lack of capital specially the working capital.
Ghanshyam Panda (2008) the object of the study was to find out whether the small scale
industries effectively uses the working capital facility obtained by them specially by those units which are
in the backward area. The final conclusion of his study found that these units specially their industries in
the backward area misutilises the funds provided to them and do not use the same for the purpose for
which they obtained it. This becomes the reason for non development of such industries.
Rakesh Basant, Sebastain. Morris (2006) their conclusion has given a new thought to find out
the reason of non development of the small scale industries along with the increased globalisation. They
stressed that the major problem faced by the small scale industries is their inefficiency to deal with
government policies and framework, to satisfy the requirements of Laws and Regulations.
Rational of Study
After going through with the literature review, it is observed that many Researchers and authors
have conducted studies with their best efforts on the analyzing the impact of globalization on small scale
industries, but the actual impact is still not certainised. The reason being, globalization is impacted by
number of factors which globally generated. The second thing is, the studies which have been conducted
till date, do not provide recommendations for improvement in the efforts to be made to develop the small
scale industries in pace with globalization. Hence a study was needed to enlighten the above aspects.
This research paper is undertaken to find out the answer of these question along with proposed
recommendations.
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