Scroll Top



According to the ministry of economy and statistics, small-scale industries lead to 95% of the countries contributing towards the economy and industries. This is even a source of employment for thousands of people. It makes a huge contribution to the industrial output and GDP of the country. It helps in the development of the country and for the developing countries like India, it helps to improve the trade connections. Major roles involve taking care of the public and the concept of making in India. Thereby, the technology is limited and the resources are scarce, the production is mainly done by the use of physical labour. Therefore, it is one of the important sources to help the country in its growth and nourishment.

Small scale Industries

They are the industries where the production, manufacturing, and rendering of services take place. They have low funding but are very essential for the upliftment of society because they contribute towards employment. Criteria have been defined by the micro, small and medium enterprises act of 2006, to identify different small-scale industries from the large-scale industries. The two things which differentiate are the investment in plant, equipment and machinery should not exceed INR 10 crore and the annual turnover should not be above INR 50 crore. The small-scale industries have the major characteristics i.e., small partnerships like two or three people, or either they have the sole proprietorship. They are responsible for fulfilling the local demands of the society at large.

The objectives of small-scale Industries

Small scale industries have several objectives:

  1. Achieving self-sufficiency
  2. Expanding the opportunities for the working class
  3. Reducing the income disparities between the rich and poor
  4. Maximize utilization of resources
  5. Better utilization of resources

Types of Small-Scale Industries

The industries have been classified into three types based on their nature and work:

  1. Assembling Industries: They focus on producing goods and services for the consumption of humans. Some examples of industries are power looms, cotton textiles, etc.
  2. Auxiliary industries: These industries provide the raw materials to the assembling industries. The large industries buy the products from this small-scale industry as they don’t produce the parts of their products.
  3. Retail industry: They are involved with servicing, repairing, and maintenance of the services.
Commercial laws used by small scale industries

The small-scale owners are aware of all the management, accounting, and documentation related to the start of the business. The entrepreneurs should also be aware of all the aspects of the legal documentation because it would avoid the organization from falling or facing any kind of failure. The business owners should be aware of the contracts and commercial laws related to the start of small-scale industries. (Goswami, 2021)

Need for small scale owners to learn the Laws

There is a need for the owners to learn the legal aspects of small-scale industries because it helps the business to grow. It helps to follow all the rules and regulations of the government and to stay updated with the new upcoming laws of the government. For an experienced one, it’s still easy to cope up with the other competitors and to strengthen the organization. It would help the entrepreneurs to learn the best to grow the most. It’s important to learn the taxation laws, employee stability tenure, and trading regulations which are both national and international. Therefore, the list for the same is:

  1. Registering to get the license for the business
  2. Complete list of documents and paperwork
  3. The conduct ensures that the company is aware of all the rules and regulations associated with it
  4. Should have the list of all the government rules (Mitra, 2018)

The various types of laws

  1. Company formation law

It’s related to the kind of company you want to start like limited liability, public limited company, sole proprietorship, and family businesses. It’s been stated under the Indian Companies Act, 2013. Thereby, the owner has to start by planning a business, getting a setup, and registering it with the regional registrar of companies (ROC).       

  1. Real Estate Law

The owners should look for buying of the real estate and should have a deed for the same. The deed got the special purpose of transforming it from the past owner to the new owner in a legal method of transforming it. Thereby, the laws having consideration should be made aware by the entrepreneur. Different areas have different legalities and you are required to comply with all the requirements.

  1. Tax law

The very importance of the tax law lies in its name. It’s necessary to know about it because it’s related to the financial payment. Thereby, it is important to learn tax law because it leads to the paying of penalties. Thereby, it’s important to learn all the ways to make the payments and claims and how to take help from the consultants.

  1. Intellectual Property Right

As the name suggests, it is related to the mastermind ideas, thoughts, ownership which cannot be copied or borrowed and cannot be given to any random creator. Thereby, it ensures the patent, trademark, and copyright and cannot be shared by anyone. All the books or journals published have copyright infringement and cannot be taken by someone else.

  1. Insurance Law

This law is very important because it provides backup to the blooming small-scale industries. Every company is supposed to have surfed the market to know all the aspects of all the various kinds of insurances. For example, some can be property insurance, health insurance for employees, and business interruption insurance.

  1. Employment Law

This law is essential to make the employees aware of the process of remuneration. They should be told about the differences between the labour, minimum wage, overtime, lunch breaks, tea breaks, etc. There should be an agreement made to include all the essentials like salary, rules, regulations, tenure, etc. This is important to reduce the disputes between the employees and the employer.

  1. Privacy Laws

This law has been mentioned under the personal data protection bill, 2018, and states that it’s extremely a necessity to follow the privacy rules because it would bind the company together and would also keep the employees intact. It is necessary to maintain the customer base in the organization. (Banerji, 2021)


Researching and evaluating the new information every day is very important because it helps the small-scale industries to grow and strengthen. The company needs to learn the new rules and regulations every time and to follow the guidelines laid down by the government. Having prior knowledge of it will help the business owners to make better judgments of the business and thereby would provide the stability and protection to the business.

Author(s) Name: Trishla Garg (VIPS, GGSIPU)

Related Posts