Globalization means the removing of all physical barriers and borders between countries and interconnecting them by the means of easy and unhindered transport and communication. Globalization can also be defined as the free and easy exchange of goods, services, trade, technology, ideas and a lot more. Easy transport and communication are the essence of globalization. Thus, Globalization intends to have free cross-border flow of goods, services, capital, labour, information, ideas and intellectual property. So, globalization is more than mere trade reform. In this way, globalization is the modern renaissance that makes ideas, goods, services, trade, technology and culture permeate into the entire geography of the world thus turning it into a global nation.

Some argue that given the developing nation that India is, Small Scale Industries (SSIs) can suffer and strangulate to death by the fierce competition put up by globalization. Let us analyze the situation

Small Scale Industries may sound small but actually play a very important part in the overall growth of an economy. Small Scale Industries can be characterized by the unique feature of labour intensiveness. That the total number of people employed in this industry has been calculated to be near about one crore and ninety lakhs in India is the main proponents of Small Scale Industries.

The importance of this industry increases manifold due to the immense employment generating potential. The countries which are characterized by acute unemployment problem especially put emphasis on the model of Small Scale Industries. It has been observed that India along with the countries in the Indian Sub-continent have gone long strides in this field.

Small Scale Industries occupy a place of strategic importance in Indian Economy in view of its considerable contribution to employment, production and exports. However, since 1991, Small Scale Industries in India find themselves in an intensely competitive environment due to globalization, domestic economic liberalization and dilution of sector specific protective measures.

After independence, the Indian Government made various rules and laws to support, revive and flourish the SSI-Government funding, support and intensive promotion has aided people to participate more in this successful phenomenon making SSI the second largest employment sector after agriculture. It forms about 45-50% of our exports. The products also form a large percentage of our domestic market too with SSI producing a number of various products. It also leads to the preservation of many traditions and indigenous skills and products, our country is famous for. It is the road to rural industrialization and rural urbanization thus creating a regional balance.

India was a self reliant and self sufficient country from SSI point of view but with the spread of globalization phenomenon, the existence of SSI seems to be at serious stake. The main reason behind this was the focus of efforts on heavy industries and lack of it on the consumption goods. From 1991, India witnessed a major change as the government introduced liberalization, privatization and globalization reforms to pep up the economy. Soon the world realized what a big 1 billion-population-market India was. They brought their goods to India which were mass produced and therefore cheaper and of better quality than the local goods. It all challenged the SSI and thus posed a danger to their existence. Further with the introduction of Special Economic Zones (SEZs), the MNCs were facilitated with areas which liberal economic and trade laws, round the clock facilities and concession to enhance foreign investments and promote exports. As such the survival of SSIs seems very difficult.

  But, there are certain benefits of globalization for the SSIs also. A number of foreign entrepreneurs, who don’t have the time or money to build the infrastructure for their own manufacturing unit in India, prefer to engage some SSIs to produce goods for them in a short span of time and sell them to cater to the international demand.  In this way, they outsource the manufacturing to the Indians. Thus, it leads to more labour absorption and growth of SSIs. Many of the SSIs have turned into Large Scale Industries this way. Moreover, the demand of some of the SSIs products will never finish as many of such products are not lucrative for the MNCs. We can identify such products as the incense sticks or agarbatties, bangles, pickles, etc. These are not being eyed by the LSIs but have a constant demand and thus SSIs have all the opportunities in such areas.

  Another way Small Scale Industries actually thrive with globalization is when large scale factories sub-contract certain jobs to Small Scale Industries. Large factories often find it necessary to get certain jobs outsourced from outside, e.g., a Japanese computer firm has set up a factory in India to manufacture computers. As we all know, computers have thousands of components, the computer firm may outsource the production of circuit boards, cables, jumpers and internal fans to small scale producers. The firm will employ more than one producer to each component. That way production is faster and there is no need for the firm to build new infrastructure in order to make these components.

So, it is not correct to conclude that globalization will mar the prospectus of SSIs in India. Actually, both globalization and SSIs are essential for the progress and development of the Indian Economy and India must make sincere efforts to support, promote, sustain and aid in a fair and unbiased way to the SSIs. Some items should he reserved specifically for the SSIs and all out efforts must be made at the government level also for their intelligent outsourcing to ensure maximum benefits for them. The government can also advertise the indigenous goods worldwide so that the foreign folk also go in for the ethnic items produced here by SSIs, like khadi, silk, wool, statues, gems, ornaments, agarbatties etc as these represent the traditional art form and culture of the region. As far as, the financial aids are concerned, the government is doing good job to make things simple and possible for the interested individuals by funding at easy terms and arranging finance on low rate of interest. We must harness the fruits of globalization and keep a check over its bad effects especially on the SSIs.