Profitable Small Scale Industries in India

Many young and middle-aged individuals often desire to start a business. Not all of these individuals have a background in business education or come from a business family. Even though India is a country that has a rich history of entrepreneurship and small scale industries, not everyone can launch a business.

However, the rise of the digital age and changes in consumer preferences have presented many opportunities to individuals looking to start a business. The country has seen a surge in the number of small scale businesses. These small scale businesses are practical ways to step into the world of doing business owing to the investment required, the scale of the business and manpower requirement among other reasons. These businesses create jobs and thus, contribute to the economy’s growth. In this blog, we will discuss some of the best small scale industries in India and those that are profitable, too.

The desire to be your own boss and build something from the ground up is a powerful motivator for many. What's more, anyone, from a fresh graduate to a middle-aged individual and even seniors, can become an entrepreneur, even if they have not attended a business school or belong to a business family.

Thanks to the incredible rise of the digital age and ever-evolving consumer preferences, India is a hub for businesses, where people are becoming increasingly experimental and looking for everything experiential. There are many avenues and industries where one can give wings to their entrepreneurial dreams. Small-scale industries are especially a fantastic entry point for aspiring entrepreneurs.

Before getting into specifics, let's understand the basics and what makes small-scale industries profitable.

Additional read : Small Business Ideas

What does Small Scale Industry mean?

Small-scale industries are types of businesses that deal in products and services with lower investment requirements, manageable operational scale, and reduced workforce needs. These are an ideal entry point into the entrepreneurship world. These businesses play a vital role in the Indian economy, creating jobs and fostering local development.

Below is a list of small scale industries in India that have helped aspiring entrepreneurs in their journey.

Apparel Boutique Stores:

Everybody likes to have a well-stocked closet with renowned brands and the latest in fashion, making apparel boutique stores a popular choice for entrepreneurs to start their entrepreneurial journey. The initial investment required for this business is low, and you can start this business with a small store and gradually expand as your business grows.

Catering:

Catering is another profitable small-scale industry in India. With the rise of the food industry, catering has become essential to events such as canteens, weddings, corporate events, and parties.

Papads/Pickle-Making:

In most Indian households, papads and pickles are a must to complete a meal. There is considerable demand as it is not possible to make pickles at home nowadays. Expertise in this area of cooking is much appreciated as it is often associated with one’s emotions. Besides, buying from home-run ventures is considered healthier and economical too.

Spices:

If not cooking or making pickles, making the perfect spice powders and blends for delicious food can also be an attractive small scale traditional business. Spices have a critical role in Indian cuisine. As a result, there will always be a strong need for them.

Indian Handicrafts:

Indian handicrafts are another interesting option from among the small scale industries list in India. With the rise of the tourism industry, Indian handicrafts have become essential to the country’s culture.

Incense Sticks and Camphor-making:

One of India's most lucrative small scale industries is making incense sticks and camphor. They are a traditional item and are used in every household in India. Initial investment is required toward machinery and raw materials. Later, the business can be easily scaled up if the quality is good and there is higher demand.

Candle-making:

A candle-making business is simple and can be started from home. Whether for therapy, religious/spiritual reasons, or simply using candles as art, candle-making is a low-investment business option. They are an excellent gifting option, too.

Salon:

Salons are another profitable small-scale industry in India. With the rise of fashion consciousness, salons have become an essential part of people’s lives. The initial investment required for this business is low, but the profit potential is significantly high.

Handcrafted Goods:

These include scented candles, handmade cards, soaps, woodcrafts, cloth/jute bags, etc. During the pandemic, many small-scale businesses flourished and made a decent profit from their sale, and handcrafted products are one of the best small-scale businesses.

Coaching Classes:

Coaching classes are another profitable small-scale industry in India. With the rise of competition in education, coaching classes have become essential to students’ lives. One can even coach from the comfort of one's home with a blackboard or a whiteboard.

Consultancy Companies:

Consultancy companies are another profitable small-scale industry in India. With the rise of the service industry, consultancy companies have become an essential part of businesses.

Jobs & Placement Services:

Jobs & placement services are another profitable small-scale industry in India. With the rise of the service industry, jobs & placement services have become an essential part of businesses.

Additional read: Business Ideas for Student

The desire to be your own boss and build something from the ground up is a powerful motivator for many. What's more, anyone, from a fresh graduate to a middle-aged individual and even seniors, can become an entrepreneur, even if they have not attended a business school or belong to a business family.

Thanks to the incredible rise of the digital age and ever-evolving consumer preferences, India is a hub for businesses, where people are becoming increasingly experimental and looking for everything experiential. There are many avenues and industries where one can give wings to their entrepreneurial dreams. Small-scale industries are especially a fantastic entry point for aspiring entrepreneurs.

Before getting into specifics, let's understand the basics and what makes small-scale industries profitable.

Types of Small-Scale Industries in India

There are three main categories of SSIs based on the nature of the work they do:

Manufacturing Industries

These SSIs create finished goods that consumers use directly or in further processing. Examples include food processing units, power looms (machines that weave fabric), and engineering units.

Ancillary Industries

These SSIs play a supporting role in manufacturing components for other manufacturers. Imagine a car company – they might not make every single part themselves! Ancillary SSIs would be the ones supplying those parts.

Service Industries

Unlike the first two categories, service-based SSIs don't manufacture products. Instead, they provide valuable services like repairs, maintenance, and upkeep for existing products. The world of SSIs extends beyond these three main categories. Here are a couple of additional types to be aware of:

Export Units

An SSI can be classified as an export unit if more than half (50%) of its production is exported internationally.

Cottage Units

These SSIs are often home-based, meaning they don't require a dedicated workspace. Production typically happens within the owner's living space or house.

Village Industries

Established in rural areas, these SSIs are not part of the economy's formal or "organized" sector. They often rely heavily on manual labor for production.

Growth of Small-Scale Industries in India

SSIs have played a pivotal role in India's economic landscape. These enterprises are characterized by low capital investment, high employment generation, and flexibility in production techniques. SSIs contribute to regional balance, wealth distribution, and the promotion of traditional crafts. By fostering local entrepreneurship and grassroots development, SSIs have become vital engines of economic growth in India.

SSIs in India benefit from a comprehensive support system.

• Government agencies like the Small Scale Industries Board (SSIB) and the Small Industries Development Organisation (SIDO) offer policy guidance, training, and technical assistance.
• The National Small Industries Corporation (NSIC) and State Small Industries Development Corporations (SSIDCs) provide marketing support, financing, and infrastructure.
• District-level District Industries Centers (DICs) assist with project planning and skill development.
• Financial institutions, such as the Small Industries Development Bank of India (SIDBI) and the National Bank for Agriculture and Rural Development (NABARD), provide loans and credit facilities.
• The Khadi and Village Industries Commission (KVIC) encourages traditional crafts and rural industries, while the Entrepreneurial Guidance Bureau (EGB) guides aspiring entrepreneurs.
• Industrial estates provide workspace, and Technical Consultancy Organizations (TCOs) offer technical expertise.

This network of institutions and policies fosters the growth and sustainability of SSIs in India. The country boasts 633.9 lakh MSMEs (Micro, Small, and Medium Enterprises). Over 99% qualify as micro-enterprises, constituting approximately 630.5 lakh enterprises. The remaining 0.5% fall under small businesses (about 3.3 lakh enterprises), while a mere 0.01% are classified as medium businesses (approximately 0.05 lakh enterprises).

Of the estimated 633.88 lakh MSMEs, 51.25% (approximately 324.88 lakh MSMEs) operate in rural areas. These rural SSIs contribute to local economies, employment, and sustainable development.

As SSIs thrive in India, aspirant entrepreneurs can fulfill their dreams by engaging in one of the many businesses.

List of Small-Scale Industries Ideas in India

The surge in SSIs provides a practical way to step into business ownership. But the number of options you can explore often seems overwhelming. Here, we list some of the exciting SSIs you can consider:

Apparel Boutique Stores

Capitalizing on India's fashion-conscious population, apparel boutiques satisfy the desire for trendy and well-known brands. Starting with a smaller store allows for gradual expansion as your business gains traction. The initial investment is relatively low, making it an attractive option for first-time entrepreneurs. These days, pre-owned clothes and thrift stores are also extremely popular.

Catering Services

The booming food industry has created a high demand for catering services. From corporate events to weddings and parties, catering businesses provide a delicious solution for various occasions. This industry offers excellent potential for growth and profitability. Healthy tiffins, gourmet cuisine, and food tailored to specific dietary requirements are also in great demand.

Food Specialties

Indian households are synonymous with papads, pickles, and spice blends. These culinary staples present a lucrative opportunity for small-scale ventures. Consumers increasingly seek high-quality, ready-made options, making home-style production a sought-after alternative. Artisanal chocolates and desserts also sell, like hot cakes.

Handicrafts and small toys

India's rich handicrafts heritage makes them a tourist magnet and a source of national pride. Embarking on a handcrafted goods business allows you to contribute to cultural preservation while building a profitable enterprise. Think scented candles, handmade cards, soaps, woodcrafts, and cloth/jute bags – the possibilities are endless. Many handmade Indian toys are still popular and sought after, which one may consider.

Conclusion

These are some of the most profitable small scale industries in India. Of course, there are many more. However, it is essential to understand that choosing a profitable niche is not the only key to success. In the absence of experience, the entrepreneur must thoroughly research their business idea and its feasibility. Also, one should be ready to put in a lot of hard work and make sacrifices when starting their own business. Also, with technical knowledge, a person should have soft skills that help him network and build a customer and vendor base. In business, networking and being able to communicate, pitch, and retain clients is crucial to keep growing. As an entrepreneur, one must recognise your business's unique needs and develop tailor-made strategies for the purpose.

FAQs

1.What are some of the most successful small business ideas in India?

Generally, traditional business ideas do well in India. These are papad/pickle-making, incense-making, handicrafts, apparel and handcrafted items, among other business options. However, with changing consumer preferences and economic conditions, cake/chocolate-making, consultancies and salon services are also gaining much demand.

2.How much initial investment do these businesses typically require?

The initial investment required for any of the abovementioned businesses depends on your chosen business, the raw materials needed and the machinery, if any. Considering the current times, you can expect the initial investment to be upwards of Rs. 20,000.

3.Where can I find resources and support for starting my own small-scale business in India?

Several governmental and private resources are available for anyone looking to start a small-scale business. For example, https://www.startupindia.gov.in/ is a one-stop platform for entrepreneurs with various resources like startup schemes, funding options, mentorship, and incubation centres. Also, there is the MUDRA loan scheme and the Skill India Mission. One can even approach incubators and accelerators as they offer mentorship, networking and funding advice.

4.Will it be cheaper to start an online business with low investment?

Starting an online or e-commerce business with little investment is cheaper than starting a physical business. An online business saves on rent, space, and other charges that a person generally bears in a brick-and-mortar business.

5.Who do I approach for funding if banks and financial institutions reject my application?

The Government of India has many schemes for new entrepreneurs looking to start traditional small scale industries. These schemes are also available at banks and other authorised, government-approved institutions.

6.I have hired an expert in my area of business interest. Is it ok if he handles the business operations and makes decisions?

A small scale industry need not even require a business expert. It is ideal that the entrepreneur first understands the business and its functioning. As an entrepreneur, one should know their business thoroughly. This will also help them have an upper hand over the hired person.

7.Can a homemaker start a small-scale business?

Yes. Even a homemaker can start a small scale business. It depends on the product/service she chooses, her interest and knowledge about the business.

8.Can a person with little education qualifications start a small scale business?

Yes, even a person with little formal education can start a small scale business. However, knowing the practical aspects of running the business, such as calculations and the ability to read, write and sign documents, is essential.

9.What are the documents required to start a small scale venture?

To start a business as a sole proprietorship, an Aadhaar card or any other ID proof, address proof, passport-size photographs, rental agreement or the latest property tax receipt, electricity bill of the premise and copy of the bank statement. Some additional documents will be required when starting a company or partnership.

10.Is GST registration mandatory for small scale businesses?

GST registration of small-scale businesses becomes mandatory only if the person's income exceeds Rs. five lakhs in some states and Rs. 10 lakhs in others. Eventually, it is advisable to register the business as it gets recognised as a business eligible for tax benefits, concessions and credit facilities, among other things.

11.Are SSI and MSME the same?

Yes, they are essentially the same. Earlier, industries engaged in small-scale or micro-scale production received SSI registration. However, with the emergence of the MSMED Act, the scope expanded, and both small-scale and micro-scale industries now fall under the umbrella of MSMEs. In other words, the government broadened the concept of SSIs and termed it MSME. The MSME Act of 2006 encompasses both.