Small-Scale Industry Sector in India: Key Committees, Institutions, and Importance

To promote the growth of the small-scale industry (SSI) sector in India, various committees have been constituted from time to time. Among them, the Karve Committee (1955) emphasized rural and small industries, while the Abid Hussain Committee (1991) recommended the reduction/elimination of the reserved list of items for small industries. In addition, the National Small Industries Corporation (NSIC) plays an important role in supporting and promoting Micro, Small, and Medium Enterprises (MSMEs).

Major Committees

I. Nayak Committee

  • Formation/Context: 1991 (under the Reserve Bank of India)
  • Objective: To recommend measures on the adequacy of bank credit/working capital for small industries.
  • Key Recommendations:
    • Encourage turnover-based assessment of working capital.
    • Reduce procedural hurdles in the flow of credit to small units.
    • Strengthen the Bank–MSME coordination mechanism.

II. Abid Hussain Committee

  • Formation: 1991
  • Objective: To suggest policy reforms and growth potential for small industries.
  • Key Recommendations:
    • Gradual reduction/elimination of the reserved items list for small industries.
    • Promote competition, modernization, and technological upgradation.
    • Ensure easy access to finance, marketing, and technical support.

III. S. S. Kohli Committee

  • Formation: 1999 (by the Reserve Bank of India)
  • Objective: Technology upgradation in the banking sector.
  • Key Recommendations:
    • Adoption and expansion of Core Banking Solutions (CBS).
    • Strengthening digital payments, IT networks, and security standards.
    • IT-enabled reforms to enhance service quality and operational efficiency.

IV. Karve Committee

  • Formation: 1955
  • Objective: Study and promotion of rural and small industries.
  • Key Recommendations:
    • Provide institutional support and training for rural/cottage industries.
    • Strengthen cooperative structures and marketing assistance.
    • Create a policy-friendly environment for employment-oriented small enterprises.

Comparative Table of Committees

Committee

Year/Formation

Main Focus

Brief Recommendations

Nayak Committee

1991

Bank credit for MSMEs/SSI

Turnover-based working capital, simpler credit procedures, stronger Bank–MSME linkages

Abid Hussain Committee

1991

Policy reforms in SSI sector

Reduce/eliminate reserved list, encourage modernization, better access to support

S. S. Kohli Committee

1999

Banking technology upgradation

Adopt CBS, expand digital payments/IT networks, improve service quality

Karve Committee

1955

Rural and small industries

Institutional/training support, cooperative & marketing strength, employment-friendly policies

Other Related Institutions

  • National Small Industries Corporation (NSIC): A Government of India enterprise providing marketing support, credit facilities, technical services, and incubation to MSMEs.
  • Ministry of Micro, Small & Medium Enterprises (MSME): Responsible for framing and implementing policies for the holistic development of MSMEs.
  • National Institute for Entrepreneurship and Small Business Development (NIESBUD): Provides entrepreneurship training, research, and consultancy services.

Importance of Small-Scale Industries

  1. Employment Generation: Provides large-scale job opportunities, especially in rural and semi-urban areas.
  2. Decentralized Development: Promotes industrial growth beyond metropolitan cities, ensuring balanced regional progress.
  3. Entrepreneurship Promotion: Encourages new enterprises with relatively low capital investment.