According to “Industries development and regulation act(1951)”, “Any enterprise which employs not more than 50 persons when using power and 100 persons when not using power and with capital assets not exceeding Rs 5 lakh.

According to MSMED(Micro Small Medium Enterprise Act) (2006) Enterprise are of two types these are-

1) Manufacturing enterprise: In this ceiling on investment in plant and machinery is done.

It has three types on the basis of the quantity of investment which is:-

• Micromanufacturing enterprise – Requires investment less than 20 lakh.
• Small manufacturing enterprise-Requires investment range from 25 lakh to 5 crores.
• Medium manufacturing enterprise – Requires investment range from 5 crores to 10 crores.

2) Service Enterprise: In this ceiling on investment in equipment is done.

It also has three types on the basis of the quantity of investment which is:-

• Micromanufacturing enterprise – Requires investment less than 10 lakh.
• Small manufacturing enterprise-Requires investment range from 10 lakh to 2 crores.
• Medium manufacturing enterprise – Requires investment range from 2 crores to 5 crores.

Features/Nature and characteristics of the small business –

1) Personal Character – Owned by a single person or in partnership. For example-Saloon shop, Grocery shop, ration shop, etc.

2) Independent management – Maintain personal touch, secrecy, and flexibility with the customers.

3) The dominance of labor – Less technology and investment but the demand for labor is high.

4) Limited investment – Small business requires low investment.

5) Limited area of operation – Small business also has a limited area of operation.

6) Located in rural and semi-urban areas – Labour is easily available in rural and semi-urban areas.

Role of small business in rural India

1) Employment – This provides employment at work. Also, it provides alternate work to the idle farmers in offseason.

2) Improves economic conditions – This increases the income of poor people as they get employment which in turn increases their living standard.

3) Promotion of artistic and the creative senses – It helps in raising the hidden skills of the rural people.

4) Rural development – As the new industries come and set up their arrangement in rural areas, this increases the growth of infrastructure and development and also electricity facility increases in rural areas.

5) Mobilization of local resources – Small business helps in the proper utilization of unutilized resources in rural India.

Government support and special schemes

Government make two programs/measures/action to help in the development of rural business in India which are as follows –

A) Institutional support

1)National small industries corporation(NSIC) (1995) –

The government put this Act in action in 1995 to:-

• Provide technological assistance
• Provide advisory and mentor services
• Export the products of SSI
• Procure and supply imported raw materials
• Supply indigenous and imported machine

2) The District Industries Centre(DIC) (May 1, 1978)

This helps in:-

• Identification of suitable scheme
• Preparation of report
• Arranging for credit

B) Incentives offered by the government for industries in rural areas

1) Availability of land in these areas at concessional/cheap rates.

2)Establishment of industrial estates in backward areas.

3)Offering tax concessions in backward areas.

4)Finance at concessional rates to set up industries in rural areas.

5)Granting subsidiaries

• Transport subsidiary – In this, the government helps when there are transportation-related problems and helps the company.
• Capital subsidiary – The government also provides some investment and helps in any investment-related problem.
• Infrastructure subsidiary – In this, the government helps in providing the necessary machines used in the business.