b. Capital required is less and therefore economises use of capital: The capital requirement of small enterprises, in respect of economic overheads, such as factory buildings, building for workers and transport facilities; are much less than in large enterprises. By promoting these industries, we can economise capital even in respect of these overheads.
c. Short Gestation Period: SSI has a short gestation period when compared to large seals industries. They can provide finished goods in a shorter period and thus can be a better counteracting force for the inflationary trends, so common in a growing economy like ours. These enterprises can thus be profitably promoted to produce consumer goods. d. Less imports- The large scale industries need big machines, technical knowledge and same raw materials which have to be imported.
All of these require foreign exchange. On the other hand the SSIs do not require much imported materials and so they do not drain much of our foreign exchange. e. Helps in Decentralisation: The SSIs are favoured as a means of decentralisation and counteracting urbanisation.
Large cities are overcrowded and breed many social evils. A check on the growth of slums, pollution etc. in such cities is put by developing small enterprises in smaller places away from cities. f. Source of Mobilization of Savings: People who have small resources of idle savings can put them to productive uses and can also develop and utilize their productive ability which at present is wasted. In a developing economy, we have to make use of every, source or skill and savings. Small enterprises are a good means of discovering and growing talent, skill and saving.
g. Leads to Equitable Distribution of Wealth: In case of big industries, the wealth gets concentrated in the hands of few big industrialists. The growth of SSIs, on the other hand, provides scope for the small producers to enjoy same lengths. It also raise the income of many people by providing them employment.