Consider the following statements about small-scale industry in India during 1950-1990:
(A) A small-scale industry is defined with reference to the maximum investment allowed on the assets of a unit.
(B) In 1950, a small-scale industrial unit was one which invested a maximum of rupees five lakh.
(C) The criterion for reserving a product for small-scale industry was the number of workers it employed.
(D) Small-scale industries are believed to generate more employment as they use more labour than large-scale industries.
(E) Small-scale units were given concessions such as lower customs duty and bank loans at lower interest rates.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (A), (B) and (D) only
(A) A small-scale industry is defined with reference to the maximum investment allowed on the assets of a unit. — Correct. The definition rests on the investment limit.
(B) In 1950, a small-scale industrial unit was one which invested a maximum of rupees five lakh. — Correct. The limit was later raised to rupees one crore.
(C) The criterion for reserving a product for small-scale industry was the number of workers it employed. — Incorrect. The criterion was the ability of these units to manufacture the goods.
(D) Small-scale industries are believed to generate more employment as they use more labour than large-scale industries. — Correct. They are labour intensive.
(E) Small-scale units were given concessions such as lower customs duty and bank loans at lower interest rates. — Incorrect. The concession was a lower excise duty, a tax on goods made at home. Customs duty is a tax on imports.
NCERT (2026-27): “2.4 Industry and Trade … A ‘small-scale industry’ is defined with reference to the maximum investment allowed on the assets of a unit. This limit has changed over a period of time. In 1950 a small-scale industrial unit was one which invested a maximum of rupees five lakh; at present the maximum investment allowed is rupees one crore. It is believed that small-scale industries are more ‘labour intensive’ i.e., they use more labour than the large-scale industries and, therefore, generate more employment. But these industries cannot compete with the big industrial firms; it is obvious that development of small-scale industry requires them to be shielded from the large firms. For this purpose, the production of a number of products was reserved for the small-scale industry; the criterion of reservation being the ability of these units to manufacture the goods. They were also given concessions such as lower excise duty and bank loans at lower interest rates.” |