Know Successful Small-Scale Industries in India

Introduction

India has a rich history of a thriving unorganised sector. Long before Shark Tank India made talk of start-ups popular, small scale industries in India were making big waves! Many of them not only managed to be profitable but were also growing at a scale that was nothing short of phenomenal.

 The growth of MSMEs has been noticeable if you look at its increasing contribution to exports. MSMEs tripled their exports, rising from ₹3.95 lakh crore in 2020-21 to ₹12.39 lakh crore in 2024-25. MSMEs also demonstrated an exceptional growth trajectory as their numbers rose from 52,849 to 1,73,350 in that period. To understand how they are achieving their success, we should first understand how these industries are classified.

What Counts as a Small-scale Industry in India?

According to the Revised Classification put forth by the Ministry of Micro, Small & Medium Enterprises (as of 1st July 2020), the following terms define a micro, small and medium-sized enterprise:

•  Micro Enterprise: The investment in plant/machinery/equipment is not more than ₹1 crore, and the annual turnover is ₹5 crore or less.
• Small Enterprise: The investment in plant/machinery/equipment is not more than ₹10 crore, and the annual turnover is ₹50 crore or less.
•   Medium Enterprise: The investment in plant/machinery/equipment is not more than 50 crore, and the annual turnover is ₹250 crore or less.

What Makes Small-Scale Industries Successful?

Small-scale industries are leading the world in many fields like finding sustainable fashion, eco-friendly packaging, organic products, handmade crafts and artisanal goods, digital entrepreneurship, speciality food production, customised and niche manufacturing, etc. Behind every successful small-scale industry, there is a story of growth and innovation. Small-scale businesses are the true drivers of change, especially in developing economies like India.

• Innovation and Problem-Solving Capacity: In this ever-changing global market, large-scale industries can’t afford to take risks directly. Due to the scale on which they operate, they have multiple levels of management. This makes them slow to respond to the changing market trends and demands. Moreover, the stakeholders prefer stability and consistent returns. They don’t like high-risk ventures as they can hurt the reputation of the brand. However, small businesses don’t face the same problem, making them more flexible. They are in unique positions where they can direct their energies and resources towards innovation and address the ever-changing needs of the market far more effectively.
• Filling Gaps Left by Larger Businesses: Small-scale industries in India have a vital part to play in maintaining healthy competition in the market. Large businesses often try to cater to a wide customer base at the cheapest rate possible, compromising on quality. Small-scale industries ensure that large-scale industries don’t dominate the market entirely, preventing monopolistic practices. They also offer more choices, promoting competitive pricing and innovation.
• Leading Social and Cultural Impact: Small-scale industries in India have a profound social and cultural impact as they help in shaping the country's economic and social landscape. They find ways to monetise age-old cultural traditions, practises and art forms, keeping them alive and in some cases showcasing them on a global stage. They are also often more inclusive, empower women, and promote sustainable development.
• Rural Development and Decentralized Growth: Local communities greatly benefit from small industries as they reduce the direct dependence on farming, minimizing rural unemployment while also developing and promoting agro-based products. They are crucial in providing farmers with other avenues of income from their already existing resources, making cold-pressed coconut oil or packaged tender coconut water instead of selling coconuts. The growth of the digital age and changing customer needs in tier 2 and tier 3 cities as well as villages has resulted in many opportunities for small-scale businesses. These industries are bound to succeed as they can easily access the untapped market potential which bigger players in the market can’t.

Top 10 Things to Learn from Small Industries in India

There are several successful examples of small scale industries in India that overcome the odds and grow into successful businesses. Here are some common strategies that have worked for them.

Targeting Niche Markets

• Targeting niche communities like athletes in upcoming sports, e.g., frisbee, pickleball, chess, fencing, etc.
• Dating and matchmaking services for exclusive socio-cultural groups like IIT or IIM alumni
•  Pet owners who want fashion accessories, high-quality pet food, etc., for their pets

 Sustainability

• Environmentally sustainable products like plastic-free daily use items like toothpaste, detergents, cleaning agents, bottles, etc.
• Eco-friendly packaging and cutlery for restaurants
•  Zero-waste event planning like marriages and birthday parties

 Health

• With the rising income of middle-class families, price is not the only driving factor.
•  Health-conscious consumers who want clean, organic, chemical-free products are on the rise.
• Meal prep services catered towards specific dietary choices like veganism, gluten-free, paleo-diets, etc., or towards specific cuisine

 Ethical Practices

• Cruelty-free makeup and skincare and medicines
•  Ethically sourced materials like cocoa for chocolate or fair labour practices
• Ahimsa silk (produced without killing silkworms)

 Personalisation and Customizability

• Bespoke gifting solutions like curated gift hampers and personalized handmade greeting cards
• Hand-painted shoes and custom-designed handbags.
• Personalized jewellery with regional designs and engravings.

 Customer-Centric Approach 

• Customised learning plans, tutor services, consultancies
• Robust consumer care services and feedback portals
• Personalising customer interactions

 Authenticity

• Honest advertising and marketing practices
• Transparency in methods of sourcing, production and logistics

 Rooted in Traditions and Culture

• Rural and heritage tourism experiences, such as guided village stays
• High-quality agarbattis
• Ayurvedic & herbal products
• Astrology & Vastu consultation

 Export Potential and Global Reach

• Indian spices, millets, pickles, etc
• Handicrafts & handlooms
• Ethnic Indian clothing & fashion
• IT & digital services like SaaS

Direct-to-Consumer (D2C) Approach

• Cutting middle-men and directly reaching out to consumers through different digital spaces
• Generating sales from E-commerce platforms
• Direct access to customers and their data for future sales

Conclusion

To conclude, small industries in India are a simple way to enter the business world and for those willing to take risks, they have the potential to reap high rewards. Small industries employ more than 12 crore individuals. They also make up more than 36% of India’s total GDP (Gross Domestic Product). These are stunning figures worthy of awe. It is only going to see upward growth in the coming years. Small-scale industries in India have become profitable not just through the hard work and innovative capacities of the entrepreneurs but also through the support of the government.

 Recognising the importance of MSMEs, both the central and state governments try to extend their support through subsidies and funding if they are SSI registered. Make In India, Credit Guarantee Scheme, Prime Minister's Rozgar Yojana (PMRY), Microfinance Programmes, Mudra loans and various other schemes are put in place to make sure these industries bloom and prosper.

 With experience and intuition, the entrepreneur must also thoroughly research their business ideas and their feasibility in the market with an unbiased eye. One must develop the know-how to strategise, plan and organise different resources to provide real value to their clients to make a long-lasting impact. No matter how brilliant an idea is, it needs to be thoroughly evaluated, keeping in mind the functioning of the business, their industry/ecosystem and their role in the market as a whole.