Industrial Sector (Economic Development) Part-II

Total Questions: 60

21. As per the Micro, Small and Medium Enterprises Development. Act, 2006, medium enterprises are defined as those with the investment of: [U.P.P.C.S. (Mains) 2016]

Correct Answer: (b) Rs. 5 crores to Rs. 10 crores
Solution:As per the question period, option (c) was the correct answer. In Industrial Policy of 1991, investment limit for small enterprises had been raised from Rs. 35 Lakh to Rs. 60 Lakh and investment limit in auxiliary units was raised from Rs. 45 lakh to Rs. 75 lakh.

Under Micro, Small and Medium Enterprises (MSME) Development Act, 2006 investment limit for Micro, Small and Medium enterprises had been classified into two groups:

(A) Manufacturing enterprises (B) Service Enterprises.

Under the Act of 2006, criteria for investment in machinery and equipments were as follows:

SectorMicroSmall Medium
ManufacturingNot more than Rs.25 lakhRs. 25 lakh to

Rs. 5 crore

Rs. 5 crore to

Rs. 10 crore

ServicesNot more than Rs.10 lakhRs. 10 lakh to

Rs. 2 crore

Rs. 2 crore to

Rs. 5 crore

On June 1, 2020, under Aatmanirbhar Bharat Abhiyan (ABA), Ministry of Micro, Small and Medium Enterprises has revised the MSME classification by inserting a composite criterion for both investment in plant and machinery and annual turnover of enterprises. The new definition has the same formula of classification for manufacturing and service enterprises.

Revised classification applicable w.e.f, 1st July 2020
 CriteriaMicroSmallMedium
Investment in plant & Machinery EquipmentNot more than Rs. 1 croreNot more than Rs. 10 croreNot more than Rs. 50 crore
Annual TurnoverNot more than Rs. 5 croreNot more than Rs. 50 croreNot more than Rs. 250 crore

22. Which one of the following is the prescribed investment limit for medium enterprises in the manufacturing sector as per the Micro, Small and Medium Enterprises Development Act, 2006? [B.P.S.C (Pre) 2015]

Correct Answer: (c) More than Ma. 5 crores and less than Rs. 10 crores
Solution:As per the question period, option (c) was the correct answer. In Industrial Policy of 1991, investment limit for small enterprises had been raised from Rs. 35 Lakh to Rs. 60 Lakh and investment limit in auxiliary units was raised from Rs. 45 lakh to Rs. 75 lakh.

Under Micro, Small and Medium Enterprises (MSME) Development Act, 2006 investment limit for Micro, Small and Medium enterprises had been classified into two groups:

(A) Manufacturing enterprises (B) Service Enterprises.

Under the Act of 2006, criteria for investment in machinery and equipments were as follows:

SectorMicroSmall Medium
ManufacturingNot more than Rs.25 lakhRs. 25 lakh to

Rs. 5 crore

Rs. 5 crore to

Rs. 10 crore

ServicesNot more than Rs.10 lakhRs. 10 lakh to

Rs. 2 crore

Rs. 2 crore to

Rs. 5 crore

On June 1, 2020, under Aatmanirbhar Bharat Abhiyan (ABA), Ministry of Micro, Small and Medium Enterprises has revised the MSME classification by inserting a composite criterion for both investment in plant and machinery and annual turnover of enterprises. The new definition has the same formula of classification for manufacturing and service enterprises.

Revised classification applicable w.e.f, 1st July 2020
 CriteriaMicroSmallMedium
Investment in plant & Machinery EquipmentNot more than Rs. 1 croreNot more than Rs. 10 croreNot more than Rs. 50 crore
Annual TurnoverNot more than Rs. 5 croreNot more than Rs. 50 croreNot more than Rs. 250 crore

23. Investment limit for micro enterprises, provided for in the Act passed in 2006 is: [U.P.P.C.S. (Mains) 2011]

Correct Answer: (d) None of the above
Solution:As per the question period, option (c) was the correct answer. In Industrial Policy of 1991, investment limit for small enterprises had been raised from Rs. 35 Lakh to Rs. 60 Lakh and investment limit in auxiliary units was raised from Rs. 45 lakh to Rs. 75 lakh.

Under Micro, Small and Medium Enterprises (MSME) Development Act, 2006 investment limit for Micro, Small and Medium enterprises had been classified into two groups:

(A) Manufacturing enterprises (B) Service Enterprises.

Under the Act of 2006, criteria for investment in machinery and equipments were as follows:

SectorMicroSmall Medium
ManufacturingNot more than Rs.25 lakhRs. 25 lakh to

Rs. 5 crore

Rs. 5 crore to

Rs. 10 crore

ServicesNot more than Rs.10 lakhRs. 10 lakh to

Rs. 2 crore

Rs. 2 crore to

Rs. 5 crore

On June 1, 2020, under Aatmanirbhar Bharat Abhiyan (ABA), Ministry of Micro, Small and Medium Enterprises has revised the MSME classification by inserting a composite criterion for both investment in plant and machinery and annual turnover of enterprises. The new definition has the same formula of classification for manufacturing and service enterprises.

Revised classification applicable w.e.f, 1st July 2020
 CriteriaMicroSmallMedium
Investment in plant & Machinery EquipmentNot more than Rs. 1 croreNot more than Rs. 10 croreNot more than Rs. 50 crore
Annual TurnoverNot more than Rs. 5 croreNot more than Rs. 50 croreNot more than Rs. 250 crore

24. Consider the following statement with references to India: [I.A.S. (Pre) 2023]

1. According to the 'Micro, Small and Medium Enterprises Development (MSMED) Act, 2006', the 'medium enterprises' are those with investments in plant and machinery between Rs. 15 crore and Rs. 25 crore.

2. All bank loans to the Micro, Small and Medium Enterprises qualify under the priority sectore.

Which of the statements given above is/are correct?

Correct Answer: (b) 2 only
Solution:According to the 'Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 (as per the revised classification applicable w.e.f. 1" July, 2020), the 'medium enterprises' are those with investments in plant and machinery or equipment does not exceed Rs. 50 crore and turnover does not exceed Rs. 250 crore. Hence, statement 1 is incorrect.

In terms of RBT's Master Direction on 'Priority Sector Lending (PSL)-Targets and Classification' dated 4 September, 2020, all bank loans to MSMEs conforming to the conditions prescribed therein qualify for classification under priority sector lending. Hence, statement 2 is correct.

25. As on March 31, 2011, which one of the following States had the largest number of registered factories? [U.P.P.C.S. (Mains) 2011*]

Correct Answer: (d) Tamil Nadu
Solution:As per the question year and at present, option (d) is the correct answer. According to the 'Annual Survey of Industries, 2021-22', top five States where maximum number of factories registered (in ASI Frame), are as follows:
StatesNumber of factories
Tamil Nadu39667
Gujarat29868
Maharashtra23527
Uttar Pradesh17645
Andhra Pradesh17012

In 2021-22, the number of operating factories factories is reported highest in Tamil Nadu (15.76%) followed by Gujarat (11.63%).

26. Consider the following statements: [I.A.S. (Pre) 1999]

Small-scale industries are, in most cases, not as efficient and competitive as the large-scale ones. Yet the Government provides preferential treatment and reservations in a range of products to the small firms because small-scale industries:

1. provide higher employment on a per unit capital deployment basis.

2. promote a regional dispersion of industries and economic activities.

3. have performed better in export of manufactured products than the large scale ones.

4. provide jobs to low-skill workers, who otherwise may not find employment avenues elsewhere.

Which of the above statements are correct? avenues elsewhere.

 

Correct Answer: (b) 1 and 2
Solution:The Government provides preferential treatment and reservations in a range of products to the small-scale industries (S51s) because they provide higher employment on a per unit capital deployment basis. SSIs are a major source of employment for developing countries like India.

Because of the limited technology and resource availability, they tend to use labour and manpower for their production activities, 551s also promote a regional dispersion of industries and economic activities.

They use local and readily available resources which help the economy to fully utilize natural resources with minimum wastage. They help in developing the rural and less developed regions of the economy. Hence, option (b) is the correct answer.

27. For a developing country like India small scale and cottage industries should be encouraged primarily because they: [U.P.P.C.S. (Mains) 2004]

Correct Answer: (b) Generate large employment opportunities
Solution:Small scale and cottage industries play a very vital role in the country's economy despite the phenomenal growth in the large scale industries. In fact, the small scale industries are playing a vital role in the growth of national economies the world over and are considered to be the engine of growth in most countries.

Small scale industries are a major source of employment for developing countries like India. These industries are generally labour-intensive, and hence they play an important role in the creation of employment.

28. Small Scale and Cottage Industries are important, because: [R.A.S./R.T.S.(Pre) 1999]

Correct Answer: (a) they provide more employment
Solution:Small Scale and Cottage industries are important because they provide more employment. Small Scale Industries are industries in manufacturing, production and rendering of services are done on small scale. The investment limit is up to Rs.5 crore while the annual turnout is up to Rs. 10 crores.

Cottage Industries are usually very small and are established in cottages or dwelling places. Khadi and Village Industries Commission (KVIC) is a statutory organization that promotes village industries that also helps cottage industries.

In Small scale industry outside labour is used whereas in cottage industries family labour is used. SSI uses both modern and traditional techniques. Cottage industries depend on traditional techniques of production.

29. The most important small scale industry in India is the: [R.A.S./R.T.S.(Pre) 1994]

Correct Answer: (c) Handloom
Solution:Handloom industry is the most important small scale indus- try in India, under which muslin, chintz, carpet, khadi etc. enterprises are included. Handloom industry comes under unorganized sector.

According to the fourth All India Handloom Census, 2019-20, a total of about 35.23 lakh people are employed in handloom industry of which 30.54 lakh are in rural areas and 4.69 lakh are in urban areas.

The handloom sector of India has the advantage of being less capital intensive, eco-friendly, having less power consumption, and the ability to adapt to market conditions.

  • According to the Handloom Census 2019-20, the industry employs about 3,522,512 handloom workers across the country.
  • The industry primarily employs women workers with a share of 72.29% of the total handloom workers.
  • The majorly exported handloom products from India are mats and mattings, carpets, rugs, bedsheets, cushion covers, and other handloom articles.
  • Home textile constitutes over 60% of India's total handloom exports.
    Carpets, rugs, and mats made from handlooms had a total share of 13.6% of total exports during 2020-21.
  • Indian silk scarves are popular around the world and these handloom-made products form a sizable chunk of the total handloom exports.
  • The major handloom export centers are Karur, Panipat, Varanasi & Kannur where handloom products like Bed linen, Table linen, Kitchen linen, Toilet linen, Floor coverings, embroidered textile materials, curtains, etc. are produced for export markets.

30. The largest industry of Uttar Pradesh in terms of employment is: [U.P.P.C.S. (Spl.) (Pre) 2008]

Correct Answer: (b) Handloom
Solution:Among the give options, handloom is the largest industry of Uttar Pradesh in term of employment.

The handloom sector of India has the advantage of being less capital intensive, eco-friendly, having less power consumption, and the ability to adapt to market conditions.

  • According to the Handloom Census 2019-20, the industry employs about 3,522,512 handloom workers across the country.
  • The industry primarily employs women workers with a share of 72.29% of the total handloom workers.
  • The majorly exported handloom products from India are mats and mattings, carpets, rugs, bedsheets, cushion covers, and other handloom articles.
  • Home textile constitutes over 60% of India's total handloom exports.
    Carpets, rugs, and mats made from handlooms had a total share of 13.6% of total exports during 2020-21.
  • Indian silk scarves are popular around the world and these handloom-made products form a sizable chunk of the total handloom exports.
  • The major handloom export centers are Karur, Panipat, Varanasi & Kannur where handloom products like Bed linen, Table linen, Kitchen linen, Toilet linen, Floor coverings, embroidered textile materials, curtains, etc. are produced for export markets.