Global trends have suggested that small business is the biggest contributor to the economy of any country. Small business is big in India too. It is one of the most crucial sectors of the economy in terms of the number of employments generated. As more than 65% of its population lives in rural and semi rural areas, small business is one of the most viable options for the population residing in these areas. After agriculture, small business in India is the second largest employer of human resources. In India an industrial undertaking that has investments in fixed assets which do not exceed more than Rs.10 million falls under the category of small business.

The Government of India has undertaken several reforms to attract more investors to the small business sector in India. Some of the reforms undertaken include provision of training facilities, availability of machinery on hire-purchase terms, special bonus for setting up small business in backwards areas, tax deduction for small business and assistance for marketing the products in domestic markets and exports. All small business in India needs to get registration from Director of Industries of the respective state government. Most states across India follow a uniform process of registration, though there may be slight variation from state to state.

There are various reasons due to which the small scale business in India has witnessed a spurt of growth. Chief among them are an increase in the export potential of Indian goods, the industry is less capital intensive, the industry has availability of manpower training facility, there is ease of machinery and manpower procurement, goods from some of the sectors are exclusively purchase by government and there is also reservation of exclusive manufacture of goods in this sector.

List of some of the items reserves for exclusive manufacture:

• Food and allied Industries
• Textile Products Including Hosiery
• Art Silk/Man-Made Fiber Hosiery
• Wood and Wood Products
• Paper Products
• Rubber Products
• Plastic Products
• Leather and Leather Products
• Chemicals and Chemical Products