Difference Between Small Scale and Large Scale Industries

Edited by Diffzy | Updated on: May 14, 2023


Difference Between Small Scale and Large Scale Industries

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According to the investment made in purchasing the equipment and machinery for manufacturing goods, every industry can generally be categorized as either small-scale or large-scale. Small-scale industries are considered to be those whose investment in capital assets is constrained to the sum determined by the national government in this way. On the other hand, those industries that invest more in their machinery and plant than that are regarded as large-scale industries. However, there are still several additional variables that can be used to classify the industries, such as the number of workers employed, the location occupied, the size of the output, etc. Let’s continue to learn more about the distinction between small-scale and large-scale industries.

Small-Scale Industries vs. Large-Scale Industries

Businesses that operate on a smaller manufacturing scale and with fewer personnel than big-scale industries are referred to as small-scale industries. They often function as family businesses with a niche market. On the other side, large-scale industries produce at a higher scale and have a larger workforce and market penetration. They are often run and owned by big businesses or enterprises. Compared to big-scale industries, small-scale industries have a lower output capability, and when compared to large-scale industries, small-scale industries need less capital to launch and maintain operations, and they also employ fewer people than the number of large-scale industries.

As compared to large-scale industries, small-scale industries typically use simpler technology and have a lesser market sizing. Small-scale industries also often use resources more effectively than large-scale industries and therefore, small-scale industries great receive greater government assistance and incentives. Small-scale industries typically have a more localized economic influence because of their small market sizing and they even have a reduced environmental impact than large-scale industries as fewer resources are wasted in small-scale industries.

Difference Between Small-Scale Industries and Large-Scale Industries (In Tabular Form)

MeaningSmall-scale industry is an industrial endeavor where the machinery and plant have a clear capital investment.Large industrial entities that have invested more in their equipment than allowed by the government are considered to be part of large-scale industries.
FocusOperations, manpower, and financial restrictions limit the volume and nature of work.They can afford to increase production and indulge in diversification activities.
Other Organization HelpDoes not follow formalities and procedures for organizational activities. difficult to make investments in capital purchases and different in procuring loans from banks and financial institutions.Follow guidelines and procedures. Modernize machinery due to assistance from banks and financial institutions.
RoleThe business role is limited to supplying components or services to big industries.Become exporters or global players.
EducationEducation level is low among employees and frequent turnover of employees.The best talent can be hired. Due to better working conditions, it is low.
MoraleEmployee morale is low.Employee morale is high.

What are Small-Scale Industries?

Small-scale industries are those in which the production process is carried out on a tiny, or even microscopic scale. Private individuals frequently set it up, usually with the assistance and support of their family members and by hiring local workers who are familiar with the industry. Simple tools, machinery, and equipment are utilized. These are small enterprises that, depending on the amount of production, are renowned for producing goods with few people and light equipment. These industries are essential to rural industrialization and to giving rural residents ancillary employment. Its objective is to reduce capital expenditures while providing locals with jobs. Raising the income level and raising the standard of living contributes to eliminating backwardness in rural areas, which reduces regional imbalances. Furthermore, it makes use of the nation’s untapped and hidden resources. Along with that, it promotes indigenization.

Examples of Small-Scale Industries

Bakeries, cashew processing, bread production, biscuit production, incense stick production, coconut oil production, candle production, cotton bud production, custard powder production, envelope production, rubber production, fruit bar production, ice cream production, jam and jelly production, leather bag production, microbreweries, paper cup production, pickle production, slipper production, soap production, woodworking, etc.

Advantages of Small-Scale Industries

  • Low Capital Investment Necessary: Small-scale industries need less money than large-scale industries do.
  • High Potential for Employment: Compared to large-scale industries, small-scale industries offer a high potential for employment.
  • Decentralized Production: Production decentralization is aided by the dispersion of small-scale industries around the nation.
  • Ease of Starting a Business: Launching a small-scale industry is easier than launching a large-scale one in terms of the difficulty of business establishment.
  • Flexibility in Business Operations: Small-scale industries can change their operations to meet shifting consumer demands and market conditions.
  • Contribution to Local Economy: Small businesses support the community's economy by generating cash and creating job possibilities.
  • Enhances Entrepreneurship: Small-scale industries give entrepreneurs a place to launch and expand their own companies.
  • Develops Rural Areas: By creating jobs there, small-scale industries contribute to the development of rural areas.
  • Helps in Diversification of Economy: Contributes to economic diversity by opening up chances in several areas, small industries contribute to economic diversification.
  • Decreases Reliance on Major Industries: Small-scale industries increase the economy’s independence by reducing reliance on large industries.

Disadvantages of Small-Scale Industries

  • Limited Resources: Small-scale industries frequently have fewer resources and may find it difficult to compete with more established ones.
  • Limited Market Reach: Small-scale businesses may find it difficult to grow outside of their area.
  • Limited Production Capacity: Small-scale businesses may find it difficult to fulfill large orders due to their limited production capability.
  • Financial Constraints: Small businesses frequently face financial constraints and may find it difficult to obtain loans or investments.
  • Limited Access to Technology: Small-scale industries may have trouble competing with larger sectors due to their limited access to technology.
  • Limited Access to Skilled Labor: Access to skilled labor may be limited for small-scale industries, which may make it difficult to hire and retain staff.
  • Vulnerable to Competition: Small businesses may find it difficult to survive in a highly competitive market since they are exposed to competition from larger businesses.
  • Vulnerable to Economic downturn: Small-scale industries are particularly susceptible to recessions and may find it difficult to stay afloat during one.
  • Limited Scope for Expansion: Small-scale industries have limited room for growth and may find it difficult to expand their operations.
  • Limited Access to Export: Small-scale industries may face difficulties expanding their operations abroad due to their limited access to export markets.

What are Large-Scale Industries?

When we talk about large-scale industry, we're talking about operations with a sizable workforce, infrastructure, and machinery that's powered by a lot of power. Effective complicated management is needed to run and manage these industries. It includes businesses engaged in manufacturing as well as those who employ both domestic and foreign technology to produce goods to meet the needs of both home and international markets. The division of labor and specialization theories are applied in various industries to enhance production. Modern capital equipment is also employed in the production of commodities to cut costs. Because they produce a large amount of goods and services, these industries benefit from economies of scale.

Large-scale enterprises are the backbone of the economy because they make it easier to produce capital and consumer goods that are imported from other countries, promoting independence. They also give jobs to a large number of people from various backgrounds. Additionally, exports are encouraged, which boosts national income.

Example of Large-Scale Industry

Tea, textiles, iron and steel, jute, cement, paper, petrochemical manufacturing, oil refineries, food processing, automobiles, silk, fertilizer manufacturing, sugar, paper, chemicals and pharmaceuticals, distilleries and breweries, gold making, metal processing, aviation industry, shipbuilding, construction, etc. are just a few examples of industries.

Advantages of Large-Scale Industries

  • Economies of Scale: Because large-scale industries can benefit from economies of scale, they can create things at a cheaper cost per unit. As a result, they may create things at a lower cost than smaller businesses, which may result in reduced consumer costs.
  • Job Creation: Jobs are created by large-scale industries for a lot of people, which can lower unemployment rates and accelerate economic growth.
  • High Production Capacity: Large-scale industries can manufacture items at a high rate, which can aid in satisfying consumer demand and boosting overall economic production.
  • Technical Advancements: Large-scale enterprises frequently have the funds and knowledge to invest in new technologies and enhance production techniques, which can result in more effective and efficient production processes.
  • Infrastructure Improvements: Major corporations spend money on building new roads, ports, and airports, which can enhance the region’s overall economic growth.
  • Higher Revenue: Because they can produce a lot of money, large-scale industries can use that money to expand their operations, buy new equipment, and invest in new technologies that will boost the economy’s overall growth.
  • Opportunities for Export: Large-scale enterprises frequently have the means and know-how to export products to other nations, which can help to increase revenue and foster economic progress.

Disadvantages of Large-Scale Industry

  • Environmental Damage: Due to their extensive operations and production methods, large-scale enterprises have the potential to inflict environmental harm. This may include the deterioration of natural ecosystems as well as air, water, and habitat contamination.
  • Exploitation of Natural Resources: Large-scale enterprises frequently use significant amounts of natural resources, which can result in resource depletion and environmental harm.
  • Displacement of Local Communities: Large-scale companies have the potential to displace nearby communities and have a negative influence on the local population’s social and economic well-being.
  • Monopolies: Large-scale industries have the potential to dominate their respective markets, which could result in monopolies and lessened competition.
  • Small Business Decline: Small firms can struggle or even fail because large-size industries frequently dominate their market.
  • Labor Exploitation: Huge-scale enterprises frequently employ a huge number of people, which makes them vulnerable to labor exploitation through low pay and unfavorable working conditions.
  • Loss of Traditional Skills: Because people are more likely to work in large-scale industries, traditional skills, and crafts may disappear.
  • Dependence on Overseas Markets: Large-scale industries are susceptible to changes in the world economy because they frequently rely on international markets to sell their product.
  • High Capital Intensity: Because large-scale industries demand significant capital expenditures, it may be challenging for small and medium-sized enterprises to compete.

Main Differences Between Small-Scale and Large-Scale Industries (In Points)

  • Small Scale Industries are businesses that manufacture, process, and convert items. They must invest up to a certain amount in fixed assets, such as plants and machinery. On the other hand, large-scale industries refer to business ventures that are organized to produce capital and consumer goods on a significant scale and for which significant money is invested in plants and equipment.
  • Small Scale Industries require a lot of labor because of their significant reliance on the labor force, but they also need capital to operate and grow. Large-scale industries, on the other hand, require significant capital investments to start and run them.
  • When it comes to the geographical area, small-scale enterprises are typically formed in a constrained area of the site from which the labor supply and raw materials are conveniently accessible. Large-scale industries, on the other hand, are established across a wide region and are spread throughout the nation.
  • Workers with some level of skill are needed in small-scale industries. In contrast, trained personnel are needed in large-scale enterprises, thus sufficient training is provided to the employees on how to operate machines.
  • Local technology is used by small-scale enterprises to create their goods. Contrarily, large-scale industries use cutting-edge technology to produce goods to minimize costs and increase profit.
  • Small-scale industries occasionally buy raw materials from outside suppliers in addition to local vendors. Large-scale industries, in contrast, buy their raw materials from a variety of domestic and international vendors.
  • Small-scale enterprises seek to create jobs with less financial outlay. In contrast, the goal of large-scale industries is to create capital and consumer commodities domestically to make the nation self-sufficient.


An important role in the growth of the nation is played by both small-scale and large-scale industries, not only because they generate a great number of jobs but also because they raise the GDP of the nation. Additionally, they contribute to improving people’s quality of life.


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"Difference Between Small Scale and Large Scale Industries." Diffzy.com, 2024. Mon. 10 Jun. 2024. <https://www.diffzy.com/article/difference-between-small-scale-and-large-scale-industries>.

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