Difference Between Small-Scale Industry and Large-Scale Industry

Difference Between Small-Scale Industry and Large-Scale Industry

In general, each industry can be classified as small-scale industry or large-scale industry according to the investment made in the procurement of factories and machinery for manufactured goods.

In this way, a small-scale industry is said to be an industry whose investment in capital assets is limited to an amount determined by the Government of the country.

On the other hand, those industries that invest in their factories and machinery beyond that limit are considered large-scale industries. However, there are other factors such as number of workers employed, geographic area occupied, volume of output, etc., which can also be used to classify industries.


Let us go further to understand the difference between small scale industry and large scale industry in this article. The following is the definition and difference between small-scale industry and large-scale industry.

Definition of Small-Scale Industry

Difference Between Small-Scale Industry and Large-Scale Industry-1

Small-Scale Industry, as the name suggests, is an industry where the production process is carried out at a micro or say small level.

These are usually set up by private individuals, usually with the help and support of their family members and employ local workers who understand the job. It uses simple machines, tools and equipment.

It is a small company known for manufacturing products using light machines and less manpower, however it depends on the scale of production.

These industries play an important role in rural industrialization as well as in providing additional employment for rural communities.

The goal is to create jobs for local residents using less capital. It helps in removing underdevelopment from rural areas which results in decreasing regional imbalances as it increases income levels and raises living standards.

In addition, these small industries mobilize and use the country’s hidden and untapped resources. Moreover, it encourages indigenization.

Definition of Large-Scale Industry

Difference Between Small-Scale Industry and Large-Scale Industry-2

Large-scale industry refers to a business that has a large infrastructure and employee base along with large power driven machines and large capital investment. To effectively manage and operate this industry, complex management is required.

This includes manufactures and others that utilize indigenous and imported technologies to manufacture products, so as to cater to both domestic and international markets.

In this industry, the division of labor and the principle of specialization are followed with the aim of increasing productivity. Furthermore, modern capital assets are used to produce goods to reduce costs. These industries benefit from economies of scale due to the high volume of output.

Large-scale industries are the backbone of the economy as they facilitate in the production of consumer goods and capital goods imported from abroad that encourage self-reliance.

In addition, they provide employment for a large number of people who come from different areas. In addition, exports are promoted which increase the income of the country.

Difference Between Small Scale and Large Scale Industry

  1. Small-Scale Industry is the business of manufacturing, processing and converting goods and involves investment in fixed assets, i.e. plant and machinery, up to a specified amount. On the other hand, large-scale industry implies industrial efforts made to produce consumer goods and capital goods at a substantial rate, for which large investments are made in factories and machinery.
  2. Small Scale Industries are labor intensive, due to their dependence on labour, but they also require capital for operations and expansion. On the other hand, Large Scale Industries are capital intensive, as they require large capital investments to build and operate them.
  3. When it comes to geographic areas, small-scale industries are established in a limited area generally in locations from where raw materials and labor supply are easily available. On the other hand, large-scale industries are established in a large area, even if they are located in several locations in other countries.
  4. Small-scale industries require skilled or semi-skilled workers. On the contrary, skilled workers are required in large scale industries and proper training is given to workers on how they can operate the machines.
  5. Small-scale industries use indigenous technologies to manufacture products. In contrast, large-scale industries use advanced technology to create products, thereby reducing costs and maximizing profits.
  6. Small Industries purchase raw materials from local suppliers and sometimes from external suppliers. In contrast, large-scale industries get raw materials from different suppliers from home and abroad.
  7. Small-scale industry aims to generate job opportunities with less investment. On the other hand, the purpose of large-scale industry is to produce consumer goods and capital goods domestically, to make them self-sufficient.

Examples of Small-Scale Industry and Large-Scale Industry

Small Scale Industry: Bakeries, cashew processing, bread production, biscuit making, incense making, coconut oil making, candle making, cotton buds, custard powder making, envelope making, eraser making, ice cream making, jam making, leather bag making, cup making paper, palm oil processing, pickle making, sandal making, soap making, carpentry, etc.

Large-Scale Industry: Tea Industry, Textile Industry, Iron and Steel Industry, Jute Industry, Cement Industry, Paper Industry, Petrochemical Industry, Oil Refining, Food Processing, Automobile, Silk Industry, Fertilizer Manufacturing, Sugar Industry, Paper Industry, Chemicals and Pharmaceuticals, Metal Processing , Aviation industry, Shipbuilding, Construction, etc.

Red Thread | Both Small-Scale Industries and Large-Scale Industries occupy a significant place in the development of the country, not only because they provide employment for a large number of people, but also because they contribute to the GDP of the country. In addition, they help to raise the standard of living of the people.