In India, there are different types of small business. They may be categorised on the basis of investment in fixed capital in plant and machinery or on the basis of nature or place of operation. Following are some of the main types of small business:

  1. Small-scale industries
  2. Tiny industries
  3. Ancillary industrial undertakings
  4. Village industries
  5. Cottage industries
  6. Micro Business enterprises
  7. Small-scale Service and Business (industry related)
  8. Trading units

1. Small-scale Industries

A small-scale industrial unit is one in which fixed capital investment in plant and machinery does not exceed Rs. one crore. In case of certain export promotion units this investment ceiling can be raised up to Rs. 5 crores.

2. Tiny Industries

A business unit whose total fixed capital investment in plant and machinery does not exceed Rs. 25 lakhs is called a tiny industry.

3. Ancillary Industrial Undertakings

When a small-scale industry supplies not less than 50% of its production to another industry, it is called as ancillary industrial undertaking. The fixed capital investment limit of Rs. one crore also applies to it. If an ancillary unit is owned by some other business unit, it losses it status of small business.

4. Village Industries

A unit that is located in rural area and whose fixed capital investment in plant and machinery does not exceed Rs. 50,000 per artisan or worker is termed as village industry.

5. Cottage Industries

These are small manufacturing units producing simple products involving some specific art or skill like handicrafts, filigree, etc. They use simple equipments with indigenous technology for production. Cottage industries are carried on wholly or primarily with the help of members of the family either on a whole or part-time basis. These units are not defined by the ceiling of capital of investment.

6. Micro Business Enterprises

The fixed capital investment in plant and machinery of these enterprises does not exceed rupees one lakh.

7. Small-scale Service and Business (Industry related) Enterprises (SSSBE)

In these businesses the investment limit in fixed assets of plant and machinery does not exceed Rs. 10 lakhs. The main business enterprises included under this category are - Advertising agency, marketing consultancy, Typing centre, Photo copying centre (Xeroxing), Industrial testing laboratory, Auto repair and garages, laundry and dry cleaning, tailoring, STD/ISD booths, beauty parlor, crèches, etc.

8. Trading Units

These are usually in the form of small retailers found in the market places.