Essentially small scale industries comprise of small enterprises who manufacture goods or services with the help of relatively smaller machines and a few workers and employees. Basically, the enterprise must fall under the guidelines set by the Government of India. At the time being such limits are as follows

1. Personal character : SSIs enjoy personal character.
It is generally owned by a single entrepreneur or partnership.

2. Simple managerial structure : It is managed by owners only. Thus, can reap the benefits of direct motivation, secrecy, flexibility, etc.

3. Labour incentive techniques : There is pre-dominance of labour. These units use labour incentive techniques of production instead of mechanised methods of production.

4.Local area of operations : The operations of a unit are localised. It depends mainly on local resources but products are exported all over the world.

5. Simple technology : The machinery and equipments used for production of goods are operated manually and are not very sophisticated.