Q1. [3] deep thorough-understanding
A newly established unit manufacturing electrical goods has invested ₹80 lakh in its assets. A rival unit in the same business has invested ₹1.5 crore. How would each unit be classified based on capital investment, and what practical difference might this classification make for the units?
Generated by claude-sonnet-4-6 · 2026-06-26 13:34 · grounding rag
Model Answer
Classification:
- The unit with ₹80 lakh investment is a small-scale industry, as its investment is below the ₹1 crore limit.
- The rival unit with ₹1.5 crore investment is a large-scale industry, as it exceeds the ₹1 crore limit.
Practical Difference:
The small-scale unit may receive special government benefits such as easier loans, subsidies, and tax concessions meant to support small industries. The large-scale unit, having higher capital, can produce in greater volume but does not qualify for such concessions.
Source: Classification of Industries, Chapter 6
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Explanation
- The textbook defines small-scale industry by the maximum investment of ₹1 crore on assets — this is the key fact examiners check.
- Any unit above ₹1 crore is large-scale by contrast.
- For the "practical difference" part, link it to government support/concessions for small industries — examiners reward applied thinking here.
- Keep both parts balanced; don't over-explain one and ignore the other.