Small-scale industries are regarded as the driving force behind economic growth and equitable development. The main advantage of this sector is its employability with a low cost of capital. The labor intensity of the Small Industrial Sector (SSI) is much higher than that of large enterprises. The role of small businesses in the economic and social development of a country is well known. This sector is a breeding ground for entrepreneurship, often driven by individual creativity and innovation. The report concludes that the growth potential of this sector in Jammu and Kashmir (J&K) goes beyond its important role in job creation. It also contributes to the state's gross domestic product (GDP), thus contributing 12.55% of GDP. This study is meaningful in that Jammu and Kashmir is a relatively underdeveloped region in terms of economic and educational aspects. Therefore, this paper examines the performance of SSI in J&K, how self-employment and income lead to SSI, and challenges facing these industries.

Key Words; SSE’s, Credit Facilities, Problems, Incentives, Industrialization,REGP.