The role played by the small scale industry in the economic activity of advanced industrialized countries like Japan, Germany, Great Britain and the United States of America is significant. Many Nations, both developed and developing exteriorized that the small industry sector is a useful vehicle for growth, in the later for the creation of new employment opportunities on a wide scale in the shortest possible time. Small and Medium enterprises account for approximately 80 percent of the private sector industrial workers and hence occupy an important position in the industrial structure of Japan. The employment creating capacity of the small and medium enterprises in Japan has been seen to be larger than that in Germany or United States.Kurnool district is one of the industrial backward districts of Andhra Pradesh. The economy of the district is predominately agriculture based and about 70 per cent of its population is engaged in agriculture and allied activities. In some parts ofthe district agriculture is well developed due to availability of good irrigation facilities and the remaining parts of the district depend on non-agriculture activities.