A Review of Policy Framework for Small and Medium Enterprises in India

Abstract

The important role played by Small and Medium Enterprises in the economic development of the country, encourages innovative policies for the small firms and attracts increasing attention from academic researchers and policy makers. The differences and similarities of approach towards increasing contribution of this sector, in the three countries, Japan, China and India, form the base of this article. The process involved a review of the secondary data available on innovative trends and small firms, then move to a qualitative approach in identifying effective business supports for small firms. Explaining the differences in definition of small sector between the countries and the importance of small and medium sector, summarises the current policies. Comparison in terms of definitions, philosophies and roles of small firms, with developed countries like Japan and China, could help to overcome the obstacles of finance sourcing, risk management, unethical competition, etc, phased by the sector in India. The matured policy making experiences of Japan and the selective part of Chinese approach could avoid the policy risks and show more effective path towards sustainable and progressive developments of Indian SME sector.