Small-scale Industry Development for Export Promotion: India’s Experience Under Liberalization

Small and medium enterprises (SMEs) are playing an increasingly important role in the process of export-led industrialization in the developing world. Progressive globalization over the last two decades or so has created a new international environment for SME exports from developing countries. This international environment provides unparalleled new opportunities while also posing new risks for SME exports from developing countries (Wignaraja 2003). On the one hand, globalization has brought many uncertainties to industrial enterprises, including SMEs — uncertainties as to whether local industries can survive competition from both domestic and export markets, and whether the playing fi eld is level. On the other, it has opened doors to opportunities to fi nd new markets, new cooperation models, and more innovative ways of doing vertical and horizontal collaboration (Leopairote 1999). Those SMEs which are competitive or can acquire ‘competitiveness’ will be able to increasingly penetrate the international market and reap the benefi ts of globalization, whereas those that lack competitiveness would suffer even domestically due to increasing competition within the domestic market.