ABSTRACT
The economic policy reforms of the 1990s, by opening up the economy, transformed the business environments in India, drastically widening the scope for market forces and private initiative. The economic reforms unleashed the dynamic forces of competition and changed the rules of doing business. These changes are further forcing business enterprises, 1 including the smaller ones, to restructure so as to remain competitive. Ensuring the competitiveness of small enterprises is of critical significance as they account for 45 per cent of the manufacturing output, 40 per cent of the total exports of India, 2 and also for the fact that these enterprises are not considered to be competitive. 3 A more open and market-based economy provides opportunities as well as challenges. To avail of market opportunities, small enterprises need to restructure on all fronts, including technology and product composition. In the light of this background, it is important to know the changes in business environments, the existing structure of the small-manufacturing sector, and the implications of their restructuring. This chapter is an attempt to understand some of these aspects and is based on the Third All India Census of Small Scale Industrial Units 2001–2002 (DCSSI 2004) and existing empirical works.
