With an impressive history of policy related development regarding small scale industry in post-independence India, SMEs dominate the industrial scenario by its contribution to job creation and income and fight against regional disparities. Given the imperatives of globalization, although in some sectors, a strong outward orientation can be observed even in the early 1980s, it was in 1991 that a small business policy in India has been strongly pursued a policy which stresses the importance of the internationalization of trade and interdependence in the field of innovation activities, training, marketing and business strategies. Small scale industry continues to contribute immensely to the creation of jobs for any large-scale space, and in the process, reducing inter-regional differences in urban and rural growth. Extremely wide range of products manufactured in this sector, often at reasonable prices, served successfully calibrated still a huge market. Some agricultural products are constantly appearing in the export basket in recent decades, although the export performance in the world market has been spectacular.

After making at least four decades of industrialization controlled – the protection of infant industries and support the strategy of import substitution – in 1991, as part of the official announcement of economic reforms in India’s economy is still protected sector of small businesses started to cope with the imperatives of globalization. The emphasis on outward orientation, competitiveness and collaboration with institutions within and outside the industry and the nation seems to be the basis for the paradigm of the current policy; the policy framework confirms the recent marked change in focus. In the light of these suppositions , the rationale of the proposed research is to study the role and contribution of small scale industries towards the development of Indian economy, with focus on the question as whether their potential undermined or exaggerated.