Reservation :
The current form of policy of reservation- as envisioned in 70s and 80s, has become at best redundant and at worst a handicap for the SSIs in changed economic realities. It does not mean the policy, in principle, has lost its value in Indian context. There are certain sectors that may be de-reserved and certain new areas e.g. services be identified for continuous growth of small sector. What should be reserved and what should be de-reserved must be based on rational research rather on the recommendations of committees. The committees are not the answer to such questions; research is.

Investment limit for SSIs:
The investment limit for defining SSIs has been a hotly debated issue in India. It is not a question whether the limit should be 60 lac. or Rs. 1 crore or 3 crore. The first question is why should SSIs be defined at all? Perhaps the government wants to define SSI because it considers their growth socially and economically desirable and it wants to ensure delivery of some inputs to the SSIs. Therefore, the most important question is what are the inputs that it wants to provide, in how much quantity and how ? It is based on these parameters that a definition should emerge. Without clarifying its own agenda, the debate on the issue is like trying to trap a black cat in the dark room which just does not exit. Had it not been so why all three major input deliverers or concession providers would choose their own definition

SSI and Medium Enterprises:
It is not the SSIs alone but the Medium Enterprises also need attention of the Government. Some policy intervention is required at the lower end of medium enterprises to facilitate gradual progression of small to medium. This will break the historical compartmentalization of SSIs and will augment more linkage formation between small, medium and large. Further, in the wake of WTO regime, there are certain provisions specially available for Small and Medium Enterprises (SMEs)- which is internationally recognized segment for public policy support. WTO provides another reason for defining Medium enterprises.

Small verses Large:
There is no need of confrontation between small and large. In most sectors, small and large have their distinct places where they will succeed on the principle of most efficient scale of economy. What is known in all open economies, is increasingly recognized in India also that most large industries - especially in engineering and auto sector, cannot survive without long term linkages with small sector. The competition will force both the small and large to leverage upon the complimentary strengths of each other in order to survive. We see heralding of a new era of cooperation between small and large in the coming years.

Regulatory environment for SMEs:
Excessive and outdated regulatory environment- as the case is in India, become doubly counterproductive. First, it is ineffective as the majority of the people have no option but to violate it for it is impractical to follow it. Second, it provides room for the regulatory machinery to use it selectively on those who do not 'buy' peace. But, as shown by many researches world over, the situations also leads to formation of large 'informal sector'. It is the sector whose objectives are legal but are condemned to be illegal because of high or unaffordable cost of compliance of excessive laws. One of the major reason of data constraints of the sector could also be traced back to this. A very large number of entrepreneurs would work 'illegally' i.e. without proper registration or without licence, to save cost of compliance of law.

An entrepreneur needs to be seen by the law makers as merely a self-employed person and not as an industrialist. He/ She may lack the skills, expertise and resources to comply the formalities which an excessive law may demand. Simplification of regulatory environment for SMES is badly needed in all spheres whether these are tax related ( excise, customs, income tax etc.) or social laws ( labour or factory act etc.)

Life of an entrepreneur after failure:
Failure of business is a natural corollary of free economy. The very competition means that few will fail and few succeed. It is the maturity of the economy the way it treats the failed entrepreneur. Whereas in most of the developed economies value of failure is recognized as learning experience and is regarded as the cost to the society for developing entrepreneurs, it is very unfortunate that the entrepreneurs are sent to jail after failure under outdated laws of recovery of dues. Nowhere in the world, in any civilized society, a failed entrepreneur and a criminal, are treated alike. Such laws and regulations require drastic reforms.

Need for policy intervention : Role of Govt.
"The importance of Trade Fairs in inducing competitiveness in a sector and in helping industries in Marketing, as a concept, is well recognized by promotional agencies. Accordingly, most of the agencies are providing assistance, financial or otherwise, to industries to facilitate their participation in Trade Fairs. The role of promotional agencies in developing a Trade Fair where Sector specific Fair does not exist nationally as in the case of Sports sector- perhaps due to very small size of the sector, becomes extremely challenging for the Fair has to achieve dual objective:
- To bring about qualitative changes in the existing sector
- To induce quantitative changes in the sector which has not reached a critical mass yet i.e. its size is still too small.

This requires far deeper commitment on part of the promotional agencies, both in terms of financial and infrastructural support."

"It's the marketing"
Let's go back to the heart of the forces of liberalization and globalization. Market! Therefore, market is the key. What we produce, where we produce and in what quantity, with what quality, at what price, with what technology, where we sell…..every thing would be decided by market. And, the market is global. Understanding the dynamics of international market of our product category, is going to be the single biggest factor to decide that you win or you loose.

Subsidies for small scale and agriculture:
First, there is a myth that is propagated in the country that two sectors, SSIs and farmers are given a lot of subsidies and other benefits. The fact is far from the truth. About farmers, one just has to study what Indian Govt. has said in WTO. And about SSIs, after being in public life for around two decades and running my own industry, I am aware of only two tangible benefits : one is flow of funds under priority sector lending for which Govt. admits on its own that it has failed to reach even the 1/3 level of requirement. The other is, option of exemption limit of excise to SSIs, which most progressive units don't exercise as that deprives them of the CENVAT credit on inputs.

In my view, other than the benefits as mentioned above, let the govt. take all benefits back and let the Govt. do the following three things:
1. Provide free space to SSIs in Trade Fairs in India and in select markets abroad and facilitate mounting of highly subsidized trade delegations.
2. Prepare or get prepared Market reports for products manufactured by SSIs and country specific reports, and provide them at affordable cost
3. Repeal existing laws and put a basic law for SSIs in place as envisaged by Abid Hussain Committee Report with provisions of respectable and easy exit in case of failure."

Support Institutions to SSIs:
Most of support institutions for SSIs created in the country over the years, suffer from what is termed as 'supply side syndrome'. Due to their 'Government knows best' attitude, their ability to develop programmes and services that are required by the target group, has been severely impaired. The representation in such institutions of the industry is so thin that accountability is hugely diluted. Further, even the most sincere initiatives taken up at the top level are to be delivered through them only- for they are there, their incapacity to deliver has become a serious handicap for the SSIs.

E-commerce:

FISME regard internet led e-commerce as the best thing to have happened for SMEs. It is seen as a great equalizer. It has potential to wipe historical weaknesses of small enterprises chiefly marketing and access to information. However, these changes are not taking place in isolation for SMEs. The revolution has gripped the large corporations and governments too. For SMEs, it is not a question of choice that they should be active player in internet led e-commerce or not. It has become a question or survival. The opportunity cost of not being an active player in e-commerce is too high for SMEs.
To survive, grow and win, SMEs will have to continuously infuse the latest tools of IT in their production processes and marketing and management functions to cut cost, gain efficiency and consistency.

Trade Fairs:
Trade Fairs have emerged as one of the most potent tools of marketing in last decade or so. Initially, the misconception that participation is done by an industry for the purpose of getting orders only proved to be a narrow view. Since SMEs cannot afford to have extensive Market surveys done for their products, the exercise empowers them with critical information about their products.

However, the SMEs confront several limitations while participating in Trade Fairs due to limited resources both man and material and lack of experience and confidence. It has been proved conclusively that the best option for them is to go through collective participation. By participating in this way, not only does the cost of participation is reduced considerably, but the quality of participation also improves as cost of organizing the participation is shared by other participants too.

Intellectual Property Rights:
The Agreement on Trade Related Aspects of Intellectuals Property Rights (TRIPS) is of great relevance to India. There is an urgent need to spread awareness of Patents, Copy Rights etc. not only among the Research Institutions but also at the level of SMEs and Schools and Colleges.

An affordable, accessable and stricter IPR regime will go along way in creation of wealth by Indians.

Challenges of WTO for SMEs:
In nutshell, the challenge for the Indian companies is coming from three quarters:
a. First, there is challenge for the companies to be internationally competitive and to have products of comparable quality, even to survive in the domestic markets
b. Secondly, the challenge is to survive the unfair competition resulting from dumped or subsidized foreign products or competition killing policies of foreign companies
c. Thirdly, the challenge for the companies is to able to influence the rules of international trade to their advantage in organizations as WTO, WIPO, FAO, ISO, CODEX Alimentarius, Multilateral Agreements on Environment etc. through active participation.

World Trade Organization:
The concepts of liberalization of international trade, deregulation and privatization of internal economy, have now been strengthened and legalized under WTO. The choice before countries in adopting a direction other than this, has become almost unrealizable. The countries that have understood this, have moved swiftly in fine tuning their domestic and international trade policies creating a winning environment for their businesses. Those who are still debating the issue or are in the stage of bewilderment, will help neither themselves nor their businesses.

Need of policy intervention: Role of Govt.
1) The fixed cost of acquiring information creates serious cost disadvantage to small firms. The ability of small firms to enter and compete effectively in export markets is discouraged by the high cost of acquiring information on foreign buyers, distribution channels, quality standards etc. There is an important role for Government here to develop and provide exhaustive markets reports for specific products and specific countries.

2) SMEs' demand for non-financial services such as training or consultancy is usually low for various reasons. Sometimes, they do not recognize that these services can raise their productivity and growth or because of lack of information or because of the risk that these benefits will not occur. As a result they use fewer external sources for advice. Development of roaster of consultants and little assistance from Govt. to reduce the cost of using their advice, can benefit the SMEs significantly.

3) One of the area that needs special attention is strengthening of marketing efforts of SMEs. The concept of 'Export Development Company' is well recognized by the promotional agencies world over in strengthening marketing efforts of SMEs. The concept needs to be broadened. It is better to develop Market Development Companies (MDC) that specialize in specific markets which could cater to both domestic and international markets. The support institutions/ Govt. could assist formation of such companies by providing matching equity if some SMEs get together to form an MDC. These MDCs could either be market specific or product group specific.

Competition:
Every industry has to understand that with liberalization and coming into being of WTO, the competition has become single dimensional. If one has competition in one sector - the nature of competition is international. It is of vital importance that every industry keep gauging its international competitiveness periodically. One of the ideal tool for SMEs to do that is by participating in export. Or by learning whether as a country we are competitive in particular product category. If we are exporting, we are.

Linkages between SMEs and R&D Institutions:
Due to changed economic scenario in the country, the linkages between the industry and R&D institutions have started taking place and we are confident that these would grow exponentially. Whereas the R&D institutions are increasingly forced to fend for themselves, the industry is forced to innovate and be continuously on learning curve to survive. The speed with which it needs to happen, however, is painfully slow.

The three biggest impediments in the way are :
i. Non-availability of information on the activities/ capabilities of R&D institutions in India to the industry- particularly in SMEs
ii. Mindset of the Industry and its lack of trust on the institutions- particularly about their capabilities and their ability to keep the trade secrets of the industry
iii. Mindset of the R&D institutions with two important things lacking -efficiency and quality service

Service Sector Exports:
India's own internal policy regime should be liberalized with regard to Service Sector to pave way for influx of Technology, professionalism and competition to make it to the global standards. Without decisive internal liberalization the potential of Services' exports will stand unrealized. The delay in fact, will spell doom for manufacturing sector exports as well.

On future of SMEs:
"Global markets are in a state of flux. As the rapid advances in information technology are fused in the industrial and marketing processes more and more, inefficiencies of the markets and of the systems will contract, forcing all industries to act with greater and greater speed. Entrepreneurial skills will come to the fore. The future is of SMEs. To survive, even large will have to learn to act like small."

On the major challenges confronting Indian SMEs:
"First, is understanding the change precipitated by globalization or put simply new rules of the game. Understanding that competition has become single dimensional phenomenon; its dimension has become international. Second, understanding and exploiting the tools of IT not only for marketing but also for attaining higher efficiency and productivity. Third, ensuring that redundant regulatory framework does not tie their hand and kill their greatest advantage-flexibility and speed."

On the role of Govt. and case for policy intervention:
" We do not think, with liberalization the role of the governments has cease to be of value. It has changed- it is required to be qualitative than quantitative. Leaving all the virtues of creation of SMEs aside, their sheer number and their contribution in the economy require policies to be SME oriented.