The book covers the growth and transformation of small industries in the nineties and before. It addresses policy issues and makes radical suggestions on how small industries can become the leading edge of India's competitiveness. Inter alia it covers the issue of "Reservation", credit policy including directed credit, duty concessions, preferential purchase, the tariff regime and macro-policies for small firms to take off. It argues for incentivisation of bank lending to small firms, privatisation of banks, de-reservation, petty patent regime, geographical identifiers for protection of intangible property, correction of the inverted tariff, better infrastructure especially in industrial estates, cluster oriented micro action, and the pursuit of export led growth policies.
The current paradigm of 'protectionist' and 'supportive' policies is shown to be not only inadequate, but also to have constrained the growth and transformation of the sector. Macroeconomic policies especially with regard to trade and exchange rate and the functioning of credit markets have severely discriminated against small firms. Bringing in a wide variety of evidence, including that from large primary survey, the study recommends that more aggressive exchange rate policy, correction of the tariff inversion, incentivisation of credit flows, and de-reservation would make the sector the principal dynamic force in the economy. Small firms need to be 'freed' rather than protected. The deep "schism" in the labour market makes small firms crucial to the transformation of the economy, and to labour absorption. The characterisation of the segments within the small firm sector is fresh and innovative and leads to a new perspective of the economy and its structure.