The Small Scale Industrial Policy in India and Performance of Unorganised Manufacturing: A Comparative Analysis with East Asian Countries

This chapter attempts to understand the key factors that explain the growth of a competitive and dynamic informal industrial sector in the major East Asian countries by looking at the historical developmental context as well as the industrial policy adopted by these countries. The chapter also compares the characteristics of the informal industries in India with that of the East Asian countries to conclude that the contrasting nature of the informal industrial units of these two sets of countries is essentially embedded in the differences in labour market regulation, approaches to financial market liberalization and the overall strategy of industrialization. The concluding observations and reflections stresses upon the crucial role of the state in formulating an industrialization strategy in consonance with the factor abundance of the country, in the absence of which targeted intervention to protect or promote the small scale industrial sector may produce counterproductive results, as we see in the case of India.