Don't dismiss India's SMEs as 'dwarves'

INDIAN government economists appear to be ignoring the important lessons of China and Taiwan, which have achieved spectacular economic growth through the massive contribution of their small and medium-sized enterprises (SMEs).

The economists have criticised the contribution of India's small companies, disparaging them as a phenomenon of "dwarfism" for their apparent reluctance to grow and blaming them for holding back job creation. The Economic Survey 2018-2019 prepared by the Ministry of Finance and released last month, calls for putting an end to "dwarfism" in Indian industry by cutting off incentives to firms older than 10 years.

The survey defines "dwarfs" as firms employing less than 100 workers and which account for half the number of businesses in the Indian economy. It claims that their share in employment is only 13.3 per cent, and their slice of the economy's net value-added is a minuscule 4.7 per cent - a statistic since clarified by the World …