Constraints to export growth in the small firm sector

Abstract

Exports from small firms are analysed and the constraints in expansion and growth of exports from the sector are brought out. A large priary survey of over 1200 firms is used to bring out experiences of small firms. Small firms would have to have a major role in exports from India, because only they have access to the unorganised labour market. Principally, macroeconomic policy especially exchange rate, tariff and credit policies have discriminated against the sector. The adherence to orthodoxy has resulted not only in considerable under-performance of the sector and its exports, but also of the economy as a whole. Relaxation of the institutional and policy constraints in the expansion of manufactured exports should have been the topmost priority, but given the continued reign of orthodoxy this is most unlikely. As such labour absorption by the sector would hardly be able to go much beyond 4% per annum, and the envisaged growth of the economy at rates of 7% or more is hardly likely