Small businesses have been time and again referred to as the back bone of any economy.

They have been for India ever since the Harrapan era. They were even a part of the Independence movement, in the form of Swadeshi' movement. In fact they have proved to be a successful economic and political strategy to cast out British Imperialism by boycotting the British products and creating an army of domestic producers. Post independence, in the 2nd and 3rd five year plans, India went for rapid industrialisation. The Karve committee was one of the earliest, which suggested a protective environment for the growth of small industries in India. Following this, the government reserved up to 800 items for exclusive manufacture in the small scale industry by the Industries, Development and Regulation Act, 1951. After the liberalisation of Indian economy in 1991, there was a complete reversal in the scenario, with the iron handed move towards de-reservation of sectors previously reserved for the small scale industries. The Micro, Small and Medium enterprises post-liberalisation were initially apprehensive about their ability to survive in the global competitive environment but soon realized that it also provided them with greater opportunities to become a part of the global supply chain, as large manufacturing companies outsourced their production. However, they had little control over their terms of trade. This brings us to the present day, when strong government action has resulted in making widespread the practise of clustering and increasing bargaining power. Moreover the government has also declared MSMEs priority lending sector and made available to them a fixed percentage of all Commercial banks available funds.

Small and medium enterprises are those enterprises whose initial investment amounts fall below certain set limits. In India, the classification is as follows: