Berkeley Planning Journal

This paper examines two manufacturing sectors in India and shows that regulation aimed at protection does not provide the necessary impetus for growth and survival of small indus­ tries. Rather, such regulation provides a fertile territOI)' for larger businesses to avail themselves of undue rents through protected markets and regulatory loopholes. The article also proposes a new role for the state to better serve the twin objectives of social equity and industrial growth. Such a role would rely on the existing coalitions of small enterprises and pool resources to consolidate their economic and political power. The article concludes that state institutions can pro­ vide a forum for small-business coalitions that would create conditions for all scales of operation to survive and grow without protective regulations.