Abstract
Abstract
This paper makes a comparative analysis of the major reforms and measures taken by China via-a-vis India to shape their SME sector performances. Since SME sectors are mostly labour intensive labour reforms are absolutely essential. This would in turn, facilitate FDI (foreign direct investment) inflows and ease the credit and finance problems faced by the SMEs. India with its lop-sided distribution of firm-size faces the challenge of “missing middle”. SMEs are finding it suboptimal to grow because of the archaic labour laws in India, that constrain hiring and firing policies related to firm’s downsizing decisions. One observation regarding Chinese reform is that their reform agenda was much ahead of time, holistic and gradual, unlike India’s reform measures, which are piecemeal and non-uniform across time, and hence was partially effective in facilitating stable growth in the SME sector across time. However, recent initiatives are quite ambitious, if the steps get translated into reality the SME sector’s growth might reach its potential.
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