In this era of globalization, when large Indian enterprises are on a mergers and acquisition spree and are entering the international arena, the Indian Small and Medium Scale Enterprises (SME) sector seems to be lagging behind in the race. The reasons are immaterial and the result is the concern. After the enactment of `The Micro, Small and Medium Enterprise Development (SMED) Act' in June 2006, everybody interested in the issue is again hopeful of a bright and prosperous future for the Indian SME sector. But is the repeated redefinition of SMEs (on the same age-old investment parameters) a solution for survival in today's cruel battle? Or does it require broadened horizons of thinking as well as actions from the people concerned? The protective shield provided by the Government to SMEs in India up till now has been removed, and this sector is preparing to sail into uncharted waters at the international level. When automation, technological upgradation and modernization (requiring very high capital investment) are the new sustainability norms, Indian SMEs are still finding ways of coping with investment limits forced on them. The time has now come to recraft our policies in tune with the current requirements.

Since independence, India's industrialization has been based predominantly on large-scale, import-substituting heavy industries as the keystone, with traditional Small Scale Industry (SSI) as an adjunct to meet every day demands of the people. Gandhiji was among the earliest advocates of small industry but his focus was on the expansion of traditional and rural manufactures and not on the creation of modern, small urban factory sector. Gandhiji was mainly concerned with the household industry, which is important, but is not all.

It was Prof. Mahalanobis, who set the pattern of the second five-year plan, which continues to be at the core of our industrial strategy, and conceived the small-scale sector as a supplier of consumer goods needed to support workers in the large-scale sector of heavy industry. The Mahalanobis model of industrialization, which might have been appropriate earlier, now needs trial refurbishing. For the most part, large-scale industry is noncompetitive and technologically obsolete, the SSI has indeed grown, and provided employment. Set the quality of the products that it has produced is less than desirable. Consumer goods are still outside the reach of large section of our population. Indeed, the strategic shift needed in the 11^th plan is to get away from this preoccupation with the segmentation syndrome of large, medium and small and ask how best consumer needs can be met.

Small and Medium Enterprises in India, Small and Medium Scale Enterprises, SME, Mergers and Acquisition, M&A, Small and Medium Enterprise Development, SMED, Industrial strategy, Information technology, Gross Domestic Products, GDP, State Financial Cooperation, Small Enterprise Financial Centers, Industrial policies.