Competition Policy and the Small Sector: Some Emerging Issues

Abstract

Recent years have seen a significant rise in the 'globalisation' of developing economies. The agreements in the Uruguay Round and the emergence of the World Trade Organisation (WTO) has not only liberalised world trade, it has also shifted the focus of multilateral negotiations to 'trade related' policies of member nations. Like several other policies, competition policy is also seen by many as a 'trade related' policy. This has led to a debate, especially in liberalising economies like India, on the need for an appropriate competition policy for economies in transition. The appropriateness of competition policy can be evaluated on various counts, but that is not the purpose of this paper. The paper seeks to explore the implications of current competition policy debates on the small-scale sector in the Indian context. While many analysts recognise that competition law is just one of the policy instruments to create a competitive environment in the economy, policy makers seldom account for interactions between policy instruments in design and implementation of such a law. In particular the complex links between competition policy on the one hand and investment and trade policy on the other are not explicitly recognised. Moreover, two other developments in recent years may have significant implications for the small-scale sector.