For development of the private sector, expe rts identi fy thr ee cor e actors: the G over nment, manufacturing/ service enterprises a nd b us i n e s s m e m be r s hi p o r g a n i z a t i o ns ( B MO s ) o r associations of Micro, Small and Medium Enterprises (MSMEs). The roles of the three actors are complementary. Whereas Government is responsible for framework conditions in an economic environment, associations serve as a critical link between the Government and group of enterprises affected by or beneficiary of such dispensation. They are key players in public- pr ivate dialogue. Absence of effective associations weakens the dynamic relationship of the other two players and negatively impacts the business environment.

Unlike their larger counterparts, most MSME associations in India continue to suffer from ambiguity of purpose, low resource base and are caught in the vicious circle of 'low resources - fewer activities - lower membership'. The limitation is exacerbated in view of changing needs of SMEs on the one hand and enhanced role that SME Government support programmes envisage from the associations on the other. The need for capacity building of MSME associations, therefore, is being felt equally by the MSME development agencies as well as by associations themselves in the country.