We use unit-level data from the registered manufacturing segment of the Third and Fourth rounds of the Indian Micro, Small and Medium Enterprises (MSME) census data for 2001-2 and 2006-7 respectively, to understand the changes in involvement and dynamics not only of Dalits (officially, Scheduled Castes, or SCs), but also of other marginalized groups, specifically Adivasis (officially, Scheduled Tribes, or STs) and women, in this sector. We empirically estimate the growth rates for these enterprises and analyse the determinants, including caste and gender of the enterprise owner. We find clear and persistent caste and gender disparities in virtually all enterprise characteristics in the registered manufacturing MSME sector. The share of SC-ST ownership has declined over the period, SC-ST enterprises tend to be smaller, more rural than urban, have a greater share of owner-operated (single employee) units. The inter-state variation in share of ST-SC businesses reveals that with the exception of the tribal majority north-eastern states, SC and ST businesses are under-represented as compared to their share in state populations. The sectoral mix varies considerably by rural-urban location as well as by the caste and gender of the owner. The traditional stigmatizing association with leather-work continues to be one of the top five business activities for SCs and not for other caste groups. The gender-caste overlap indicates that the share of female-owned and female-managed enterprises is significantly greater among SC-ST-owned enterprises, than those owned by Others, and especially by Hindu upper-castes.The majority of the MSME workforce is employed in non-SC-ST owned firms. Also, there is evidence of homophily in OBC and upper-caste-owned firms, suggesting that the rise in Dalit entrepreneurship is key to increasing Dalit employment in the small business sector. While it is significant that there is now an emerging section of Dalit entrepreneurs, we find that most Dalit businesses occupy a very different place in the production chain, viz., that they are engaged in the bottom-of-the-ladder, low productivity, survival activities, as can be seen from our estimates of their lower rate of growth, after controlling for other characteristics. Thus, we find that entrepreneurship as a vehicle for social mobility for Dalits is yet to become a reality for India.
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