``The small industries will have to compete no matter what incentive the government might give to the sector in the wake of moves for lifting of quantitative and tariff restriction and the proposed common market of saarc nations,'' he said.

``Even if we have restrictive practices for some time we will have competiton from next door,'' he said addressing small entreprenuers at a conference organised by the World Association for Small and Medium Enterprises (WASME) here.

Sinha, however, expressed confidence that small industries will be able to face domestic competition as it has been competing outside the country.

``Since a major chunk of exports are contributed by the small scale sector, there is no reason why they will not be able to faceglobal competition,'' he said.

Sinha said he desired a nation-wide debate on the issue of dereservation of items hitherto reserved for the small industries and asked the WASME to take initiative in this regard.

Sinha said China had made inroads in the international market by also using low technology in manufacture of toys and other products.

``Low technology is not bad and china has done well in it,'' he said.

The finance minister also dwelled at length on the ``unevenness'' in competition in the SSI sector where the tiny sector has been complaining of problems.

Sinha told small-scale entrepreneurs that if one were to go by categorisation of industries then even the investments of Tisco was small at one point of time.

Speaking on the occasion, managing director of Small Industries Bank of India (SIDBI) Dr Sailendra Narayan said small-scale sector had grown at a rate of 13.75 per cent during the first few months of 1998-99.