The small-scale industry sector plays a key role in the Indian economy today. SSIs account for almost 40 percent of country's industrial production, 35 percent of direct overall exports and employment of 20 million. The capital investments on plant machinery by units are considered as the main criteria for distinguishing between the large and small industries. By no means these facts and figures can ever be taken lightly. Contrary to this overall trend, the status of small-scale units is not the same in the Indian pharmaceutical industry. The SSI units in India's pharmaceutical industry, numbering over 18,000 units, account for hardly 25 percent of production and exports, whereas 250 large and medium scale drug units control almost 75 percent of pharmaceutical production and exports. One main reason for this unique feature in this sector is the fact that this industry is highly regulated as its products are life saving and are critical for the survival of the patients. Regulations in this industry are, therefore, going to be only more stringent with increasing public awareness and concern for health. The impending implementation of Good Manufacturing Practices under Schedule M of the Drugs and Cosmetics Act is one such key regulation that could bring down the number of SSIs considerably from 2004. A good number of tiny and small drug units, which cannot afford to bring in GMP standards, may have to close down from next year. Implementation of GMP in Indian pharmaceutical industry will thus open a new chapter in manufacturing standards of the surviving SSIs. In fact, this change was badly needed in the SSI sector as an increasing number of MNCs and a good number of large Indian drug companies are getting out of manufacturing and are solely depending on SSIs for their product manufacturing. This ongoing change in the working of the SSI sector and its role will place a serious responsibility on these units in the coming years. This, therefore, calls for a strong support system and encouragement of SSIs in this industry. Currently no drug industry associations are truly representing them and are taking up their cause on a regular basis. Often, SSIs are unfairly branded as producers of spurious and substandard drugs; cases are filed against and harassed by the officials. Most of them are often under financial crisis as the payments from large units regularly get delayed. Absence of a national body representing SSIs in drug industry has been a serious handicap for them to take up such key issues. However, the recent formation of Confederation of Indian Pharmaceutical Industries, representing all state and regional level small industry associations, is a move to bring an end to this neglect of this sector. It is high time the regulatory bodies in the Central and state governments appreciated the role of SSIs in this sector and offered the recognition they deserve.