Small and Medium Enterprises (SMEs) play an important role in any economy through
generation of employments,contributing to the growth ofGDP,embarking on innovations and
stimulating ofother economic activities.Thissectoris said to bethebackboneofalldeveloped
and developing nations. So, the development of this sector is paramount important for any
countryirrespective of their level of development.This is even more important to developing
countries where poverty and unemployment are the persisting problems in those economies.
Having understood this fact, successive governments in Sri Lanka have taken various steps,
from time to time, to promote this vital sector since independence. But, when analyzing the
present contribution of this sector in the national economy, it is clear that the sector has not
achieved desired level of contribution when compared with other developed and developing
countries in the region.So, there seems to be a vast opportunity for Sri Lanka to harness the
opportunitybydeveloping this vital sector.So,the objective of this paper is to provide a brief
overview of SME sector in Sri Lanka,and to make suggestion for enhancing the capacities of
SMEs for a sustainable development in Sri Lanka