This study attempts to explore the changes and constraints that have taken place as policy gaps still remain in small and medium manufacturing enterprises. The industries in two industrial parks were studied i.e. Pul-e-Charki and Jumma Mohammad Mohammadi, where many Afghans are engaging with the traditional and modern manufacturing of goods. With the implementation of new economic policies many problems in the SME sector have been reduced and economic situations have improved. The establishment of new standardized industrial parks improved licensing procedures, new sources of raw material. Up gradation of machinery (from manual and semi mechanical to full mechanical methods) have contributed to expanding business. Likewise, entrepreneurs have more appropriate conditions to operate work themselves generating their creativity in production. The sector has gained initial results in the beginning stages of the market oriented economy model.