Conclusion: Environmental requirement exerts more pressure on larger industries, because they have bigger operations and need more money to change more complex operations.
Ask for weakening.
(A) Environmental regulations are applicable in the same way to all segments of industry, irrespective of the size of operations.
Yes regulations are equally applicable but still it's likely that bigger operations need to spend more money. Not weakening.
(B) Many large industries depend on the smaller industries for their intermediaries.
It has nothing to do with the impact of environmental regulations, out of scope.
(C) Small industries are less likely to have at their disposal the capital reserves to improve their existing operations.
This one seems good, since it talks about why small industries may have greater burdons to improve the existing operation so that it becomes more environmental friendly.
(D) Large industries are always in a better position to diversify their operations than are smaller industries.
Environmental regulations require industries to make their process more environmental friendly, not require them to diversify their operations. Irrelavent.
(E) Many a times, the technology requirements of large and small industries are similar.
If it is talking about the tech requirement for environmental regulation then I would have chosen this one. But on second read it is talking about tech requirement for the industries themselves. Again kind of irrelavent to environment regulation requirements.
So I would choose C.
Keep on asking, and it will be given you;
keep on seeking, and you will find;
keep on knocking, and it will be opened to you.