The small and medium enterprises (SMEs) have been recognized as engines of equitable economic growth and development. They constitute a majority of total enterprises in most of the economies and account for a major share of industrial production. In India too, the SMEs play a pivotal role in the overall industrial economy of the country.  However, in the global product and services markets, SMEs in general, face increasing competition not only for sales but also for technical know-how and skills.

Competitiveness of businesses depends on the speed with which research resultants are converted into practical solutions. In fact, innovation is an important tool that enables SMEs to reap rewards of scientific achievement. 

 

 

Even though the new economy technology start-ups can embark on breakthrough innovations for building knowledge intensive businesses, SMEs generally need to innovate, even if incrementally, to ensure competitiveness. The National Knowledge Commission (NKC) report (2007) sees the following as primary barriers to innovation: excessive government regulation, lack of effective collaboration between industry and research conducted in universities / research laboratories, skill shortages, inability to move beyond the initial successful innovation and poor understanding of market dynamics.  Both empirical studies as well as findings of the NKC study show that a small proportion of firms (about 30% of large firms and <10% of SMEs) partner with government agencies for the purpose of innovation. Unlike some established big firms, several SMEs have not adopted innovation as a strategic tool to achieve necessary competitiveness. Towards development, protection and exploitation of novel products / processes, SMEs (other than those in the knowledge-intensive sectors) generally display poor awareness of intellectual property issues. There is thus an overwhelming need for awareness and support. 

 

An extremely important barrier to competitiveness in the SME sector is the lack of knowledge / skill and resource conducive to innovation drives.  However, technical training institutions conduct various short term trainings, apart from their regular curricula, to augment the knowledge/skill requirement for the small and unorganised sector. Another good example can be seen at the industry-interface organization like Foundation for Innovation and Technology Transfer (FITT) at IIT Delhi which conducts technology intensive and industry-customized programs for professional development of the human capital. FITT has also launched a novel outreach program called Professional Candidate Registration that targets knowledge enrichment in the catchment area of the National Capital Region of Delhi and envisages professionals from Industry to take up individual course modules in class room of IIT Delhi during the academic session along with regular students. Such efforts are aimed to bridge  knowledge gaps, strengthen employee skill-sets and enable companies to leverage refreshed human resources towards greater innovation opportunities.

 

 

In the growth of the Indian economy, innovation is emerging as a key driver ensuring economic survival and advancement. According to surveys by the National Knowledge Commission 70%, 56% and 17%  of SMEs have introduced innovation that is “new to the industry”, “new to India” and “new to the world” respectively therefore, implying that 17% of the SMEs are highly innovative. Economic liberalization of 1991 led to a significant increase in competitiveness in the Indian economy and therefore an increase in the importance of technology innovation. Innovation, in general, has led to a greater increase in profitability for the manufacturing sector and a greater reduction in the costs for the service firms. SMEs have been greatly impacted by three types of Innovation  new products, new processes and new services. Moreover, in line with R&D expansion, technology must create additional value through proliferation & commercialization. 

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