On Learning, Innovation and Competence Building in India’s SMEs: Challenges Ahead

With a vast and diverse SME sector India’s industrialization owes much to the technological dynamism of enterprises. Various institutional interventions have been made to promote innovativeness in the sector, albeit, following economic reforms, it appears that the SME sector has not been able to withstand global competition. The sector, in general, has lagged behind in terms of employment generation and also exports. Elaborate institutional arrangements for the financing of SME development at the national, state and regional levels notwithstanding the share of SMEs in the total net bank credit by the public sector banks has been on the decline. Moreover, with a complex maze of institutions for promoting science and technology across space and product spectrum in SMEs in India the R&D intensity in the small-scale sector has been declining over the years. In fact, the R&D activity, in any significant measure, is confined only to a dozen industries and there is absolute lack of coordination between the sectors (small scale, private sector and public sector) in terms of research investment. The study locates, nevertheless, a few sectors that display substantial vibrancy that in turn leave scope for learning from within. [Working Paper No. 197]. URL:[http://www.gidr.ac.in/pdf/Working%20Paper%20197.pdf].