SMEs need to invest in innovations and technology

With the globalization of product and service markets, companies, and in particular small and medium-sized enterprises (SMEs) face increasing competition not only for sales but also for technical know-how and skills.

In this environment, competitiveness at the company level depends heavily on the speed with which new products can be brought to the market place and new cost-saving improvements made. Similarly, the creation of newer markets and more customers depend to a very large extent on the speed with which scientific and technological breakthroughs are converted into practical and attractive solutions.

Innovation holds the key to increase in productivity and productivity gains are key to both economic growth and in raising the standards of living.

Innovation is a tool that enables SMEs to reap rewards of scientific achievement and requires much more than the ability to turn a new idea into a working product. Efficient flows of technology are not enough and ready supplies of finance and business skills are also crucial.

Critical to such a culture of innovation are the SMEs which have, in recent years, proved themselves to be the engines of economic growth and principal sources of foreign exchange. And SMEs account for a bulk of all Indian businesses and in many fields provide the channels along which new technologies develop.

SMEs play a pivotal role in the success of the Indian economy due to their ability to exploit new technologies and to respond quickly to changing market needs. Support for the creation of new ventures and spin-offs from research institutions and large companies, as well as the removal of barriers in their way of their rapid growth and support for the transfer of know-how, also deserve to be accorded the highest priority.

Despite this, with SMEs facing a financial crunch, they are unable to invest in innovations and R&D. Investing in R&D to innovate in technology by SMEs has to be encouraged. However a focused approach on advanced technology products which is of the utmost importance, is missing. And without all these SMEs stand to lose a great deal. Sadly government intervention including public investment which can act as a catalyst for SME growth is still a Utopian dream.

What is needed is a dynamic, self-sustaining culture of innovation for SMEs. But a big cloud of uncertainty hangs over when our authorities will focus on this area...at least as of now!

Monthly Economic & Commercial Report on Tanzania for January 2008 giving latest updates on developments directly affecting India's foreign trade and investment. Read More...

Rightly said...However we need to continue with this growth. The government needs to take certain steps to see that the robust economic growth continues. Moreover India should also take its time in negotiating with the developed bloc for the WTO Deal. Any hasty decision can lead to far-reaching consequences later.

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