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How to enhance innovation culture for MSMEs

By modernizing and adopting green technological innovations, India’s MSME sector can create new economic opportunities and strengthen its long-term competitiveness.

How to enhance innovation culture for MSMEs

Indian men work at a garment factory in Ludhiana. (Photo: AFP)

MSMEs play a pivotal role in the growth of the Indian economy. The MSME sector, with 63 million enterprises, has an enormous social and economic impact. MSMEs in India contribute about 45% to manufacturing and nearly 40% to the export sector.

Their contribution to the country’s GDP is around 30% and while the sector is considered as a strong pillar of the Indian economy, it faces several challenges like financial constraints, strong international competition, pressure for efficient utilization of key resources like energy, water and raw materials, implementing more environmentally sustainable production processes, and dealing with technological obsolescence and supply chain inefficiencies.

To overcome these constraints and become globally competitive, MSMEs need to adopt innovative approaches in their work. A culture of Innovation on multiple parameters like business processes, product development and technology up-gradation, marketing practices and improving the efficiency of internal operations can bring a sea change in their overall wellbeing.

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By modernizing and adopting green technological innovations, India’s MSME sector can create new economic opportunities and strengthen its long-term competitiveness. MSMEs also need to implement new and innovative ICT technologies on a large scale like Software as a Service (SaaS) and Infrastructure as a Service (IaaS).

Although the Government of India has taken a number of initiatives like Startup India and launching of Innovation hubs aimed at strengthening the innovation capacity of MSMEs, the cooperation between industry, academia and government bodies remain weak, thereby hampering the innovation capacity and sustainability of MSMEs.

Technology up-gradation in manufacturing and Innovations and Digitization in processes can prove to be a game-changer for MSMEs in India to achieve global competitiveness.

Presently, the technological advancement and innovations in industrial and services sectors are being led by science and technology institutions, academia and innovative Startups. To bring India to the forefront in the field of innovation and entrepreneurial ventures, it is necessary to build a support system for speedy conversion of innovative ideas into products, processes and services for the global market. Through such innovations, India can also raise the productivity of its labour force and deliver basic services to millions at affordable prices using technology and the digital economy.

In line with the vision of Aatmanirbhar Bharat, MSMEs in India have to be technologically empowered to overcome the challenges being faced by them in exporting their products and for import substitution. The world is changing rapidly and building competitive strengths of MSMEs needs to be given priority through continuous innovations for improving the quality standards and price advantage.

Towards this end following suggestions could prove to be useful:

  • Evaluate the present level of technology in various sectors and the desired technology levels sought to be achieved.
  • Tap on the innovations and technologies suitable for MSMEs for implementation.
  • Set up Information Centres and a Bank for innovations and their transfer mechanism along with support institutions for facilitating such technology transfers and up-gradation.
  • Facilitate regular consultations with various agencies, innovation and technology centres and institutions engaged in technology management.
  • Encourage Research & Development of indigenous technologies for micro & small enterprises including traditional occupations.
  • Create a Large number of innovation infrastructure in various institutions to encourage and incubate start-ups.
  • Organize awareness programs among MSMEs with respect to quality, standardization and import substitution.

The global markets demand quality products with zero defects and zero effect. India’s vision of achieving US$ 5.0 trillion economies can be put on a fast track by bringing in a culture of innovations in both products and processes and adopting innovative technologies.

(By Pradeep Multani, President, PHD Chamber of Commerce and Industry)

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