September 2008

Developing countries need policy support for MSMEs to embrace ICTs!

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MSMEs have to confront high level competitive markets in an increasingly globalised world. What can information and communication technologies do to create a supportive and empowering environment for the huge numbers of small sized or medium sized or even micro enterprises to battle the current economic and market trends?  Attaining competitiveness is a big challenge for the MSMEs in India which are important contributors of GDP and exports. This is especially of concern to the Government of India, which has reponded by setting up a national portal to strengthen the hands of MSMEs through ICTs. Set up with support from Microsoft, the project Vikas enables MSMEs to use information and communication technologies effectively.

As global economies become increasingly reliant on ICTs, to receive, process and send out information, SMEs  in developing countries have to become responsive so as not to be left behind. ICTs are often used for increasing the global outreach and awareness of products and services,  to integrate to the global supply chain,  to bid for outsourcing business opportunities, and to improve their own productivity in production processes as well as to improve internal business processes.

In India, the SMEs are spread thin. Wherever clustering approach has been developed, and organisations like UNIDO have brought technology transfer and support to clusters, they have seen to embark on an improved profitability and competitiveness route.

Why have MSMEs been slow to adopt ICTs in developing countries? Often, it has been seen that Governments in these regions have been slow to adopt policies. Agencies like Small Industries Development Bank of India (SIDBI) have collaborated with international agencies like GTZ to build technical and business capacities besides rendering the important financial services crucial to MSME sector.

If we were to learn from other Asian countries of how they have provided supporting policy environment, we can adapt them for India. For example, Korea provides a webforum to SMEs to showcase their products to an international market; Japan provides tax relief for SMEs that use ICTs; Singapore subsidises the training of SME workers in ICTs, Philippines has deregulated VOIP so as to reduce international telephony costs. These are important policy directives that have been researched and documented by UN's ADPID policy note issued way back in 2005. It is important to know that SMEs are the core backbone of employment to the rural/peri-urban masses, and manufacturing has to be the hard core strength of any nation, if it has to have a secure financial inclusion, and strong economic future.

In this issue, we bring you some of the core experiences of MSME sector and the use of ICTs from across the world. This issue is central to addressing the poverty

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