On May 1, 2007, the Indian Prime Minister, Dr. Manmohan Singh, inaugurating the new campus of the Institute for Studies in Industrial Development, said in clear words that the country’s industrialisation could not be dependent on large corporate groups and it required small and medium enterprises (SMEs) for both growth and employment. Observers will recognise the duality of this statement considering the aggressive neo-liberal and globalisation policies being followed at the centre as well as state levels. The prime minister spoke about the dangers “Crony (Monopolistic) Capitalism”, which tends to confer state privileges on a select few.
The role of small and medium-sized enterprises (SMEs) in employment, growth and development is now recognised the world over. SMEs have played a major role in the growth and development of all leading Asian economies. There is a need for a shift in favour of SMEs and micro enterprises at the policy level, to ensure a more balanced flow of investment towards the development of micro, small and medium enterprises (MSMEs). The policy most be gender sensitive to enable women micro entrepreneurs and self help groups (SHGs) to aspire to become small and medium level enterprises. New developments are forcing SMEs to seek offshore markets, to upgrade their internal technological and organisational capacities to international standards, in order to look for contracts within more international markets. The new trading environment in which SMEs find themselves offers both a range of opportunities and threats.
To achieve maximum gain from trade in the new scenario it is essential to improve governance, build capacity, reduce transaction costs, address non-tariff barriers, increase Internet access and facilitate trade and investment to improve the capacity of SMEs to export. Capacity building includes: access to finance; improved professional skills (IT, management, accounting and entrepreneurship); improved business infrastructure; removal of trade barriers that particularly adversely affect SMEs. E-commerce use by SMEs also lags behind Usage of technology is also a problem due to set up and usage costs lack of adequate infrastructure and IT skills. All the above-mentioned issues can be either partially or fully addressed by ICT integration in the SME sector. A more holistic ICT integration will also look towards helping in networking and building of collaborative SME clusters.
SME clusters in India are not performing upto their full potential. There are about 350 modern and 2000 artisans based rural clusters in existence. ICT can significantly complement cluster-grown initiatives especially for small and micro enterprises. ICT adoption by the Indian clusters is extremely low. (30% including the IT firms, according to some industry estimates). SMEs suffer from disadvantage principally in the areas of access to information and technology, willingness to adopt new ICTs, paucity of funds, and lack of knowledge.
It remains to be seen how policy interventions, capacity building initiatives and networking collaborations take advantage of the new trading environment, and harness the social potentials of SMEs, as there are also differences between developed and developing nations.