Traditional SME sectors like textiles, footwear and metal ware, which have their own unique “local innovation systems”, need strengthening to make them more competitive, as per one of the top official of Institute of Small Enterprises and Development (ISED).
According to Dr PM Mathew, Director of ISED, principles of modern systems of innovation are only partially relevant to such sectors. These principles need contextualization to ensure that the delicate balance of the traditional knowledge-based production techniques of such sectors is not disrupted.
He said development banks, public promotional agencies and professional agencies must work together with a clear purpose in this regard.
He also emphasized that in developed economies, a relatively small number of fast-growing SMEs, often dubbed “gazelles”, account for the majority of new job creation.
He pointed out that firms comprising less than 10 per cent of the total SME population create 70 per cent or more of all net new jobs.
World Bank’s Enterprise Surveys show that these high growth firms make up 16.4 per cent of all SMEs, and create almost 38 percent of new jobs, he said.
The ISED report released by Reserve Bank of India Deputy Governor SS Mundra also highlighted that in Brazil, eight per cent of SMEs account for 57 per cent of new jobs. This cannot be the path for India, where traditional and modern, as well as organised and unorganised sectors are significantly interdependent, it said.
