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ISED calls for strengthening traditional SME sector

Dr PM Mathew, Director of ISED, said principles of modern systems of innovation are only partially relevant to such sectors.

PTI|
Last Updated: Nov 27, 2015, 07.23 PM IST
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THIRUVANATHAPURAM: Traditional SME sectors like textiles, footwear and metalware, which have their own unique "local innovation systems", need strengthening to make them more competitive, a top official of Institute of Small Enterprises and Development (ISED) said.

Dr PM Mathew, Director of ISED, said principles of modern systems of innovation are only partially relevant to such sectors.

These principles need contextualisation to ensure that the delicate balance of the traditional knowledge-based production techniques of such sectors is not disrupted, he said.

Mathew was speaking on the sidelines of the release of 'India MSME Report 2015' at World Trade Centre in Mumbai yesterday, a release said here.

He said development banks, public promotional agencies and professional agencies must work together with a clear purpose in this regard.

Mathew said 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 report was released by Reserve Bank of India Deputy Governor SS Mundra.

The ISED report said that in Brazil, eight per cent of SMEs account for 57 per cent of new jobs. This cannot be the path for India, where both traditional and modern, as well as organised and unorganised sectors are significantly interdependent, it said.

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