The Role of SMEs in Job Creation: Indian Perspective

Vijay Kalantri, President AIAI and Vice Chairman WTC

MVIRDC - World Trade Centre

Centre 1 Bldg, Cuffe Parade,

Mumbai  400 005 

Tel: 022 663 87390  E-mail:


J P Ghate, Director


Bose K Nair, Joint Director


Type of Presentation: Workshop

Aims: Small and medium Enterprises (SMEs) have emerged as an engine of growth in several developed and developing economies of the world. In India also they have emerged as a vibrant and dynamic component of Indian economy by virtue of their significant contribution to Gross Domestic Products (GDP), industrial production and exports. SME sector also creates employment opportunities that provide a source of living to millions of people and their regional dispersal.

The Indian Micro, Small and Medium Enterprises Development (MSMED) Act, seeks to facilitate the development of these enterprises as also enhance their competitiveness. It provides the first-ever legal framework for recognition of the concept of “enterprise” which comprises both manufacturing and service entities. It defines medium enterprises for the first time and seeks to integrate the three tiers of these enterprises, namely, micro, small and medium. The major advantage of the MSME sector lies in its significant employment potential at low capital cost and the labour intensity in the MSME sector is estimated to be considerable higher than the large enterprises. Hence, the MSME sector provides one of the most viable avenues for absorbing the large surplus population engaged in the agriculture sector.

However, there are weak linkages between the technology providers (Universities and R & D laboratories) and the MSME’s as technology users; very little motivation exists for the MSME’s for upgrading their capabilities towards entering into subcontracting and ancillarization of activities with the larger firms in India. While surveying the current Indian scene, the author has advocated the need for MSME’s to utilize the technical facilities available at the S & T infrastructure created in the country. A special mechanism may be created at the national level to enable the MEME’s to upgrade their technical capacities and capabilities for producing quality products to interact with larger firms, in new and merging fields. The article highlights the technoprenurship capabilities which are being developed by SME’s in India for producing quality products as well as undertaking ancillarization and sub-contracting activities for the larger firms in India.

Contents of the paper would be:

• Indian MSME sector Retrospect and Prospect
• Protective regime to libralised regime
• Outlook on policies, Finance, Foreign Trade Policies
• MSME problems and prospects
• MSME in global prospective: Employment generation
• Global competition and opportunities
• Development of science and technology through industry linked education
• Market challenges & opportunity in the turbulent global economy.

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