Challenge for Improving the R&D in Indian Small Businesses

Posted on February 8, 2011 by

It is important to improve the technological skills for sustaining in the current environment. In general, many Indian manufacturing firms are less involved in research and development (R&D) and also less money is spent for such activities.

It was estimated that during 1991-2008, about 38 percent of the total number of large firms had reported for R&D expenses for at least single year. The contribution of 16 percent and 8.5 percent had been observed by medium and small firms respectively. The average R&D intensity which indicates the R&D as a percent of sales was found to be less than 0.5 percent for small and medium firms.

A decrease in average R&D intensity of small firms of about 21 percent was observed from 0.12 percent in 1991−99 to 0.09 percent in 2000−08. This indicated that there is a need to increase the capacities of small farms in order to meet the globalization process. However, there had been an increase of about 39 percent in the average R&D intensity for larger firms.

The contribution of SME R&D for sectors including chemicals and chemical products; drugs & pharmaceuticals; electrical and optical equipment; and machinery and equipment was found to be 80 percent of the total SME R&D in 1990s. However, there had been an increase in the contribution to 88 percent in 2000s.

The technological skills for small business sector have to be improved so that they can be used by the larger companies. Certain policies have to be taken by the government to improve the quality, productivity, and resources of SME sector. This might help in enhancing the competitiveness for small businesses.

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