Traditional Know ledge (TK) Based Innovation in MSMEs in India: The Road Less Travelled

Abstract

That, of late, MSME has emerged as a vibrant sector in the Indian economy is indicated by its significant contribution to employment, income and exports of the country. Also, the small sector has registered a higher growth rate than the rest of the industrial sector. The MSME sector has been helping in contributing to high and inclusive growth in the country. That is why the Government of India, for the first time, tabled the new small enterprise policy titled Policy Measures for Promoting and Strengthening and Supplementing Small, Tiny and Village Enterprises in the Parliament on August 6, 1991. In continuation of her strong support to the MSME sector in the country, the Government of India has enforced Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. The result is continuous growth in the number of MSMEs in the country. However, being small in size and strength, the MSMEs have been facing different types of problems like marketing, capital, technology, skilled man-power and so on. The consequence of all these problems is the increasing rate of sickness and, in turn, closure of MSMEs in the country. To quote, nearly 2 per cent of the total MSMEs had fallen sick, of which nearly 90 per cent have become non-viable, that is, as good as dead or closed. In view of the vibrant role of MSMEs in the national economy, there is a need to strengthen the MSME sector. One way to do so is to achieve competitive advantage among the MSMEs through innovation based on traditional knowledge (TK). However, available research on innovation in MSMEs reveals that not much, at least, systematic and comprehensive research has been done so far in this topical area relating to MSMEs in India. It is against this backdrop that the present paper makes an attempt to discuss the important aspects of TK based innovation in MSMEs in India.