Innovation as a Catalyst for MSME growth

MSME Sector in India

Part 29

Innovation as a Catalyst for MSME growth

‘Innovation’ is fast gaining policymakers’ attention for its recognized role in building a nationwide entrepreneurial ecosystem and thereby shaping India’s socio-economic growth and stature. Its growing importance can be assessed from the fact that 17% of the large companies rank innovation as their top strategic priority today and 75% rank it among their top three.

Innovation as a Catalyst for MSME growth

However, its application still remains limited with not much known around how to diffuse and sustain innovation. In the latest annual Global Innovation Index survey, India has slipped 10 positions to drop to 76th position.

Innovation as a Catalyst for MSME growth

It is the worst performer among the BRICS nations, with all the others improving their positions from that of the last year. While we score with quality of universities, IT services exports, and export of creative goods, but these are outweighed by weaknesses in its institutional pillars such as ease of starting a business, human capital and R&D.

Exhibit 19: Global Innovation index

Innovation as a Catalyst for MSME growth

Putting it in the context of MSMEs, their challenge is stiff and distinct. It comes from mainly two sources -- bigger and established players in the market and imports. These make it necessary for MSMEs to innovate and either introduce a new product or a service that is not offered currently by any existing player or through process innovations reduce costs or time to deliver so it gives a level-playing field if not an upper hand to the MSMEs.

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