The Hindu Business Line : `Innovation can drive SME sector'

TECHNOLOGY promotion and development lie in promoting innovation in the small and medium enterprises in Kerala, given the natural advantage in this sector in the State, said Dr P. M. Mathew, Director, Institute of Small Enterprises Development (ISED).

Speaking at a workshop on technology promotion organised by the Kerala State Industrial Development Corporation (KSIDC) and DSIR here on Monday, Dr Mathew said that the innovation agenda has to be set through participative processes. Pumping in research funds into public R&D institutions will not help much in the development of SMEs.

Public -private partnerships would be beneficial. This is the right time to restructure DSIR programmes with a specific focus on demand-driven intervention as against Kerala's beaten track of supply-side pressures.

Entrepreneurs can be brought into the mainstream through the creation of an innovation base. However, in Kerala, the agenda for industrial development is set largely by public promotional agencies, public R&D institutions and powerful social groups. Hence, the development pattern is more supply-driven, wherein investment in education and R&D focuses on socially undesirable lines.

Innovation emerges out of limited choices. The following initiatives can be taken for policy planning: the development of a stronger manufacturing base; and a further stepping up of value addition in the services sector.

Such measures require the expansion of the entrepreneurial base of Kerala by about 6-8 per cent during the 11th Plan period. Targets for the industrial sector are often set in terms of investments. However, Kerala needs more efficient entrepreneurs.

Such a target can be achieved by expanding innovation base and boosting entrepreneurial morale. The present top-down approach to R&D and innovation must be replaced by a bottom-up approach.

The Government must adopt a more professionalised approach, whereby private initiatives can emerge.

Jobless growth is haunting the Indian economy in recent times. The services sector has grown at the expense of the manufacturing sector.

The contribution of the manufacturing sector to national income has increased only to 17 per cent from about 15 per cent during the last decade. Ideally, its contribution should range from 25 per cent to 30 per cent, which effectively means an annual growth rate of 12 per cent in the coming decade.

The growth of the manufacturing sector holds the key to generating employment. The sector requires a big thrust on innovation. Given the strong public R&D base of India, a major change in manufacturing should be brought about by technology development.

Kerala has significant handicaps in this area, Dr Mathew said, as its manufacturing base is relatively small. Manufacturing contributes only 8 per cent of the State's domestic product. The growth rate of the secondary sector was only 1.3 per cent in the year 2004-2005.