`SMEs should upgrade technology'

MANGALORE JAN. 3. Speakers at the seminar on Technology upgradation of Small and Medium Enterprises (SME) here on Friday called for technological dynamism to be infused into the industries, lest they would perish.

The seminar was held under the joint auspices of the Greater Mysore Chamber of Industry, the Karnataka Council for Technological Upgradation, Bangalore, and the Kanara Chamber of Commerce and Industry.

M.H.Bala Subrahmanya, Associate Professor, Department of Management Studies at the Indian Institute of Science, Bangalore, in his keynote address, said the cumulative effects of the liberalisation, economic reforms and the formation of the World Trade Organisation (WTO) were intensifying the competitive environment for SMEs in India. Allowing Foreign Direct Investment (FDI) and the strengthening of international standards for treatment of foreign investors allowed greater freedom in making international location decisions.

Quoting the UNCTAD 2001 statistics, Dr. Subrahmanya said between 1991 and 2000, 1,185 regulatory changes were introduced in national FDI regimes out of which 1,121 pertained to encouraging FDI.

About the technology upgradation for SMEs. Dr. Subrahmanya said in the wake of the capital intensity increase, capital productivity of SMEs declined in the Nineties, unlike that of large-scale enterprises. Empirical studies were conducted with reference to SSIs in India by two institutions, Entrepreneurship Development Institute of India (EDII), Ahmedabad, and the National Council for Applied Economic Research (NCAER), New Delhi, which showed that technology used in SMEs was poor and quality and productivity were the major issues of concern for small industry entrepreneurs. Pointing out the world scenario, Dr. Subrahmanya said in countries like Japan, sub-contracting relationship between the large-scale enterprises and SMEs had been nurtured to the advantage of the latter. The sub-contracting system worked as an important mechanism of technology transfer. In Japan, 65 per cent of the SMEs produced under sub-contracting arrangements. The successful experience of Japan had been emulated in East Asia. Such outsourcing had been a major factor in the growth of Indian software industry and the potential of such outsourcing opportunities should be exploited to the maximum possible extent in other industries as well, he added.

Utpal Bajpai, chief of the Technology Bureau of Small Enterprises, New Delhi, who presented a paper on "Technological upgradation in SMEs: ways and means," said the SMEs should hone the global vision and take the global opportunities head on. Lack of awareness about the market support, availability of technology, information and accessibility to market through information technology were some of the issues that the SMEs should take control of. Among the new sectors coming up, the stress was on knowledge-based industries, healthcare, and pharmaceuticals, food processing, complimentary sector to core sector, light engineering, and automation. He said the SMEs should initiate the agro-industrial consortia in different parts of the country. Citing one such consortium, Mr. Bajpai said the Kharagpur-Agra Mustard belt consortium, had worked wonders for SMEs in that area. Without such innovative ideas, the SMEs might lose out on the opportunities that were available to them in the world market, he said.

G.Giridhar Prabhu, President of the KCCI, said Dakshina Kannada had suffered because of declining fortunes of various industries such as beedi, coffee curing, and tile manufacturing.

G.Narayana Raju, Joint Director of the District Industries Centre, Mangalore, and M.K.Anantha Swamy, Director of Uptech, State Bank of India, spoke.

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