Technology commercialization by Micro, Small and Medium Enterprises (MSMEs) in Indian context: challenges and governmental support systems.

Bhardwaj, Sanjay ; Jain, Karuna ; Joshi, Shrikant V. 等

Abstract

Post-liberalization, level of protection imparted by Indian government to Micro, Small and Medium Enterprises (MSMEs) is gradually reducing. In the changed scenario, MSMEs need to compete with large companies, both Indian and foreign, with cost-competitive and good quality products. Due to limited resources available with MSMEs, they find it difficult to develop internal technologies and hence need to access technologies developed elsewhere. Technologies developed by public funded Research and Technology Organizations (RTOs) can support MSMEs. However, MSMEs should develop competence to commercialize technologies procured from public-funded RTOs, and also utilize available governmental support to meet the emerging challenges. This paper discusses the challenges and governmental support systems for technology commercialization, with relevant examples, from Indian MSMEs' perspective.

Keyword(s): Indian, MSMEs, Economic Growth, Technology Commercialization

1. INTRODUCTION

It is well-established that technology commercialization (TC), though fraught with challenges, can lead to manufacture of competitive products leading to economic growth of developing nations like India, in which Micro, Small and Medium Enterprises (MSMEs) play crucial role. MSMEs' role in Indian economy is evident from their contribution to Gross Domestic Product (GDP), exports and job creation. As per 2006-07 census of MSMEs in India, it was estimated that they contribute 8 percent of nation's Gross Domestic Product (GDP), 45% of the manufactured output and 40% of nation's exports. Almost 2.6 crores MSMEs produce more than 6000 products and provide employment to approximately 6 crore people, second largest employer next only to agricultural sector (http://www.fisme.org.in, http:// msme.gov.in. Moreover, MSMEs, as compared to large enterprises, provide large employment opportunities at comparatively lower capital cost. MSMEs wide geographical spread in rural and urban areas, ownership of almost 50% of the MSMEs by backward communities, and source of employment for majority of disadvantaged sections of society make it possible for them to contribute towards regionally balanced and inclusive growth, one of the key objectives with which Indian government is implementing its programmes (http://www.fisme.org.in).

Enterprises have been categorized into micro, small and medium as per the following criteria adopted in Micro, Small and Medium Enterprises Development Act 2006 enacted by Indian government:

Table 1

Enterprises' Categorization as per Indian Government's
MSMEs Development Act 2006

Category of Investment in Plant Investment in
Enterprise and Machinery for Equipment for
 Enterprise engaged in Enterprise engaged in
 manufacturing providing services

Micro Enterprise Not more than Rs. 25 Not more than Rs. 10
 lakhs lakhs

Small Enterprise More than Rs. 25 More than Rs. 10
 lakhs, but less than lakhs, but less than
 Rs. 5 crore Rs. 2 crore

Medium Enterprise More than Rs. 5 More than Rs. 2
 crore, but less than crore, but less than
 Rs. 10 crore Rs. 5 crore

Full potential of India's small scale sector could not be realized due to two major reasons. First, reservation of items that could only be produced by small scale sector resulted in production of globally uncompetitive goods. Second, upper ceiling on investment in plant and machinery for getting governmental benefits prevented technology modernization efforts by small scale sector. This possibly discouraged investment in modern plant and machinery, and upscaling efforts for volume benefits by small scale sector. It is important to note that a small scale sector company would loose the privileges extended by government of India if investment in plant and machinery exceeds limit specified by government of India (Malhotra, 2011).

Till Indian government took steps to liberalize and globalize its economy, MSMEs enjoyed protection as several items were reserved by government for exclusive manufacturing by MSMEs. With the opening up of the Indian economy and gradual reduction in number of items for exclusive manufacture by MSMEs, Indian MSMEs have to compete with large companies, whether Indian or foreign. In such a scenario, Indian MSMEs have to continuously upgrade their technologies to manufacture cost-competitive and high quality products to maintain sustainable competitive advantage over their rivals (Nonaka and Takeuchi, 1995; Stevens, 2010). It is more relevant for technology-intensive sectors like advanced materials, biotechnology, and pharmaceuticals (Nauriyal, 2006). Due to availability of limited resources with them, Indian MSMEs--unable to develop internal technologies--can commercialize new technologies acquired from Indian government-funded Research and Technology Organizations (RTOs) and from academic institutes by leveraging several support schemes of Indian government. MSMEs can source new technologies from Indian government funded RTOs such as International Advanced Research Centre for Powder Metallurgy and New Materials (ARCI)--Hyderabad, Indian Institute of Chemical Technology (IICT)--Hyderabad, National Chemical Laboratory (NCL)--Pune etc. as well as from academic institutes like Indian Institute of Science (IISc)--Bangalore, and Indian Institute of Technologies (IITs).

This paper discusses the challenges posed by contemporary business environment and Indian goverenment's support systems to MSMEs for TC so that MSMEs can produce internationally competitive products to integrate themselves in global value chain.

2. CONCEPTUAL ISSUES

It will be appropriate to discuss the basic concepts of technology and technology commercialization to address issues discussed in this paper.

Technology

A number of interpretations, as provided below, of the term 'technology' have become established:

Woodward (1965) defines technology as collection of plant, machines, tools and methods available at a given time for the execution of the production task. Woodward's concept includes operations technology, the knowledge technology, the task required by operators and the control system to be used by management.

According to Jantsch (1967), technology denotes the broad area of purposive application of the contents of the physical, life and behavioural sciences. It comprises the entire notion of techniques as well as the medical, agricultural, management and other fields with their total hardware and software contents.

Cornwall (1977) considers that the technology of a country at any point in time is the stock of knowledge that pertains primarily to the production of goods and services. The operational part of this stock of knowledge consists of a set of techniques, each technique being defined as a set of actions and decision rules, for transforming inputs into outputs.

Rosenberg (1982) argues that technology is more than the mere application of prior scientific knowledge. It is a knowledge of techniques, methods and designs which work even if, at times, the reasons why they work cannot always be explained. Technological progress does not necessarily require a full understanding of the underlying scientific principles. Technological knowledge may be accumulated by trial and error and often precedes scientific understanding. For instance, gentleman farmers in the 18th century developed the cross-breeding of sheep and cattle without knowing the benefits of genetics.

Dosi (1984) defines technology as a set of pieces of knowledge, both practical and theoretical, know-how, methods, procedures and physical devices which incorporate such knowledge.

According to Burgelman and Maidique (1988), technology refers to the practical knowledge, know-how, skills, and artifacts that can be used to develop a new product/ service and/or new production/delivery system. Technology can be embodied in people, materials, cognitive and physical processes, plant, equipment, and tools. The criteria for success regarding technology are also technical (can it do the job?) rather than commercial (can it do the job profitably?).

According to Day, Shoemaker and Gunther (2000), the term technology is used broadly in business and science to refer to the process of transforming basic knowledge into useful application. Science might be thought of a know-what and technology as know-how, while markets or businesses focus on know-where and know-who. Here, we define technology as a set of discipline-based skills that are applied to a particular product or market. The technology can focus on a component, an entire product or an industry.

Thus, the word technology has a number of meanings, varying from various disciplines of science and engineering to product.

Technology Commercialization

There are several definitions reported in the literature. Few of the definitions are given below:

Mitchell & Singh (1996) define technology commercialization as the process by which ideas are acquired, augmented with complementary knowledge, developed and manufactured into saleable goods, and the goods are sold in a market. Hence, the process of technology commercialization encompasses all activities from generating an idea, designing, testing the prototype, and manufacturing to marketing the technology-derived product(s).

Oregon State University's business management (curriculum.bus.oregonstate.edu) defines technology commercialization as the process of bringing technical innovation to the marketplace. The success of any commercialization effort depends on numerous factors. These include manufacturability, cost considerations, market positioning, competitive offerings, market maturity, pre-existing intellectual property, and many other aspects that are equally important as the quality of the technical concept. Depending on these factors, one or more out of different possible routes may be adopted to extract value from technical innovation depending upon the market knowledge, intellectual property landscape and financial considerations. In some cases, a startup company may be the preferred route. In other situations, licensing may offer the lowest risk, desired royalties and highest payback.

Ohio State University's university medical centre (medicine.osu.edu) defines technology commercialization as the conversion of a body of work--that is, its intellectual property--into a stream of cash flow. The partnerships, which researchers establish with business entities during this process, are legal relationships that enable their body of work to become a commercial product in the market.

Technology Innovation Group (TIG) Inc--USA (www.technigroup.com) defines technology commercialization as the process of converting knowledge into products and services, and is a highly effective way to move ideas from the mind--or the Laboratory--to the wider world. It plays an important role in integrated regional or national economic development by utilization of research and innovation. A primary source of new knowledge/technology can be the university, where the creation of new knowledge is a primary goal. Such knowledge has intrinsic intellectual value and can provide potentially significant social and economic benefits to society by creating additional value through commercialization process.

Thus, technology commercialization process, in all the above definitions, links technology to marketplace. However, elements impacting the process of technology commercialization may vary slightly from one definition to another. For instance: Mitchell and Singh's definition deals with the stages in linear technology commercialization process. Oregon State University's definition emphasizes upon business and technical factors. Ohio State University's definition stresses upon the role of legal relationships in converting intellectual property to a stream of cash flow. TIG's definition highlights the value addition role, which can be played by technology commercialization process, for new knowledge.

3. RATIONALE OF GOVERNMENT SUPPORT SYSTEMS

Conversion of knowledge to wealth requires effective collaborative activities by government and private sectors. Prior to economic reforms being pursued by Indian government consistent with its WTO commitments, public sector used to play predominant role. But, it is gradually reducing. For example: developing economies like India are gradually increase the role of private sector, including MSMEs, to further grow their economies (Jiang & Zhou, 2006). However, governments in developing nations need to play significant role as compared to those in developed nations to ensure balanced socio-economic development. Governmental intervention towards support mechanisms in aspects like incubation, financial, marketing, technological etc, can be used to induce desired behavior of private sector for successful technology commercialization. Such interventions can help in demonstrating potential feasibility of an investment and thereby, can show future investment avenues to private sector (Salmenkaita and Salo, 2002). For example: tax exemptions provided to Technology Business Incubators (TBIs), Science & Technology Entrepreneurs' Park (STEP), and to inmate companies in recognized STEPs or TBIs have been aimed at promoting the usage of such facilities by technology-based start-ups (http://www.nstedb.com).

In view of this, Indian government needs to formulate such policies and take those measures, which will support MSMEs in making increased contribution to the country's GDP. Government support systems should try to render competitive advantage to MSMEs rather than comparative advantage to provide long term viability especially in a scenario in which SMEs need to integrate themselves in international supply chain in globalized and liberalized business environment (Pradhan, 2010). On the other hand, artificial trade barriers created by government of a country may only provide comparative, though short-term, advantage to the industry of that country.

4. TECHNOLOGY COMMERCIALIZATION BY MSMES: CHALLENGES AND GOVERNMENT SUPPORT SYSTEMS

In this section, we will discuss the Indian Government's policies and measures for surmounting challenges faced by Indian MSMEs in undertaking technology commercialization (TC). MSMEs face following challenges in their TC endeavours:

(i) Access to Appropriate Technologies

(ii) Getting Affordable Finance to Commercialize Technologies

(iii) Competing in New IPR Regime

(iv) Marketing of Technology-derived Products

(v) Infrastructural Bottlenecks

(vi) Getting Specialized Human Resource

Similar challenges for MSMEs have also been observed through studies, though conducted in slightly different contexts, by Vrande, Jong, Vanhaverbeke (2009) and by Gibson and Conceicao (2003). Indian government has taken several initiatives, in recent past, to provide support to MSMEs so that MSME sector companies can successfully convert challenges associated with technology commercialization in Indian context to opportunities. For example: Indian government's Ministry of MSME initiated National Manufacturing Competitiveness Programme (NMCP) in the year 2005 to support Small and Medium Enterprises (SMEs) through its several components (www.msme.gov.in). Indian government's scientific ministries/departments like Department of Science & Technology (DST) and Department of Scientific & Industrial Research (DSIR) have also been undertaking several programmes to support technology commercialization process (www.dst.gov.in; www.dsir.gov.in).

Access to Appropriate Technologies

Technology upgradation can involve activities directed towards either process and/ or product. These activities may help either in reducing the cost of production, in reducing pollution or/and in improving the quality of products. Process upgradation may result in reduction of energy consumption, and minimization of wastages/ rejections thereby reducing inventory build-up. With respect to product, either some features may be improved or newer attributes may be added as a part of technology upgradation initiatives.

MSMEs should adopt technologies provided by government RTOs in Indian context due to the following reasons: (a) MSMEs, established as well as start-ups, possess limited resources to conduct in-house R & D and develop own technological capability (Vrande, Jong, and Vanhaverbeke, 2009). (b) Though commercialization of new technologies by MSMEs may not render them the advantage of spreading the benefit to larger output, it may help a company belonging to MSME sector in capturing niche markets that are generally ignored by larger enterprises. (c) Such collaborations can help MSMEs to overcome the limitation of their size and risk taking tolerance, coming in their way of developing new technologies and bringing them to marketplace (Pradhan, 2010). (d) Gradually strengthening Intellectual Property Rights (IPR) regime provides conducive environment for such collaborations and helps in reducing mistrust, which generally exists between industry and public funded RTOs almost globally, particularly so in a developing economy.

Several ministries/departments of Indian government have schemes to encourage adoption of potentially useful technologies by MSMEs. One of the components of the NMCP scheme of Ministry of MSME supports the adoption of energy efficient technologies reducing energy consumption. Energy, which is usually produced by burning of fossil fuels, results in emission of carbon dioxide. By adopting energy efficient technologies, MSMEs can also earn carbon credits due to reduction in carbon dioxide emission. Accordingly, NMCP scheme also supports setting-up of Carbon Credit Aggregation Centres (CCA) for introducing and popularising clean development mechanism (CDM) in MSME clusters (www.msme.gov.in). NMCP scheme also provides partial support for adoption of Information and Communication Technology (ICT) tools and applications, establishment of new mini tool rooms, implementation of lean manufacturing techniques, and for enhancement of designing expertise (http://www.fisme.org.in).

Programmes of Indian government's scientific ministries/departments like Department of Science and Technology (DST), Department of Scientific and Industrial Research (DSIR) to promote transfer of technology can be used for the benefit of the MSMEs.

Getting Affordable Finance to Commercialize Technologies

In developing countries in which MSMEs do not possess enough resources, public funding plays important role in catalyzing risky and potentially beneficial activities like technology commercialization (Jiang and Zhou, 2006). Traditionally, Indian SMEs use debt commercial Banks.

Though risk capital providers (RCPs) have been reluctant to fund MSMEs' technology commercialization endevours due to noncorporate structure and small size of MSMEs, RCPs--during recent years--have been investing Venture Capital or Private Equity Funds in IT or service sector MSMEs due to perception of higher financial returns (www.fisrae.org.in, www.rasraementor.in). On the other hand, manufacturing MSMEs find it difficult to tap risk capital due to relatively longer payback period as perceived by RCPs. Government supported Small Industries Development Bank of India (SIDBI) has been playing a critical role in this direction. While conventional banks decide on funding an enterprise mainly on the basis of potential profits, development banks like SIDBI in India support SME sector companies for potential socio-economic benefits and for regionally balanced growth (Bisman and Goela, 2010). In addition, two attempts were made during the years 1990 and 2007 so that SMEs could access risk capital: first, Over-the-Counter Exchange of India (OTCEI) was launched in the year 1990 and second, 'BSE Indonext' in the year 2007. These attempts did not receive encouraging response due to two possible reasons: (1) lack of track record for long-term consistent performance by SMEs to enthuse investors, (2) investors expectation of faster returns (www.bsesme.com). Recent initiatives have been taken by Government of India to assist SMEs in tapping funds from capital market after the Prime Minister's Task Force (2010) recommended the setting-up of a dedicated stock exchange/platform for SMEs. Bombay Stock Exchange (BSE) has set-up an exchange for SMEs titled BSE--SME Platform (www.bsesme.com). Similarly, National Stock Exchange (NSE) has also launched its new trading platform named 'Emerge' for SMEs. NSE would mentor the SME sector companies for getting listed on NSE-Emerge (www.nseindia.com/emerge/about_us/about_sme.htm). Regulatory authority, Securities and Exchange Board of India (SEBI), has also provided guidelines for regulation of SME--based exchanges. This initiative is expected to help SMEs in raising equity risk capital from stock market.

Ministry of MSME sponsors a scheme titled the "Credit Linked Capital Subsidy Scheme" (CLCSS), which aims at facilitating technology upgradation by providing upfront capital subsidy to units in MSME sector. CLCSS also assists MSMEs in upgrading quality control/test facilities.

Indian government's scientific ministries/departments (like DST, DSIR) have also been encouraging commercialization of new technologies by providing support through different schemes. For example: Indian Government--DST's Technology Development Board (TDB) has several programmes in the form of loan or equity and/or in exceptional cases, grant to assist SME sector companies in technology commercialization. TDB also provides seed support fund through identified TBIs and STEPs to assist entrepreneurial firms to upscale/nurture lab scale technologies (http://www.tdb.gov.in). This fund helps in upscaling an innovative idea/technology to a level at which it can access finance from normal sources like Financial Institutions. Another relevant programme aimed at facilitating technology commercialization is being operated by DST's Technology Information, Forecasting and Assessment Council (TIFAC) in collaboration with SIDBI. Programme provides loan assistance upto Rs. 100 lakhs at not more than 5% simple interest per annum and can cover upto 80% of the estimated approved project cost (http:// www.tifac.org.in/images.pdf/funding_guidelines230211.pdf). Indian government's DSIR also operates programmes like Technology Development and Demonstration Programme (TDPP) and Technopreneur Promotion Programme (TePP) to support technology upscaling and commercialization (http://www.dsir.gov.in).

Lessons learnt from above funding programmes by different government ministries and departments should be carefully analysed so that necessary inputs can be used in refining future governmental policies (Salmenkaita and Salo, 2002).

Competing in New Intellectual Property (IP) Regime

MSMEs should develop understanding of nuances associated with IP management for successful TC. MSME should be capable of (a) identification and securing Intellectual Property Rights (IPRs), (b) decide on forging of mutually beneficial alliances by MSMEs with other organizations, and (c) understanding valuation of the IP assets.

Though current levels of Indian patent applications is very low, it is expected to go up since MSMEs also need to deploy patented technologies to sustain their growth in a scenario in which large companies can produce innovative products using patented technologies. For example: Indian applications constituted only 17% of total patent applications filed, with only around 2% filed by MSMEs (http://www.fisme.org.in). Accordingly, MSMEs may potentially benefit if they develop capability to identify patentable IP, modus operandi of securing and maintaining IPRs.

MSMEs should develop capability to harness IP available with external agencies like Research and Technology Organizations (RTOs) as well as its own IP by striking mutually beneficial linkages (Vrande, Jong, and Vanhaverbeke, 2009). MSMEs should take into account strength of IP regime while forging alliances with other organizations for handling IP assets. 2X2 matrix shown in Figure 1 can guide an MSME sector company as to whether it should adopt a strategy of co-operation and/or competition.

[FIGURE 1 OMITTED]

Developing economies like India are perceived to possess weak Intellectual Property (IP) regime and difficult-to-enforce IP rights (Le, Venkatesh and Nguyen, 2006). Though IP regime in India is weaker than expected, it is getting gradually stronger only after the year 1995 when Indian became WTO's member state (Balamurugan & Radhakrishnan, 2009; www.fisme.org.in). In a stronger IP regime, an SME--sector company commercializing a patented IP (rather than a trade secret) shall find it appropriate to co-operate with other constituents of supply chain, without a fear of imitation (Gans and Stern, 2003). Therefore, start-up SMEs, commercializing a new technology, can access distribution infrastructure required to take technology-derived products to the identified market, and can also acquire a patented technology from a government--funded RTO by forging alliances with appropriate organizations.

As shown in Figure 1, SMEs may find it risky to forge collaborations especially in a scenario in which they are commercializing a technology in the form of trade secrets in a weak IP regime. A well-drafted Non- Disclosure Agreement (NDA) can provide protection to a SME-sector company if this company is commercializing a trade secret in strong IP regime. SME-sector company would be best placed to enter into collaborations to leverage value from a patented technology if technology is being commercialized in strong IP regime. SMEs operating in India are finding it easier to strike mutually beneficial linkages with other organizations; whether R & D, marketing intermediaries or finance providers; since Indian IP regime has been gradually strengthening. A recently planned initiative of Prosperity Fund from UK government's Foreign and Commonwealth Office and the FISME to establish an 'IP Exchange' in India to encourage selling and buying of IP assets is indicative of gradually strengthening IP regime in India (www.fisme.org.in).

Value of intellectual assets can be better leveraged by MSMEs if IP rights in the form of patents are secured and MSMEs increase their comprehension of the modus operandi to be adopted in valuation of IP assets. It is important to note that value of intangible assets--that constituted around 20% of the market value of majority of the U.S. public corporations in the year 1970--has gone upto 90% during recent times. For example: Facebook--an internet based social media website having over 90% of their assets as intangibles like patents, copyrights, trademarks etc. has achieved a market capitalization of more than US$100 Bn--bigger than the worth of old established companies like Siemens, Boeing, BMW etc.--in less than 10 years (http://www.fisme.org.in).

One of the components of the MSME Ministry's NMCP scheme aims at strengthening of Intellectual Property Rights (IPR) related capabilities of the MSMEs by conducting IP awareness programmes, pilot studies, interactive seminars/workshops, short term and long term trainings; filing of national and international patent applications; filing the application for Geographical Indication (GI) registration; setting up of 'IP Facilitation Centre for MSME'; and for conducting exchange programme with international agencies. These initiatives are expected to provide MSME sector more information, orientation and facilities to leverage their IP for TC. For example: New Delhi- based Federation of Indian Micro and Small & Medium Enterprises (FISME) has set-up three IP Facilitation Centre (IPFCs), with the support of Indian government's National Manufacturing Competitiveness Commission, in 2011-12 at New Delhi, Bangalore and Hyderabad to spread awareness about IP and provide guidance about securing IPRs among MSMEs. The FISME IPFCs are also planning to develop competent 'IP Auditors', who can help MSMEs in identifying their hidden treasure of IPs. Indian SMEs can utilize IP facilitation services provided by government sponsored organizations like TIFAC, National Research Development Corporation (NRDC), Andhra Pradesh Technology Development and Promotion Centre (APTDC), Department of Biotechnology's Biotechnology Patent Facilitating Cell (BPFC).

Indian government signed Patent Cooperation Treaty (PCT) in 1998. After signing the treaty, an Indian MSME can take benefit of uniform patent filing procedure in each of around 140 countries, who are signatories to PCT.

Marketing of Technology-derived Products

MSMEs find it difficult to identify and capture suitable markets for their technology-based-products, thereby converting these products into cash inflows. Marketing, though one of critical success factors, is one of the challenging areas for MSMEs due to lack of information, scarcity of resources and unorganized way of selling / marketing. A study, extendable to Indian SMEs to some extent, focused on SMEs in Netherlands by Vrande, Jong and Vanhaverbeke (2009) indicated that SMEs should continuously strive to meet ever-changing users' needs to compete against established companies and start-ups. Partnering with external agencies, including industry incumbents, can be helpful to capture new markets for SMEs, to overcome the limitation of resource scarcity with them (Vrande, Jong and Vanhaverbeke, 2009). MSMEs also need to pay due attention to the usage of state-of-the-art technologies, wherever appropriate, for improving exports (Nanda and Panda, 2011).

MSME Ministry's NMCP scheme provides partial support for improving packaging techniques, for training on modern marketing techniques, for conducting competition studies, for participating in exhibitions, and for adopting good corporate governance practices. Another component of NMCP scheme attempts to enhance competitiveness of MSMEs by assisting them in getting quality related certifications from national and international bodies so that products and services provided by MSME sector companies can enhance their market reach. This is expected to help MSME in capturing the large enterprises' market, whether in India or abroad, in which such certifications are valued. Ministry of MSME also assists SMEs in market development to promote exports, and in getting bar codes to enhance the marketing competitiveness of MSEs in domestic as well as international market, Ministry of MSME's National Small Industries Corporation (NSIC) also assists MSME in marketing through schemes such as consortia and tender marketing, single point registration for government purchase, B2B web portal for marketing, marketing intelligence etc. (http://www.nsic.co.in/mktsurvey2012.pdf). Indian government's Department of Industrial Policy and Promotion also operates schemes to boost export competitiveness of industry, including SMEs.

Infrastructural Bottlenecks

It is well-established that infrastructural support to create industrial clusters by means of science & technology parks (STEPs), technology business incubators (TBIs), and technology corridors (TCs) etc. plays vital role in creation and growth of technology-led entrepreneurial firms. Clustering provides several benefits to the MSMEs, which are residents of industrial clusters: (1) Discussion among MSMEs helps them to understand the needs of large companies. In addition, continuous interaction between peer companies of similar sector can bring-in learning, competition, innovation and enhanced technology absorption, (2) Reduces the costs of procurement, transportation and storage since a pool of common requirements can be made, (3) Operational support facilities, like rapid prototyping, library, online patent databases, quality check laboratories, conference hall and reception etc., can be shared to cut down the operational costs (Gibson and Conceicao, 2003; Jiang and Zhou, 2006).

For example: Different ministries of Indian government provide assistance in establishing relevant infrastructure like STEPs, TBIs and TCs to nurture MSME sector companies, both start-ups and established. Indian government's Department of Science & Technology, Ministry of Information Technology, and Ministry of Food Processing etc. have been supporting various STEPs and TBIs. Ministry of MSME also undertakes a programme to assist micro and small enterprise cluster development (http://www.fisme.org.in). India has approximately 120 STEPs and TBIs with 53 supported by the National Science & Technology Entrepreneurship Development Board (NSTEDB), 40 supported by Ministry of Information & Communication Technology and 30 supported by other government departments/ banks/financial institutions/private sector (www.nstedb.com).

Several state governments have also instituted schemes to establish infrastructure to nurture growth of MSMEs sector. For example: Government of Andhra Pradesh (India) offered several concessions to the private firms, including biotechnology--based SMEs, intending to locate their operations in "Genome Valley", an area of approximately 600 square kilometers spread in the northern periphery of Hyderabad, India. These concessions were in the form of subsidized land, continuous power, and appropriate exemptions from labour laws. Financial and technical aid has been extended by Government of Andhra Pradesh and other government agencies to SMEs in the pharma cluster, for example, those engaged in bulk drug production (Walcott and Heitzman, 2006; The Hindu Business Line, 2007).

Getting Specialized Human Resource

SMEs need specialized manpower having capability to understand nuances of commercializing new technologies, and to manage technical, market and other business issues related with technology commercialization. However, SMEs find it difficult to hire and maintain such manpower due to paucity of resources (Gibson and Conceicao, 2003).

To help SMEs in surmounting this challenge, several institutes and R & D centres established by different ministries of Indian government provide continuous programmes aimed at upgrading the capabilities, skills and knowledge of manpower deployed in MSME sector. For example: Central Coir Research Institute, Indian Plywood Industries Research and Training Institute, Indian Institute of Packaging, and several such government funded organizations conduct skill upgradation programmes for manpower employed in their respective relevant sector. Indian Government's Ministry of Labour and Employment (MLE) sponsors several skill development programmes for manpower employed by industry, including MSMEs, through government institutes and reputed private institutes accredited by a Board/ University/Government Authorized Council. One of the schemes of the MLE involves upgradation of government Industrial Training Institutes (ITIs), which are one of major source of manpower for MSMEs. NMCP scheme implemented by Ministry of MSME supports programmes conducted by Indian Institute of Technologies (IITs), National Institute of Technologies (NITs), Engineering Colleges and other appropriately identified organizations for entrepreneurial and managerial development of SMEs. It has been recently observed that MSMEs may benefit by providing suitable training in the area of IP and related issues to their human resource. In this regard, MSMEs can encourage their identified human resource to participate in training programmes organized by Ministry of Human Resource Development sponsored IPR chairs in 18 different institutes and universities in India (http://mhrdchairs.org). MSMEs can also get, their appropriately identified manpower, trained at Indian Government's Rajiv Gandhi National Institute for Intellectual Property Management (RG-NIIPM) on IP related issues.

5. CONCLUSION

Vast support system institutionalized by Indian government indicates the government's desire that MSMEs should make gradually increasing contribution in the Indian economy's growth when economy is undergoing transition from predominantly government--controlled to market economy, and import substitution to export promotion. In the changed scenario, government needs to play a catalytic role, formulate such policies and take those measures that will help MSMEs in surmounting the challenges associated with TC. In addition to central government sponsored schemes, there are several schemes sponsored by state governments and industry associations to support the establishment and growth of MSMEs in India. MSME sector company should forge suitable alliances and try to leverage facilities available in the ecosystem by all stakeholders, whether government or private. Such alliances can help MSME Sector Company to tap appropriate technologies from government--funded RTOs, build its capacity to survive and grow in emerging IPR regime, tap sources of finance and market technology-derived products. We also find that MSMEs' support systems provided by governmental agencies shall be more effective and efficient if there is coordination between sponsoring agencies so that coherency can be brought at planning and implementation level.

Acknowledgement

Authors are thankful to Director--ARCI, Dr. G. Sundararajan, who provided encouragement and support for writing this paper.

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SANJAY BHARDWAJ *, KARUNA JAIN ** AND SHRIKANT V. JOSHI *

* International Advanced Research Centre for Powder Metallurgy and New Materials (ARCI), Hyderabad, India

** S. J. M. School of Management, Indian Institute of Technology Bombay (IITB), Mumbal, India