Clipped from: https://www.thehindubusinessline.com/opinion/smes-repositioning-along-the-smile-curve/article69538107.ece
In fostering research and innovation, SMEs have a major role to play
SMEs are key players in adopting research and cutting edge technology | Photo Credit: Urupong
SMEs in India, contribute immensely to employment generation, innovation, exports, and GDP growth. Positioned within the framework of the “smile curve,” which emphasizes value-added stages of supply chain — research and development (R&D), manufacturing, branding, and marketing — SMEs play a pivotal role in all these business activities.
The concept of the smile curve, popularized by Acer’s founder Stan Shih, illustrates the increasing value addition at both ends of the curve — R&D and marketing/branding — while the middle portion, manufacturing, traditionally adds the least value. This curve emphasizes the importance of moving beyond just producing goods and towards investing in innovation, design, and marketing, which can help create higher value products. SMEs must play an instrumental role in all stages of this value addition, particularly in the fields of innovation, manufacturing, and global competitiveness.
Innovation and R&D
For India to succeed in the competitive global market, innovation must be at the heart of its strategy. SMEs are often more agile than larger enterprises, enabling them to rapidly adopt new technologies and explore novel solutions. SMEs have been at the forefront of such innovation. A prime example of this is the role of SMEs in the production of generic medicines. India’s success in becoming the “pharmacy of the world” can be attributed to its SME sector, which has leveraged R&D and affordable production practices to deliver low-cost, high-quality medicines worldwide. Majority of pharmaceutical industries in India have had significant SME foundations and have been instrumental in expanding the accessibility of medicines in developing countries, thus establishing India as a global leader in the generic drug market.
Israel, with its high-tech startup ecosystem, is often referred to as “Startup Nation” because of its thriving innovation environment. The success of companies like Waze (acquired by Google) or Mobileye (acquired by Intel) highlights how SMEs, with a focus on R&D, can not only create new technologies but also become globally recognized innovators. Similarly, in Germany, SMEs, known as the “Mittelstand,” have been pivotal in maintaining the country’s industrial leadership by focusing on high-quality precision manufacturing, technological advancements, and continuous innovation.
Government initiatives
In India, the government’s initiatives like Startup India, Standup India and Make in India have been a catalyst for SMEs to invest in innovation. These programs have provided funding opportunities, ease of doing business, and a platform for collaboration, helping SMEs enhance their technological capabilities and professional competence. As SMEs engage more in R&D and adopt cutting-edge technologies such as Artificial Intelligence, Blockchain, and IoT, they will become key players in driving India’s transformation to a developed economy.
The writer is on the Faculty of Engineering & Architecture, MBM University, Jodhpur
Published on May 4, 2025
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