Indian Institute of Technology Kanpur (IIT-K) 2006 JT - Question Paper

years. This sector constitutes about 95% of industrial units, and about 40% of total industrial output. Its
direct and indirect exports potential stand at about 38%. With about 3.6 million SSI (Small Scale Industries)
registered units employing close to 2 crore people, its employment potential is next only to the agriculture
sector. Thus the performance of SMEs is important for the economic and social development of the country.
One of the ways by which this sector can be made to grow fast is by tapping both domestic as well as
international markets through business linkages ranging from Multinational Corporations (MNC5) and SMEs.
Many OECD (Organization for Economic Cooperation and Development) countries and a few Asian ones
have specific policies for developing business linkages ranging from SMEs and MNCs. So, the SME sector in
these countries have witnessed favorable growth and helped boost their countries’ exports in a very
competitive way. For example, Thailand ensured that the state given industry with physical infrastructure
and technological resources. Other Asian governments (Republic of Korea, Malaysia, Province of Taiwan,
China) have included different incentives in the form of tax breaks, preference in public contracts and soft
credit lines for both Transnational Corporations (TNCs) and SMEs to intensify relations and technology
transfer. India, however, has no specific policy guidelines to develop linkages ranging from SMEs and MNCs.
Consequently, the vast majority of SMEs that cannot meet the requirements set by MNCs remain totally delinked.
In business linkages ranging from SMEs and MNCs, outsourcing and value chain management started to play a
key role, since MNCs could not become competitive without a competitive supplier base. Thus, to create a
capable supplier base, a three-pronged approach to developing supplier linkages is needed. There is a need to
develop a technology programme to support research, development and innovation in SMEs by accelerating
their rate of technology acquisition through realization of R & D projects. The government must promote and
strengthen the knowledge base and competencies in SMEs in terms of quality, productivity and cost. Hence,
there is an urgent need to strengthen the National Entrepreneurship Development Board (NEDB) and
formulate a suitable plan for promoting rural entrepreneurship. Substantial investments and physical
infrastructure development are needed all over the country. In this regard, a public-private partnership needs

Earning:   Approval pending.