Small and Medium Enterprises (SMEs) in India are research-averse and uncomfortable to spend much on research and development activities, said the Chairman and Managing Director, National Research Development Corporation (NRDC), Somenath Ghosh to SME Times in New Delhi on Tuesday.

On the sidelines of a CII conference, Ghosh said, "The small and medium enterprises do not spend in research activity. They are very research-averse. Typically, the SME sector in India has grown through reverse-engineering process."

He added that Indian MSMEs follow a strategy to explore markets by randomly entering into the a market without doing any research of the same.

"SME sector usually attend some trade shows and start copying the same of the competitors," he underscored.

They (SMEs) does not go through research work to analyse whether the product manufactured by their counterparts are likely to be successful in the Indian market. They make the thing available in the market for the consumers to purchase, Ghosh said.

He mentioned that this kind of strategies works only in a closed economy but at present the level of competition has taken a fillip as many foreign players have entered the market. In such an open economy, SMEs need to understand the market strategies and its requirements.   

"In today's scenario, the market has potential competitions. Many foreign players are entering the Indian markets and protecting their products through intellectual property rights (IPRs)...and taking patents in the Indian markets." he said.

Indian SMEs cannot afford to just imitate those products and sell them in the Indian market because the global players are doing business in an open economy. They can't even go to the international market as it requires heavy investment, Ghosh added.

It is requisite for MSMEs to build and restructure their businesses based on new technology. They should also need to link-up with the research institutions for proper development, he mentioned.

Further, Ghosh enumerated his views on Taiwan and said that the country is entirely SME-driven and their strategy is specifically investing into the small and mid-sized companies. However, small companies has got certain setbacks as well, like they cannot develop brands, which is a reason they become and remain as the original equipment manufactures (OEMs) for their larger counterparts.

The small companies usually outsource the research firms for their R&D activities and their manufacturing activities are also outsourced. But in case of large companies, they can do their global branding and market development independently, he added.