Working Paper
Impact of Technology on the Competitiveness of the Indian Small Manufacturing Sector

A Case Study of the Automotive Component Industry

This paper endeavours to study the impact of technology on the competitiveness of the Indian small-scale automotive component units. The effect of technology is measured by directly introducing it in the production function along with the conventional inputs. For the purpose of analysis, we have taken sales turnover which reflects competitive strength of firms as a dependent variable instead of output. Three technology variables representing transformation (mechanization), organization and information aspects of technology are taken along with the three conventional inputs, i.e., capital, labour and materials as explanatory variables. Empirical analysis of the paper is based on the unit- level data collected through the primary survey of a sample of units located in and around Delhi. Results of the study indicate that a higher degree of mechanization in terms of the use of NC machines has a significant positive impact on the sales turnover, followed by materials, labour and capital.