Today, it is not individual enterprises that compete against each other, but global value chains that are mostly competing at a global level. Global value chains (GVCs) are reshaping the global economy and presents new challenges and opportunities for all countries, not just less developing countries.
The Micro, Small and Medium Enterprises (MSME) sector is the backbone of our country. It is clear from the following facts and figures : there are more than 440 lakh MSME units with gross output of more than Rs.1.8 lakh crore. The sector has shown double digit growth in the last four years. The contribution of the MSME sector to the total output of the country is over 40% and its contribution to GDP is 8-10%. Presently, MSME units in India produce more than 6000 products. This paper attempts to develop an elementary theory of global value chains. It shows how MSMEs fit into GVC and that it is necessary for Indian MSMEs to evolve not only more innovative offerings, but also offer greater value to their partner so that most competitive and mutually beneficial outcomes become possible