Abstract : The success of an organization depends on the resources they possess such as good organization structure, latest technology, high quality of raw material and productive human resources. Among these factors, human resources is the most important asset because well trained and highly educated skilled workforce always considered to be essential for the maintenance of organization’s competitive advantage. In this growing globalized environment where a fast innovative and technical changes entering into markets, products and processes somewhere affecting the sustainability & growth of SME’s. Therefore, most of them are either closed or are on the verge of closing. Thus, it becomes imperative for SME’s to refocused on their factors of production specially skill set of labour’s studies reflects that organization which pay greater attention to skills of the labour & their development shall be more successful in the long run and bring important impact on critical organizational outcome variables such as quality, customer service, productivity, competitiveness and sustainable growth. The present paper focuses on relevant constraints faced by SME’s in conducting effective skill enhancement programs. The previous studies also suggest that SME’s lack financial capabilities for investment in designing training programs for their labours all alone which in term hampering their productivity, quality& competitiveness. Hence, in order to confront these changes and challenges there is a need of alternative collaborative mechanism that is “Public-Private Partnership”. Basically it is a emerging new paradigm shows cooperative arrangement between the public and private sectors that involves the sharing of resources, risks, responsibilities, and rewards with others for the achievement of joint objectives” This paper also attempt to study PPP and benefits derived from such partnership.