India’s global brand recall and attributes of multi-cultural ethos, authenticity, and ethnic diversity are potential turbochargers for the country’s economy. One channel through which these attributes are brought out are Geographical Indications or GI tags. These were either assigned to the dusty pages of history books or left to rural artisans to propagate and preserve. Today, with the emphasis on climate change and sustainability, these products can be ready revenue generators. A modern distribution system exists in India’s robust global e-commerce backbone and a newly-released domestic drone policy, which will propel the nascent GI industry onto the national and world stage.
There is traction already. Amazon’s local to global programme has taken Indian producers and their products such as Delta Leather Corporation’s leather and SVA Organics’s organic products to 18 global markets in over 200 countries, increasing demand and company size by as much as 300 times. In the two years ending March 2021, Amazon exported such Made in India goods worth $2 billion.
GI products need the support of governments. The Europeans are masters at it, as seen by products such as Brie cheese and sparkling wine from Champagne. The EU has an $87 billion GI economy. China has also done very well by GI, strengthening e-commerce in rural areas and actively promoting agricultural special product brands in lesser developed areas. China’s Ministry of Commerce has accelerated the growth of rural online retail sales by almost 20 per cent annually. Nationally, online retail sales of agricultural products in China hit $94.4 billion in 2020.
Why is this important? A 2017 UNCTAD report on inclusive growth and e-commerce deems China’s e-commerce-driven growth as inclusive. That means China has successfully empowered micro, small and medium enterprises (MSMEs) to compete with large companies on the same stage, with no geographic boundaries. This has increased China-EU agricultural trade volumes by 16 per cent to $19.4 billion in the first few months of 2021 alone. Likewise, despite a globally depressed market for wines, the produce from the Ningxia region of China saw exports surge 46.4 per cent in 2020, benefitting 211 wineries in Ningxia. The output value of GI producers in China totalled $92.771 billion as of 2020. Several studies show that the patents and copyright protection of products under GIs result in higher economic gains, fostering quality production and better distribution of profits.
GI protection has wider positive benefits, especially for local communities. In particular, it encourages the preservation of biodiversity, local know-how and natural resources. And this is where India can do well.
Multiple benefits flow from a strong GI ecosystem, which can be a wellspring of economic and soft power. It will automatically resolve the three fraught India issues of poor pay for talent, low female participation in the labour force, and urban migration.
First, it will convert talent into entrepreneurship with gig workers, and create a “passion” economy, that is, a new way for individuals to monetise their skills and scale their businesses exponentially. It removes the hurdles associated with freelance work to earn a regular income from a source other than an employer. Second, the labour-intensive nature of GI offers the best solution to boosting the employment-to-population ratio in India, an abysmal 43 per cent compared with the 55 per cent global average. Monetising artisanal work done at home will increase India’s low female labour force participation rate, which at 21 per cent in 2019 was half the 47 per cent global average.
The hyper-localised nature of GI offers solutions to reverse urban migration and conserve India’s ancient crafts, culture and food. A rejuvenation of MSMEs, which account for 31 per cent of India’s GDP and 45 per cent of exports, will follow. An estimated 55.80 million MSMEs employ close to 130 million people; of this, 14 per cent are women-led enterprises and 59.5 per cent are rural. Another revenue-earner, GI tourism, is typically a by-product of a strong GI ecosystem.
There are several hurdles to the creation of this new industry. Because GI businesses are micro, it is necessary to address the challenges of capacity-building, formal or easy access to credit, forming marketing linkages, research and development, product innovation and competitiveness in both domestic and international markets. The groundwork for MSME access to formal credit has already been done with the new Account Aggregator data-sharing framework.
There is the vexed issue of middlemen, who run system. With the shift to digital platforms, the distribution margins of these gate keepers or mandi agents must be competitive so they do not act as countervailing agents by getting into similar businesses or product lines which will erode GI producer incomes. As seen from the experience of the new farm laws, this will be a task for the central and state governments; they must ensure the transition without breaking down too many existing linkages. GI producers and distribution intermediaries are partners in grime and sweat, one bringing unique skills and techniques and the other ensuring that the product reaches the dining table or adorns homes. Guardrails like regular audits and consultations with the GI producers must be mandated.
Pulling it together will be local GI cooperative bodies or associations which can be nationally managed by a GI board under the auspices of the Department for the Promotion of Industry and Internal Trade (DPIIT), the Ministry of Commerce department which should be tasked with developing this new sector.
Finally, a required skill for GI producers is digital literacy. This should be a priority agenda item for NGOs and stakeholders like the DPIIT. It is an opportunity for India to redefine the future of work using automation, technology and artificial intelligence while simultaneously enhancing and adorning the country’s talented local work force.
The Indian GI economy can be a platform for India to showcase to the world a model for ethical capitalism, social entrepreneurship, de-urbanisation, and bringing women to the workforce, on the back of a robust digital system. It encompasses the concept of trusteeship, as advocated by Mahatma Gandhi and more recently, by Prime Minister Narendra Modi at the UN. It is truly Made in India.
This column first appeared in the print edition on October 1, 2021 under the title ‘Growing locally’. The writer is the Director, Gateway House: Indian Council on Global Relations.