India’s global brand recall and attributes of civilisation, multi-cultural ethos, authenticity, and ethnic diversity are potential turbochargers for the country’s economy. These attributes are mirrored by the depth and range of products in India that are eligible for Geographical Indications or GI tags. Geographical Indications were either assigned to the dusty pages of history books or left to rural artisans to propagate and preserve. 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 can propel the nascent GI industry onto the national and the world stage.
Amazon’s local to global programme has taken Indian producers and their products such as Delta Leather Corporation’s leather and SVA Organics’ organic products to 18 global markets in over 200 countries, increasing the demand for their products and company size by as much as 300 times. In over two years, as of the first quarter of 2021, Amazon exported such Made in India goods worth $2 billion.
GI products need the support of government, as is done around the world. The Europeans are masters at it, as seen by products such as brie cheese and champagne. But China has also done very well by GI. For instance, by strengthening e-commerce in rural areas and actively carrying out the promotion of 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% annually. Nationally, online retail sales of agricultural products in China amounted to $94.4 billion in 2020.
A 2017 UNCTAD report⁴ on Inclusive Growth and E-commerce deems China’s e-commerce-driven growth of the past decade 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. “MSMEs can leverage affordable digital platform services, which used to be too expensive for them to establish, to build brand awareness, acquire and manage customers, and spur innovation. Second, e-commerce knows no geographic boundaries. Remote rural residents can purchase the same goods at the same price on the same platform as urban residents. Finally, e-commerce allows more flexible and inclusive employment.”
This has helped increase China-EU agricultural trade volumes by 16% 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% in 2020, benefitting 211 wineries from the Ningxia region. The output value of GI producers in China totalled $92.771 billion as of 2020. The EU has an $87 billion GI economy as per a report published in 2019. Several studies show that the patents and copyright protection of products under GIs result in higher economic gains, fostering quality production growth and better distribution of profits (Areté, 2013; Teuber, 2010).
GI protection has wider positive benefits especially on 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. Given the traditional guilds and ethnic and cultural diversity in India, the GI industry has the potential to be a wellspring of economic and soft power. And it will automatically resolve the three fraught issues of poor pay for talent, low female participation in the labour force, and urban migration.
First, it will create a new class of entrepreneurs, gig workers, and a “passion” economy, i.e. a new way for individuals to monetise their skills and scale their businesses exponentially. This provides platforms to creators by connecting them with genuine, engaged communities that share the same passion. These connections help remove the hurdles associated with freelance work to earn regular income from a source other than an employer. Second, the labour-intensive nature of the GI industry offers the best possible solution to the employment-to-population ratio in India which is an abysmal 43% compared with the global average of 55% and by monetising artisanal work at home, will address the issue of low female labour force participation rate, which at 21% in 2019 was at half the global average 47%. Moreover, given the hyper localised nature of GI, it is one of the possible solutions to stop urban migration. A robust GI ecosystem will not only potentially induce reverse migration but also become the conservator of our ancient crafts, culture and food, for GI tourism is typically a by-product of a strong GI ecosystem. Third, given the hyper localised nature of GI, it is one of the possible solutions to stop urban migration. A robust GI ecosystem will potentially induce reverse migration and also become the conservator of our ancient crafts, culture and food. Another revenue-earner, GI tourism, is typically a byproduct of a strong GI ecosystem.
It will rejuvenate Micro, Small and Medium Enterprises (MSME) and act as a catalyst for economic growth across India’s geographical, social and cultural strata. The MSME segment accounts for 31% of India’s GDP and 45% of exports. An estimated 55.80 million MSMEs employ close to 130 million people. Of these, 14% are women-led enterprises and 59.5% are rural.
There are several hurdles to the creation of this new industry. The micro nature of GI businesses necessitates addressing 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.
This policy brief has been divided into two parts- Phase I and II to address the challenges and create a sustainable GI ecosystem in India. The GI economy will act as a catalyst for economic growth across India’s geographic, social and cultural strata.
Blaise Fernandes is Board Member, Gateway House and President and Director, Indian Music Industry.