Globalisation, Economic Liberalisation and Indian Informal Sector (GELIIS) |
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Dialogue for Advocacy: Globalisation, Economic Liberalisation and Indian Informal Sector, Home-based Producers and Cottage Industries
1. Background & Objective
1.1 For the Indian economy to grow with equality and economic justice, the informal sector, home-based production and cottage industries need to achieve high growth with policy and institutional support. The contribution of these sectors to any economy cannot be ignored. This is especially true for a country like India, as they are important sources of employment and income for many families. They have 40 percent share in the total industrial output, 35 percent in exports, and over 80 percent in employment.
1.2 However, many of such sectors are not doing well in this era of globalisation, which encompasses economic liberalisation. It has been found that in order to overcome the challenges and avail opportunities of globalisation and economic liberalisation, these sectors and associated entrepreneurs need institutional support for technology upgradation, infrastructure support for market penetration, and adequate working capital finance from the banking sector.
1.3 There is also a need for small entrepreneurs to keep pace with the structural and technological changes taking place in large industries. They should be in a position to adjust so as to act as service providers as many larger companies are keen on outsourcing a number of job works.
The objectives of the project are to:
bring different stakeholders active in informal sector, home-based production and cottage industries into dialogues platforms for exchanging information and views on opportunities and challenges facing the sector in the era of globalisation and economic liberalisation.
disseminate balanced views on globalisation and economic liberalisation to the representatives of these sectors.
create an enabling environment for policy advocacy so that these sectors are able to take challenges and avail opportunities arising out of globalisation and economic liberalisation.
develop a long-term work programme with these sectors as the target group and for facilitating the process of getting benefits out of globalisation and economic liberalisation and understanding safety nets for taking risks in order to avail opportunities as well as insulate from threats.
Target Group
The focus of our activities concentrated in the following sectors:
Non-timber Forests Product
Handloom
Handicraft & Home based Crafts
People from the associations, artisan groups, community-based organisations working among these groups, government officials, elected representatives of local self government institutions, media persons, developmental agencies will be involved in these dialogue.
Methodology
The project is supported by OXFAM GB in India. In order to address the above-stated concerns and achieve objectives of the project the following methodology has been drawn up.
Partners Organisation:
Bhubaneswar: Regional Centre for Development Cooperation (RCDC)
Lucknow: Network of Entrepreneurship
& Economic Development (NEED)
Hyderabad: Cenrte for Resource Education
(CRE)
Ahmedabad: International Centre for Entrepreneurship
& Career Development (ICECD)
Bhubaneswar
Regional Workshop
BACKGROUNDER
REPORT
LIST
OF PARTICIPANTS
Hyderabad
Regional Workshop
BACKGROUNDER
REPORT
LIST
OF PARTICIPANTS
Ahmedabad
Regional Workshop
BACKGROUNDER
REPORT
LIST OF PARTICIPANTS
PRESS COVERAGE
Lucknow Regional Workshop
BACKGROUNDER
REPORT
LIST OF PARTICIPANTS
PRESS COVERAGE
Documentation:
Launch Meeting
The Competitiveness of Indian Informal Sector and Cottage Industries in the Era of Globalisation and Economic Liberalisation
9th June, 2003, New Delhi
AGENDA
9.00-10.00 REGISTRATION
Session I 10.00-11.00 Inaugural
Welcome Address: Mr. Pradeep S. Mehta, CUTS
Mr. Biranchi Upadhyay/Mr. Anand K. Das, Oxfam GB’s India Office
Project Overview: Ms. Mita Dutta, CUTS
11.00-11.30 TEA BREAK
Session II 11.30-01.00
Indian Economy: Recent Trend of Globalisation, Liberalisation and Indian Informal Sectors
Speaker: Dr. B. B. Bhattacharya,
Director, IEG
Mr. T. P. Bhat, ISID
01.00-02.30 LUNCH
Session III
02.30-03.30
Role of Banking Sector in Generating Capital in the Informal and
Home Based Sectors
Speaker: Mr. D. S. Negi, General Manager, SIDBI
3.30-4.00 TEA BREAK
Session IV
4.00-05.00
Govt Policies and Market Access: How to Ensure Healthy
Growth of the Informal and Home Based Sectors
Speaker: Dr. Shyam S. Sharma
President, Fair Trade Forum
05.00-06.00 Labour Issues in the Ready Made Garment Sector
Dr Samar Verma, Oxfam GB’s India
Office
Facilitator: Ms.
Manleen Duggal, CUTS
Launch Meeting
Competitiveness of Indian Informal Sector and Cottage Industries in the Era
of Globalisation and Economic Liberalisation
9-10 June 2003, New Delhi
The informal sector, covering a wide spectrum of home-based production and cottage and small industries in India, has emerged as a dynamic and vibrant sector of the Indian economy. The sector contributes around 40 per cent of the gross industrial value added to the Indian economy. It has made a commendable contribution of 40 percent in industrial production, 35 percent in direct exports, 45 percent in overall exports and 80 percent in industrial employment. Through over 32 lakh units, the sector provides employment to about 18 million people.
The inherent resilience and strength of the sector, its high flexibility, low overheads, labour-intensity and adaptability to semi-urban and rural environment put it in high growth trajectory which even the large industries find hard to emulate. With respect to capital and labour productivity, the partial measures of efficiency, small scale enterprises have both lower capital-output and capital-labour ratios compared to large scale sector. Thus, in a labour-abundant and capital-scarce country like India, with mounting problem of unemployment, the growth and development of the small and informal sector deserves utmost importance.
The sector has contributed significantly to the realisation of the socio-economic objectives of growth with economic justice. Besides emerging as the engine of growth for Indian economy, the sector helps to achieve important objectives like employment generation, more equitable distribution of income, industrial dispersal, optimum utilisation and exploitation of local resources and capital and fostering entrepreneurship.
Indian Economy: Recent Trend of Globalisation, Liberalisation and Indian Informal Sectors
India embarked upon the process of economic liberalisation in 1991. Since then liberalisation has exposed all industrial units including small home-based enterprises in the informal sector to the inherent risks of free market competition. Globalisation has intensified the market competition by allowing imports and multinational corporations.
The reform process of the Indian economy has a far reaching impact on Indian informal sector. Most of the problems, during this era of economic liberalisation, arise due to the unorganised nature of the sector, lack of data and information, use of low technology and poor infrastructure of the sector.
The setting up of the WTO (World Trade Organisation) in 1995 has intensified global competition. The World Trade Organisation regulates multilateral trade and enforces its member countries to remove import quotas and other import restrictions, and to reduce import tariffs. In addition, countries, especially the developing countries, are asked to stop subsidies to exports as well as to domestic production. As a result, every single individual enterprise in India, small or large, whether exporting or serving the domestic market, has to face competition.
In India, selective dereservation of some SSI products and removal of ORs (Quantitative Restrictions) have started taking place with a view to enhancing exports and competing effectively in the global market. Out of 836 items reserved for production under SSI, 162 items have been dereserved and almost all the items are placed on the OGL (open general license) list of imports. This opens up the possibility of direct competition in the domestic market with the imports of high quality goods from the developed countries and cheap products from the other less developed countries.
Competition in the domestic market would further be intensified with the arrival of multinational companies as the restrictions on foreign direct investment have been removed. Removal of quantitative restrictions and lowering tariffs are creating a serious impact on the small and informal sector, leading to closure of some units and consequent displacement of labour.
In view of several desirable socio-economic objectives, Abid Hussain Committee made out a strong case for support and promotional policies to encourage the development of SSIs left to free market forces. The committee recommended to effectively address the problems faced by the SSI units.
The silverlining amidst the fierce competition lies in exploiting the opportunities of globalisation – in terms of outsourcing, sub- contracting and ancillarisation of the products manufactured by corporates. To be able to face competition in a level playing ground the Indian informal sector needs to be endowed with technological upgradation and modernisation. In the changing economic scenario, it is the knowledge-based technology, organisation and information which will be able to improve the quality and competitiveness of products and thus help to face competition from imports. The free economy will usher in accessibility to bigger markets, greater linkages for SSI with larger companies and marketing outfits, improved manufacturing techniques and processes.
However, the sector is afraid of adopting new technology because of the huge initial capital investment and adjustment of production process, uncertain input supply, marketing prospect and profit of the products manufactured with new technology. Other major impediments are lack of knowledge of technology sourcing, evaluation and demonstration facilities, lack of surveys and feasibility studies etc. Therefore, for the development of this sector there needs to be a major thrust on technology intervention in clusters which offers the small units an opportunity and easier access to get acquainted with new technologies.
Civil society and government agencies can play a significant role in educating small units about the changes in the business environment and the necessity of going in for technological upgradation. Civil society organisations are mostly unable to come to a platform for conducting meaningful dialogues (exchange of information and views), taking forward the outcomes at appropriate levels and disseminate the learning to their respective constituencies. Thus, there is the need to facilitate the process of learning (through exchange of information and views) for policy advocacy at different levels. This will go a long way to instil trust and confidence in the small units.
Role of Banking Sector in Generating Capital in the Informal and Home Based Sectors
With the financial liberalisation, a crucial component of liberalisation policy, credit requirements of the Indian informal and home based sector merits urgent attention. Working capital and long term finance are mainly two types of credit requirement for the growth of informal and home based sector. Recognising the need for a focussed credit policy the government of India ensured Priority Sector Lending and Institutional Arrangement policies for the sector.
The small scale industries sector has been accorded the status of priority sector for the purpose of credit dispensation from the banks. 40 percent of the total bank credit is earmarked for priority sector lending comprising agriculture, SSI and service sector. Under the Institutional Arrangement: Small Industries Development Bank of India (SIDBI) was set up as the apex refinance bank. Term loans are to be provided by State Financial Corporations (SFCs), Scheduled Banks, Small Industries Development Corporations (SIDCs). Credit lending in direct/indirect forms is also undertaken to some extent by National Bank for Agriculture & Rural Development (NABARD), National Small Industries Corporation (NSIC) etc.
SFCs have played a significant role in generating finance for the informal and small scale sector. However, due to various reasons, most of the SFCs have become financially weak and are not in a position to perform their tasks properly. Kapur Committee and Khan Working Group have recommended for rejuvenation of the SFCs.
Specialised branches of public sector banks cater to the needs of small scale enterprises and help in extending required credit assistance. Setting up of more such specialised SSI branches in the clusters with concentration of SSI units will go a long way to provide financial assistance to the informal and small scale sector.
Micro credit is another way to generate capital for the home-based small units. SIDBI has launched the micro credit scheme since 1994 and widened its operation in 1998 with the introduction of a Rs. 100 crore “SIDBI Foundation for Micro Credit”. The objective of such endeavour is to build up a strong and viable national network of Micro Finance Institutions from both the informal as also formal financial sector to provide micro finance services to the small village and home based poor entrepreneurs, especially women. Local area banks, co-operative banks and regional rural banks are also ideally suited for financing micro credit to the tiny units.
The establishment of the different development banks after independence acted as a positive step to augment productivity of small and home based enterprises. The development banks provide long term finance, knowledge and enterprise, the three major ingredients of development, for informal home based enterprises. Their lending operations are supplemented with promotional and developmental activities to facilitate entrepreneurship.
However, the Second SSI Census stated that the absence of adequate and timely finance act as the largest constraint in healthy growth of the informal cottage and small industries sector. It deserves mention that in spite of RBI’s directives in response to Nayak Committee’s recommendations to provide working capital facilities equivalent to 20 percent of the projected actual turnover (for working capital limits upto Rs. 2 crore), actual credit made available to the sector is only 7-8 per cent.
The liberalisation regime has opened the doors for a large number of entrepreneurs to launch their venture with innovative technologies. Their commercial applications with a high risk high return profile requires assistance through the venture capital route.SIDBI has already taken a number of initiatives to provide sector specific Venture Capital funds to small scale sector.
SIDBI has evolved a number of schemes, which aim to solving to some extent the financial tangles faced by the informal and small scale sector. The Government of India launched National Equity Fund Scheme through SIDBI to provide equity assistance for setting up small and tiny units. Besides this, there is direct lending provision by SIDBI to meet the needs of these units in areas like infrastructure, marketing, venture financing etc. The schemes of bills financing, Single Window Scheme, Working Capital Term Loan, Factoring Services, Forex Services, Technology Development and Modernisation Fund (TDMF) provide finance and assistance for development and healthy growth of the sector.
Govt Policies and Market Access: How to Ensure Healthy Growth of these Sectors
Marketing is an important ingredient for the success of an enterprise. However, marketing has been identified as the second most important problem affecting smooth performance of informal and small home based enterprises. These sectors cannot afford to offer optimum amount of resource allocation for marketing their products. So the governments of even the developed countries have launched programmes to promote sales of items produced by the small and informal sectors.
Government of India has been operating two schemes, viz. Price Preference upto 15 percent to SSI products under government purchase scheme and Purchase Preference in respect of 358 specified items on purchases by government departments. The policy is implemented through the Directorate General of Supply and Disposals (DGS&D). But at present government purchases from small scale sector routed through DGS&D are hardly 10 percent of the total government purchase. The situation, therefore, needs immediate redressal.
In the area of marketing, institutional support will be necessary for the healthy growth of these sectors. The National Small Industries Corporation Ltd. was established in 1955 by the Government of India with a view to promote marketing of the small scale sector in the country. NSIC is providing Single Point Registration facilities that extend some other benefits in the area of SSI marketing. NSIC provides integrated technology, marketing and financial support to small scale sector.
Increasing internationalisation of production, distribution and marketing of goods and services has given rise to global commodity chains. In order to access the markets, it has become sine qua non for each producing unit, be it large or small, to be a part of the chain. Increased market access under WTO requirements will also mean that domestic industries can compete for export markets in both developed and developing countries. The small and informal sectors, besides facing problems in the domestic market, are also affected in the global export market. This necessitates general upgaradation in quality, proper price adjustment and allocation of more resources for marketing.
It deserves mention here that the development banks need to help the industrial units to market their product and/or encourage entrepreneurs to develop the common marketing infrastructure.It has been suggested by the different industry associations to extend the merchant banking services to the small units which hitherto were available mainly for the large scale units.
The surge in Indain exports can come about only if the small and informal sector is restructured to meet the demands of global competitiveness which is the key to the future of the sector in the present context. Various measures adopted by government to stimulate marketing for small enterprises through the consortium formation, brand building, design selection, media publicity and making available the technology inputs are expected to enhance the prospects of the sector towards the new millennium.
List of Participants
Launch Meeting
The Competitiveness
of Indian Informal Sector and Cottage Industries in the Era of Globalisation
and Economic Liberalisation
9th – 10th June, 2003, New Delhi
Speaker:
- Dr. B. B. Bhattacharya
Director
Institute of Economic Growth
University of Delhi Enclave
Delhi – 11007
Ph: 91 11 2766 7260 (O), 2766 7598
Fx: 91 11 2766 7410
Email: bbb@ieg.ernet.in
- Mr. D. S. Negi
General Manager
Small Industries Development Bank of India
10th & 11th Floor, Videocon Tower E-1, Rani Jhansi Road
Jhandewalan Extension
New Delhi 110 055
Ph: 91 11 2368 2463
Fx: 91 11 2368 2461
Email: kesavan@sidbi.com
- Dr. Shyam S. Sharma
President
Trade Alternative Reform Action Projects
148, Sukhdev Vihar
Mathura Road
New Delhi 110 025
Ph: 91 11 2683 9721/2691 8033/7/8040, 2631 6518
Fx: 91 11 2683 8885
Email: tara.delhi@gems.vsnl.net.in;
taraproj@del2.vsnl.net.in
- Mr. T. P. Bhat
Institute for Studies in Industrial Development
Ph: 91 11 2370 2450-1
Fx: 91 11 2370 2448
Email: tpbhat@vidur.delhi.nic.in
- Samar Verma
Oxfam GB’s India Office
B-3, 1st Floor, Geetanjali Enclave
New Delhi-110 017
Ph: 91 11 2651 6481/7, 2652 5135/1971,
2685 6638/89 Ex. 111
Fax: 91 11 2685 6728
Email: sverma@oxfam.org.uk
Oxfam: 1. Sumananjali Mohanty
Oxfam (India) Trust
1116, Jaydurga Nagar
Jhapada, P. O. Box 170
Bhubaneswar – 751 006
Ph: 091 674 2571531/0485/0278
Fx: 091 674 2571579
Email: smohanty@oxfam.org.uk2. Ms Monika Singh
Oxfam GB Lucknow
Oxfam (India) Trust
1-Dilbagh Butler Road
Lucknow 226 001
Ph: 091 522 2204783/85
Fx: 091 522 2309712
Email: msingh@oxfam.org.uk3. Mr. Nishant Pandey
Programme Officer
Oxfam (India) Trust
Plot No. 18,
Amaravathi Cooperative Housing Society
Near Kausalya Estate
Khar Khan
Secunderabad – 500 009
Ph: 091 40 2774 1891/2552 6154
Fx: 091 40 2770 9037
Email: npandey@oxfam.org.uk4. Mr. Anand K. Das
Programme Coordinator
Market Access Programme
Ms. Aditi Kapoor
OXFAM GB in India
C-5, Qutab Institutional Area
New Delhi – 110 016
Ph: 091 11 26516481 (Telefax)
091 11 26516487/26521971
Email: adas@oxfam.org.uk
| Regional Partners: | |
|
1.
Mr. Binu Zachairah |
2.
Mr. Anil K. Singh |
|
3.
Mr. Nirmalendu Jyotishi |
4.
Mr. D. Narasimha Reddy |
| GRANITE Partners: | |
|
1.
Arun Kumar Mishra |
|
| Target Group: | |
|
1.
Mr. Prabhakar Adhikari |
2.
Mr. Peter Bakos |
|
3.
Pravanjan Mohapatra |
4.
Mr. Mangaraj |
|
5.
Mr. U. C. Pandey |
6.
Mr. J. P. Singh |
|
7.
Ms. Alpa Seth |
8.
Ms. Jigisha Patel |
|
9. Mr. Jagroop Singh Councellor ABHIYAN Atarra (Banda) UP |
|
| Local Participants: | |
|
1.
Dr. S. K. Jain |
2.
Mr. Amitabh Mazumdar |
| Bhubaneswar Regional Workshop |
Bhubaneswar
Regional Workshop on Globalisation, Economic Liberalisation and Indian Informal
Sector:
Impact of Globalisation on Non-Timber Forests Produces
17th – 18th July 2003, Bhubaneswar
AGENDA
OXFAM RCDC CUTS
DAY ONE (17th July)
09.30 – 10.00 REGISTRATION
Session I
10.00 – 11.00
Inaugural: Welcome by RCDC
Inauguration by Honb’le Chief Minister Mr. Naveen Patnaik
Keynote Address: Overview of Golbalisation and
Liberalisation and its Impact on Indian Informal Sector
Prof. Nabinanada Sen , CUTS
11.00 –11.15 TEA BREAK
Session
– II
11.15 –1.30
Theme - Conservation, Certification and Patenting of
Medicinal Species and other NTFP
Speaker:
Mr. Ardhendu Chatterjee, Service Centre,
Calcutta
Mr. R. K. Sahu, Srusti,Bhubaneswar
Ms. Sumita Sindhi, Freelance Researcher, Sunabeda
Chairperson:
Mr. Saroj Kumar Patnaik, IFS, Addl. PCCF (Rtd.)
01.30 – 02.15
LUNCH
Session
– III
02.15 – 03.45
Theme - Impact of Globalisation on NTFP Policy and Trade in
Orissa and Neighbouring States
Speaker:
Mr. A. K. Mohapatra, Managing Director, Tribal Development Cooperative
Corporation, Bhubaneswar
Mr. R. K. Agarwal, Natural Renedies, Bangalore
Mr. G. Raju, Gram Mooligai, Bangalore
Mr. A. K. Patnaik, Special Secretary, Forest Deoartment, Govt. of Orissa, Bhubaneswar
Chairperson:
Mr. Ram Vir Singh, IFS, Convener, Poverty Task Force
03.45 – 04.00 TEA
Session – IV
04.00 – 05.30
Theme - Market Promotion and Cooperatisation
Speaker:
Ms. Vidya Das, Agragamee, Bhubaneswar
Mr. Biswajit Pandey, SRUSTI, Bhubaneswar
Mr. Nihar Ranjan Mishra, Bana
Banijya Samittee, Gurundia, Orissa
Presentation
by the SHG
Federations/Cooperatives
Chairperson:
Mr. Rajendra Kumar Sarangi
05.30 – 05.45
Discussion on the group work to be organised on 18th July
DAY TWO (18th July)
09.30 – 09.45
Recap of the first day
Session – V 09.45
–10.30 National Innovations, on Knowledge as a Tool for Advantage in
the Era of Globalisation - Video presentation by Mr. Rohini
Sahu, SRUSTI
10.30 – 10.45 TEA
Session – VI 10.45 – 12.00 Group Discussion on Selected Thematic Areas
Session – VII 11.45 – 01.15 Group Presentation and Discussion
01.15 – 02.15 LUNCH
Session – VIII 02.15 – 03.00 Evolving and identifying key recommendations
03.00 – 3.15 TEA
03.15 – 04.00 Valediction
Honb’le Forest Minister, Mr. Bijayshri Routry to Chair the
session
Vote of Thanks
Backgrounder
for Bhubaneswar Regional Workshop
17th – 18th July, 2003
OXFAM RCDC CUTS
Plight of Sal Leaf Pluckers: A Case from Mayurbhanj
‘If I had any other option, I would never go for sal leaf collection. My family is forced to sell sal leaf plates as there is no other source of income’, says Ratani Dei, 45 year old Santal woman from Jarala village in Karanjia block of Mayurbhanj district. For the tribal women in Mayurbhanj collection and selling of sal leaf cup and plates, though not remunerative and commensurating with the labour, is a major source of income. She along with her family members spends more than 12 hours ( 6 in the morning to 6 in the evening) a day to collect one bag of sal leaves which invariably contains 1000-1200 leaves. On the second day, they stitch the leaves and make plates and pali (pali is two leaves stitched and later on compressed to chautis or cups). About 6-7 leaves are required to stitch one plate which means that about 200 plates are stitched from one day’s collection. On the third day, the plates are dried and made ready for binding and sale. Three days of hard labour fetches the entire family a mere sum of Rs 10-12, provided the Government declared rates (Rs 5 per one chaki, one chaki contains 80 plates) are given. Interestingly, the Government rates are fixed for 80 plates but the traders collect 100 plates for the same price. Ratani Dei in her rustic innocence asks a very fundamental question, ‘can’t the Government rates for procurement for sal leaf plates be raised a bit so that we are a little comfortable. We hear that the local traders from Betanati and Karanjia are making a fortune by selling the sal leaf plates to the next traders in the ladder at an exorbitant price, sometimes even 20 rupees per chaki. Though during the rainy season the rates increase and goes to the tune of 9-10 rupees per chaki, we are unable to fetch that price since we do not have space for storage. There are instances when properly dried plates have been stored for about one year, but if the colour changes from green to red which it does invariably, the trader starts grumbling and reduce the price.’
Ratani and many others from blocks like Karanjia, Bishoi and Sukruli are not aware of anything happening at the State level with the policy or royalty. To them, ‘as long as it does not make the procurement more erratic and further reduce the collection price, we wouldn’t be interested.’ They have, on the contrary, very humble and straightforward demands like a little hike in the collection price, storage facilities and procurement security.
Analysis
of the Case Study
Majority of the livelihood of tribal population and forest dependent community is dependent on NTFP.
Due to lack of communication facilities, inadequate information regarding prevailing prices, market and demand structure, local intermediary traders exploit the primary NTFP collectors. The intermediary traders between primary collectors and tertiary traders procure the sal leaf plates from the primary collectors at abysmally low rates and sell the same to the next trader in the ladder with sumptuous profit margin. An institutionalised approach should be put into practice so that the primary collectors are ensured a due and a fair return on their collections. The low returns that the primary collectors get is because there is no proper mechanism to ensure them a fair return.
Absence of proper infrastructural facilities like storage, transportation etc. come in way of percolating the benefits of commercialisation of NTFP to the primary collectors and of enabling them to utilise it as prospective and sustainable source of livelihood.
Lack of awareness of state level policy of NTFP as also of emerging consequences of globalisation and economic liberalisation on NTFP trade impart adverse impact on the primary collectors to make a niche in the export market. The modified and novel design of the leaf plates that use sal leaf is on the rise. The future is very promising and thus an assiduous strategy is needed to optimize the opportunities on offer.
Most of the NTFP products are primarily collected by women. Women empowerment and promotion of NTFP trade here get inextricably intertwined.
To translate the negative impact of globalisation into challenging opportunities, awareness generation regarding domestic policies related to NTFP and international trade environment at the grass root level merits urgent attention. Dissemination of information about provisions of Convention on Biological Diversity (CBD) deserves particular mention here.
The growing demand of the NTFP products to be used as inputs in various sectors in the international markets is on the rise. Apart from sal leaf, in case of sal seeds the problem in Orissa exists in the form of lack of institutional support like no extraction plants. It is pertinent to understand that the demand of sal oil is on the rise and this presents an unique opportunity to the primary collectors to gain the most out of it. But this again needs massive support from the state so that the collective energies of the local population are chanalized in the right direction.
The primary collectors of NTFP pour their lifeblood to eke out their living from meagre return as illustrated in the case study. Their hard work and fortitude can be utilised as stimulating ingredients to foster NTFP as one of the most profitable trading, specially when it embraces a large population dependent on forest products. Proper institutional support and policy mechanism will usher in a new era in both domestic trading and export potential for NTFP.
Economic Liberalisation, International Trade and Non-Timber Forest Products
Introduction
The over exploitation of the forests and the open plundering of the biodiversity treasure is a growing concern. There is an overriding disquiet about the degradation of forests and the increasing need to add value to forest resources. This ever-increasing environmental awareness and the constantly developing concept of sustainable development have made it imperative that forests be used in a more benign manner and thus the need of evolving strategies that aim at bringing sustainability in the use of forests.
All this has created a huge interest in Non-Timber Forests Products (NTFP) as they are ecologically sustainable and environmentally friendly. But the importance of NTFP is not limited to just ecological or environmental considerations. NTFPs are an indispensable element in the livelihood systems of forest-dwelling people. The forest dwelling people especially the local tribals have relied on the NTFP for centuries for food and cash income. The significance of the NTFPs in sustaining biodiversity of local forests and regions is also well understood. Therefore our approach towards NTFPs has to be a holistic one that encompasses the entire imperative attributes of it.
Economic Liberalisation and International Trade
Another important reason for this renewed vigour is the latent commercial interest in the NTFPs. This commercial prospect has drawn the attention of the trans national corporations in the NTFPs. The commercial interest in forests is not restricted just to timber but has expanded to a wide array of non-timber products like medicinal plants, mushrooms, resins, saps and many other raw materials. The forces of globalisation and economic liberalisation have generated this commercial interest.
>India embarked on the path of economic liberalisation in the early nineties in a major way. The process of economic liberalisation and the pursuit of neo liberal, market driven economic policies is having a significant impact on the entire economic landscape of the country. The process of economic liberalisation has been marked by a constant shift in the role of the state in economic activities. The role of the state is undergoing a paradigm shift from being a producer to being a regulator and facilitator. A constant removal of restrictions on economic activity and fostering private participation is becoming the order of the day.
Today’s economic jurisprudence is being guided more by market forces and less by state forces. This thrust on market forces has both positive and negative aspects. The positive aspects include the opportunities for the growth of entrepreneurial skills and better market access both at domestic and international level. The most negative element of this economic liberalisation has been the exposed vulnerability of the poor and marginalized sections of the society. But this economic liberalisation is a reality and therefore the question to be asked is, “how to maximise the opportunities and minimise the negatives?”
An important consequence of India’s economic liberalisation was the adoption of the multilateral trading regime under the WTO. This multilateral trading regime is a rule based, institutionalised trading system that imposes significant obligations on its member countries. This new model of international trade is a reality and has significant ramifications for a developing country like India.
It is in this light that it becomes imperative to understand the symbiotic relationship that the local tribals or the indigenous populace have with their forests with special emphasis on the NTFPs. Has this dynamic relationship undergone a change because of the neo-liberal market forces that have started to dominate every strata of our lives, how relevant is international trade for this relationship, what are the opportunities provided and challenges thrown and what should be our strategies to counter these challenges and optimise the opportunities, are some of the questions that need some serious pondering.
Strategies to be Followed
This analysis has to be done at two levels. One is the multilateral trading level and the second is at the domestic level.
At the multilateral trading level the need is to look at those forces that have a profound impact on the Bio Diversity, where NTFPs are of paramount importance, of developing countries. The first step should be to expansively understand the threats that the legal and the economic forces of the multilateral trading regime under WTO entail. The next step would be to structure a proper policy response that is broad based and incorporates the voice of all the stakeholders.
At the domestic level the need is to locate those bottlenecks that are disrupting the relationship of the local population with their forests and the NTFPs. the important stage is that domestic strategies are to be fine tuned in a manner that the benefits from the NTFPs are vested in the hands of the primary beneficiaries i.e. the local population living in close proximity of the forests. In this regard a multi pronged effort is needed which should include legislative intervention and policy formulations.
The International Scenario
CBD and TRIPS
In international law the Convention on Biological Diversity (CBD) is one all pervasive treaty on biological diversity. Biological diversity is a very comprehensive term and includes the NTFPs as well. Therefore any law, treaty or policy that affects biological diversity would invariably have an impact on the NTFPs. The (CBD) provides two important stipulations. Firstly it recognizes the sovereign right of the nations over their biological diversity and secondly the acceptance of the need to share benefits flowing from the commercial utilization of biodiversity resources with the holders of the traditional knowledge. However it is interesting to note that there is no Agreement in the multilateral trading level that recognizes these two noteworthy characteristics of the CBD. The Trade Related Aspects Of Intellectual Property Rights (TRIPS) Agreement does not recognize the sovereign rights of the nations over their biological diversity nor do they recognize the concept of benefit sharing.
The TRIPS Agreement requires WTO members to meet certain minimum standards for protection of intellectual property. Categories of intellectual property covered by the Agreement are patents, copyright, trademark, industrial designs, geographical indications, layout design of integrated circuits and trade secrets. This Agreement also requires parties to provide fair, effective judicial procedures and remedies for right holders claiming infringement. Under the TRIPS Agreement the principles of National Treatment and Most Favoured Nation are also to be observed. The TRIPS Agreement also asks countries to recognize patents on both products and processes.
Article 27.3(b) of the TRIPS Agreement states as one of its basic objectives to provide either patents or an effective sui-generis system for plant varieties. The patent regime at the multilateral trading level is in the form of Union for the Protection of Plant Varieties.(UPOV) But the problem with UPOV 1991 is that they significantly diminish the farming community’s capacity to be self sufficient in seed and self reliant as agricultural producers.
Therefore the sui-generis option given in Article 27.3(b) of the TRIPS Agreement needs to be explored. The language of Article 27.3(b) of the TRIPS Agreement that gives the sui-generis option is quite flexible. Taking recourse to the sui-generis option is much more preferable for developing countries rather than adopting the patenting route given under the UPOV. The developed countries in general and the US in particular want the elimination or at least the narrowing of the sui-generis option and to make the UPOV 1991 patenting route as the only option for the protection of the plant varieties in developing countries.
The UPOV 1991 route could spell catastrophe for developing countries as it talks only of breeder’s rights and not farmer’s rights and it also does not recognise any concept of benefit sharing. In other words there could be many forest plants having varied qualities and characteristics that could be easily exploited and patented by the trans national corporations. Patenting on the lines of UPOV 1991 would mean that only the breeder would have the right and the local people who have lived in harmony with these forests would not have any right on the forest plants that have been patented. Moreover the benefits of commercial utilisation of these plants would be cornered by the breeder, which most likely would be the Trans National Corporations, and the local or the indigenous people would not get any benefit.
Therefore there is an urgent need to resist any single legislation model for the patenting of the plant varieties. India has already explored the sui-generis option by enacting the, “The Protection of Plant Varieties and Farmer’s Rights Act”, 2001 and the “Biological Diversity Act”, 2002. If the sui-generis option is eliminated or narrowed it would mean the laws made by India would become redundant and new laws in conformity with the UPOV 1991 would have to be made.
An important strategy at the international level has to be to bring the TRIPS Agreement in conformity with the CBD. In other words the TRIPS Agreement should incorporate two important elements that have been given in the CBD. The TRIPS Agreement should recognize the sovereign right of the independent countries over their biological resources and should give acceptance to the principle of benefit sharing.
It is also important to understand that by virtue of international law the CBD prevails over other international treaties. This point has not been emphasized too often as the interests of developed countries is linked in undermining the importance of CBD. Article 22 of CBD succinctly states that where the performance of rights and obligations of any member country under any international Agreement jeopardizes or threatens biological diversity, then the provisions of CBD would prevail. This is equally valid for all those Agreements that have come into existence after the Convention by virtue of international law. A fundamental principle of international law is that a treaty in respect of specialized subject matter like the CBD would always take precedence over a general Agreement like TRIPS. Similarly Article 16(2) of the CBD ensures that any IPRs under national or international law are supportive of and do not undermine the convention.
The superlative way would be to develop an interpretation of the two treaties in a manner that harmonises the provisions of these treaties rather than one, which undermine the provisions of any one of the treaties.
NTFPs and Eco-Labelling
There are a lot of NTFPs that could be subjected to a wide variety of use like in food processing and pharmaceutical industries. These wide uses have the possibility of being challenged under the Sanitary and Phytosanitary (SPS) Agreement and the Technical Barriers to Trade Agreement (TBT). These Agreements are very important for developing countries as they are directly linked to market access.
The issue of eco-labeling and certification is very important for developing countries. Stringent eco labeling and certification standards could mean denying market access to the products of developing countries as developing country producers find it difficult to meet the labeling and certification standards. Thus it is important for developing countries to ensure that the eco-labeling and certification standards and the provisions of the TBT Agreement are interpreted in a manner that does not deny market access to developing countries. The ever-growing demand and opportunity for the NTFPs in so many different sectors has the potential to boost our export earnings and also help the indigenous people who are relatively more likely to gain from trade in these minor forest products. Stringent eco-labeling and certification standards could easily hamper the export opportunities of the NTFPs.
The Case of Neem
The case study of Neem, an important non-timber forest product abundantly illustrates the vulnerability of the NTFPs vis-a-vis the international patenting laws. The multi-utility of Neem is well known and its use for medicinal purposes need not be overemphasized. The local and indigenous people have possessed the traditional knowledge regarding the use of Neem for centuries. But the increasing patenting of many uses and processes of Neem has exposed the vulnerability of the Indian traditional knowledge base and the protection of the NTFPs. This patenting has also meant that the local and the indigenous people have been denied the use of the qualities and properties of Neem for ever.
The Domestic Scenario
The enactment of the Biodiversity Act and the Protection of Plant Varieties and Farmer’s Rights Act are import ant steps that have been taken in this direction.
The Bio Diversity Act
In the bio diversity wealth of India the central importance of NTFPs is well understood. The legislative intervention to protect bio diversity came in the form of enacting a Bio Diversity Act in the year 2002. This Act is one of the first of its kind to protect the rich biological diversity and traditional knowledge of the indigenous people. The tribals and the indigenous people have a rich and varied knowledge base regarding the NTFPs. As the understanding about the economic importance of these NTFPs is on the rise the piracy of these bio treasures is also mounting. The tribal and the indigenous people who have nurtured the knowledge of these forest products stand to loose as the superior bargaining and economic power of the MNCs allows them to literally steal these bio treasures from the indigenous people. The traditional knowledge base could range from knowledge about the medicinal plants to use of a particular non-timber product in the food sector. Thus it was felt that there has to be an institutionalized approach to protect this bio diversity and the rich traditional knowledge base.
The Biological Diversity Act of 2002 aims to achieve these coveted goals by furthering the objectives given in the CBD. Most importantly this Act conveys the strong message that India has the sovereign right over its biological resources and anyone cannot just come and take away this wealth. The other important element in this Act is that it recognizes the principle of benefit sharing. This principle ensures that the tribals and the indigenous people do get their due share in case of commercial exploitation of these forest products by non-citizens.
The Act prohibits the obtaining of any biological resources occurring in India and associated knowledge for research, commercial utilization, or bio survey and bio utilization without the prior approval of the National Biodiversity Authority (NBA) by non-citizens staying abroad and foreign corporation. It also prohibits further transfer of biological resources or the knowledge associated with them by the person who obtained the permission for use to any other person without the approval of the NBA.
However the Act has certain shortcomings that need to be rectified in order to provide complete support and protection to the indigenous people and their traditional knowledge base.
The Act has not defined “Benefit Claimers” in the proper manner. The definition of benefit claimer lays a lot of emphasis on the individual members of the community. But in reality it has been found that the benefit claimers are the entire community not just individual members of the community. The Act has no provision to identify the benefit- claimers in cases where the entire society is the benefit claimer. In such cases there is every possibility that the indigenous people who collectively posses the knowledge regarding the use of a particular NTFP could easily be devoid of any benefit sharing.
Another important flaw in this Act is that it allows Indian citizens and corporations to use the biological resources and knowledge without the prior approval or permission from anyone. They are bound only to give prior intimation to the concerned State Biodiversity Body (SBB).
This provision could have serious implications for the tribals and the indigenous people as the giant Indian corporates could easily exploit these resources and take away the traditional knowledge that the indigenous people posses. Thus there would be no benefit sharing with the traditional people who in reality are the custodians of the traditional knowledge about the various NTFPs. Therefore the need is to make changes in the Act so that the concept of benefit sharing could also be evolved even when biological diversity is exploited by Indians.
The Act needs to be restructured so that the biological resources and the knowledge associated with them are not looked differently from each other. The need is to confer the ownership on the local and indigenous people who collectively possess and have possessed these resources and the knowledge for centuries together.
The Protection of Plant Varieties and Farmer’s Rights Act
The Protection of Plant Varieties and Farmer’s Rights Act is another legislative attempt to protect and nurture our rich bio diversity. This Act is a sui generis legislation that recognizes the rights of the farmer’s in India. This law has been enacted by exploring the sui generis option given in Article 27.3(b) of the TRIPS Agreement.
This law provides for farmer’s rights and it defines the farmer in a broad way comprising not just of the cultivator but also of the conserver of the gene pool or the breeder of new varieties. This law also recognizes the importance of the farmer’s right to sell seeds. This is very important for NTFPs like sal seeds.
The Act has incorporated the principle of benefit sharing. This is a significant step but is at present ridden with difficulties. The system of benefit sharing should be made much more simpler and easier to implement. The National Gene Fund should be the recipient of all the revenues payable to the farming community and the farmers should have the right to decide how this money is to be spent.
The Initiatives at the State Level
The new forest policy of 1988 has made a significant departure from the earlier forest policies that talked about maximizing forest revenue and fostering forest industry. The thrust in the new policy is on ecological stability and social justice. The new policy recognizes the symbiotic relationship between the tribals and the forests and emphasizes on the protection of their rights. This policy talks of chalking out a strategy so as to create space for the participation of forest-dependent women and men in the management of state appropriated forests land.
In order to convert these policies into realities the Central Government issued orders that have led to the adoption of the Joint Forest Management (JFM) in many states of India. The nature and character of these JFMs differ and vary from state to state.
It is felt that this policy would deliver good results in a decentralized model of governance. One of the formal processes launched to announce decentralisation in Indian polity was the adoption of the 73rd Amendment to the Indian Constitution. This amendment was a watershed development in the Indian polity as it institutionalized the three-tier Panchyati Raj structure model of governance. This has been a significant step vis-à-vis the NTFPs as the NTFPs are one of the 29 functions recommended for decentralisation to the Panchayati Raj institutions. The enactment of Panchyats (Extension to Scheduled Areas Act) PESA in 1996 has further given a mandate for decentralized governance. The basic intention behind enacting this Act was to empower the tribal people.
However, this Act is ridden with ambiguities primarily because of multiplicity of legislations and vagueness of policies. The contradictory nature of PESA with other with the new forest policy and the JFM is well evident. The fact that revised JFM guidelines that were issued in 2000 do not even mention PESA is a pointer to the ambiguity that exists in the institutionalized structures. Moreover, the assortment of legislations has further convoluted the picture. The co-existence of PESA with other laws like the Wild Life Protection, Forest Conservation Act, the Indian Forests Act of 1927 has made it difficult to find out which of these Acts prevail over the other.
CFM and NTFP in Orissa
The Community Forest Management (CFM) programme in Orissa has made significant strides in terms of improving forest quality, and enhancing the capacity of the local self help groups to tackle with issues like lives and livelihoods. The CFM programme has enormously helped the process of forest regeneration and this in turn has contributed significantly to the availability of the NTFPs. An increased availability of NTFPs has boosted income of the tribals and of the local indigenous people.
But the problems galore in the form of lack of marketing support by the government. The local tribals still depend on the petty traders and the middlemen and thus are not able to realize the full potential of the NTFPs.
The CFM in Orissa has created a lot of space for the local forest management. This movement has amply demonstrated the power of the local institutional endeavours and management practices. These local endeavours are based on the proper understanding of the local demands and aspirations and thus are able to erect proper strategies for the growth of the NTFPs. These measures are very important in context of globalisation as it arms the local people with the weapon of collective bargaining. The local communities need to be in a position where they could effectively negotiate with the transnational corporations so that they are ensured of those benefits that they deserve.
These local endeavours in the form of CFM have not received the kind of recognition that they deserve from the state. However, the mounting pressure on the government has compelled it to take cognisance of these initiatives. The Forest Department of Orissa Government in 1996 issued a resolution declaring that the area under the villagers’ protection would be village forests and the villagers would have the complete right to maintain the NTFPs within them. This resolution has however remained a dead letter.
The benefit sharing arrangement under the JFM has not materialized. The monopoly and marketing rights over a lot of NTFPs have been leased out to private traders. The local tribals and indigenous people who are supposedly co managers in the NTFP exploration in the jointly managed forest land have not received dues that could be called proportionate to the actual value of the produce. The transfer of control to the Gram Panchyats under the Orissa’s Gram Panchyat Act has remained illusory as the bargaining powers of the NTFP gatherers has not improved.
To counter the challenges of globalisation and economic liberalisation it is pertinent to arm the local institutions and people with the weapon of collective bargaining. This could happen only if the villagers are allowed to play an active role in the local forest management. The CFM programme has amply demonstrated the benefits that could emerge from community involvement in the management of forests.
The sad part is that instead of nurturing and fostering these local initiatives the state has done everything that could be done to retard and derail these initiatives. The JFM model reduces the control of the local institutions and the local population and in essence is quite contrary to the principles of decentralised model of governance. The state through its Forest Department exercises too much control on the forests and the forest resources and the real custodians i.e. the local villagers or the indigenous people do not get the real benefit.
This is not to argue that state should not have any say or role in the management of the forests. The role of the state is very important in this regard especially because the NTFPs have a direct effect on the lives of the local tribals and the indigenous population. The real question is what should be the nature and character of the role of the state. The state should provide a congenial environment for the growth of local institutions and community based endeavours. The local population has lived in close proximity with the forests for centuries and has nurtured these forests like their children. The need is to recognise their effort and diligence in an institutionalised manner so that sustainable economic benefits could be derived from them.
Conclusions
It is important to understand that the state should do everything that is possible to ensure that the real benefits of the NTFPs goes to the local population living near the forests. The threat of multinationals and the Indian industrialists stealing these bio treasures has increased manifold in the era of globalisation. The need is not just to protect but also provide every possible support to the local population so that they are able to counter the forces of globalisation and are also able to maximise the opportunities that globalisation presents. This needs to be done at two levels as discussed in the paper. Fine tuning of the existing laws and policies at the domestic level and the assiduous campaign at the international trading level to make the multilateral trading fair, participatory and accountable.
List of Participants
Regional Workshop on Globalisation, Economic Liberalisation and Indian Informal
17th – 18th July 2003, Bhubaneswar
| 1.
Ms. Neera M. Singh |
2.
Mrs.Vidya Das |
|
3.
Ms. Sumananjali Mohanty |
4.
Ms. Bratindi Jena |
|
5.
Mr. Ashish Raj |
6.
Ardhendu Chatterjee |
|
7.
Mr.Rohini Sahoo |
8.
Mr.Pravakar Adhikari |
|
9.
Mr. Ramesh Ch. Das |
10.
Ms. Jayshree Nayak |
|
11.
Mr. Biswajeet Padhi |
12.
Dr.S.K. Pattanaik |
| 13.
Mr. Abani Panigrahi |
14.
Mr. Ashini Kumar Maharana |
|
15.
Mr. Ranjan Panda |
16.
Mr. Krupasindhu Tarai |
|
17.
Mr. Jirimo Digal |
18.
Mr. Soumya Tripathi |
|
19.
Mr. Sankarsan Hota |
20.
Prof. Radha Mohan |
|
21.
Mr. P. Felix Kerketta |
22.
Mr. E. Basant Minj |
|
23.
Mr. Cornelius Baxla |
24.
Mr. Saroj Kumar Jena |
|
25.
Mr. Jeorge Cheriyan |
26.
Mr. A. K. Patra, ACCF, |
|
27.
Mr. J. P. Singh, G. M. (H. Qs) |
28.
Mr.A.K.Mohapatra, MD |
|
29.
Mr. Bipin Raut, Deputy Director |
30.
Ravindra .K. Agarwal |
|
31.
Mr. D. B. Pattanaik (M.D.) |
32.
Dr. Satyananda Patra |
|
33.
Prof. Bhabagrahi Mishra (HOD) |
34.
Mr. L. Balia |
|
35.
Mr. Nihar Mishra |
36.
Ms. Hitmai Dei Vanashri Mahila Sangathan C/o: Antodaya At/Po: Kaniguma Bhawanipatna Dist: Kalahandi Ph: 91 6660 232038 |
|
37.
Ms. Sumani Jhodia |
38.
G Raju |
|
39.
Ms. Panamani Hembram |
40.
Ms. Singo Beshra, President |
|
41.
Mr. Abhas Panda |
42.
Mr. A. K. Pattanaik - SMPB |
|
43.
Mr. Saroj Pattanaik |
44.
Ms. Sumita Sindhi C/o: P. R. Choudhury Scientist (Forestry) CSWCRTI, MIG – 36, H. B. Colony Sunabeda – 1 Koraput, Orissa Ph: 91 6853 221261 Email: choudhury@sancharnet.in; sumitasindhi@yahoo.co.in |
|
45.
Mr. Ratan Kumar Pani |
46.
Mr. R. V. Singh Convenor Poverty Task Force Planning and Coordination Department Orissa Secretariat Ph: 91 674 2536882 Fx: 91 674 2322619 |
|
47.
Mr. R. K. Sarangi |
48.
Mr. Pravakar Sahoo SGUP At/Po: Lannunipara Dist: Sundargarh Ph:Fx: 91 6625 232270 |
|
49.
Ms. Alisha Bage |
50.
Ms. Sumita Bag Nari Vikas Parishad At/Po: Jamut Via – Guduella Dist. Bolangir |
|
51.
Mr. A. K. Pandey |