Micro-enterprises hold key to ‘Make in India’ story

The “Make in India” campaign is aimed at transforming the economy from a services-driven growth model to labour-intensive manufacturing-driven growth. Such a move will create jobs for over 10 million people, who join the workforce every year, according to government officials. The government has identified 25 key sectors in which India has the potential of becoming a world leader, including automobiles, chemicals, IT, pharmaceuticals, textiles, ports, aviation, leather, tourism and hospitality, wellness and railways. The major thrust behind this initiative are heavy industries and public enterprises, while generating employment, empowering secondary and tertiary sector and utilising the available human resource.  However, a nation can only prosper if it adopts a developmental path that is directed towards inclusive growth and generates employment. With this backdrop, the ‘Make in India’ slogan aims at overall growth and prosperity of the nation. As we understand it, the present campaign is not only aimed at ‘Bharat mein Banao’, but towards ‘Bharat ko Banao’. 

In this context, ‘Make in India’ campaign also needs to target and include our traditional and micro enterprises that have operated for centuries. These sectors were at the helm of India’s storied past and could again be cheer leaders of the ‘Bharat ko Banao’ movement. History tells us that till the 18th century India and China were the world’s two biggest economies. By 1700 AD, these two accounted for almost half of the world’s income. After colonisation, the income share of these two neighboring nations dwindled to less than 10 per cent by 1950. Besides, all of us know that traditional industries were primarily fed by micro enterprises in those times.

In order to take a reality check on the state of affairs of these traditional industries and the clusters from where they operate, we went to Aligarh to carry out our field work to investigate their business models and practices. It was a search into their innovative practices, entrepreneurial ability and sustainable models, which may be replicated for other clusters. Aligarh, a small district town in Uttar Pradesh, is known all over India for its famous lock making industry. Almost every family in the traditional streets here runs a small lock production unit or is associated with this line of work. According to the District Industries Centre (DIC) records, there are about 1,100 registered lock-manufacturing units in Aligarh. Among them are large corporate players like ‘Godrej Locks’ and ‘Link Locks’. However a majority of these are very small units, with sometimes as few as three/four workers. Few of these are registered with DIC, because owners do not want get involved in doing the rounds of government offices, or pay taxes that registration would entail. There are actually around 12,000 units that are run out of homes. Families of these manufactures are engaged in the same business. These techniques were acquired from earlier generations. But continuous losses and exploitation by middlemen and traders has forced them to shut down their traditional business. Entrepreneurs are increasingly becoming redundant and the lock making business in Aligarh is on the verge of closure. According to a member in the lock-key association till some time ago, “Aligarh used to supply 95 per cent of the locks in India”. While Aligarh still remains India’s biggest lock-making hub, the industry is clearly in decline. This industry, which is estimated to be around Rs 900-crore (including brass components) in 2012, is declining by 15 per cent every year. Exports, which until five years ago constituted about 40 per cent of the turnover, now stand at  25 per cent.

Our team observed that some of these lock making enterprises have already shut down their business because of the continuous neglect and lack of institutional linkages over the years. Contributing factors to its decline include lack of technological know-how and innovations, the onslaught of Chinese locks that are around 40 per cent cheaper than those made here, and increasing labour problems. Poor working conditions that trigger diseases, has affected their efficiency. Even basic working facilities associated with a manufacturing unit like erratic electricity supply, bad road networks, skilled workers and financing arrangements are dismal. Problems associated with infrastructure and other facilities of traditional clusters are understandable as they spread across the length and breadth of the country including remote pockets. Hence, it is difficult to recognise and reach out to each one of them. Surprisingly though, Aligarh faces these issues despite being India’s largest lock making cluster that is located in the close proximity of the national capital. Such drawbacks also hamper the manufacturing process. The workers are untrained and even unaware of any institutional mechanism that provides support for training and skill development. Further, skilled workers are leaving their current vocation to earn a better livelihood, as mobility has become much easier in present times.  The government has setup an incubator for Aligarh by National Small Industries Corporation (NSIC). It is mandated to provide various schemes related to technology assistance, market assistance, bank credit facilitation, marketing intelligence, etc. 

However, micro enterprises are barely aware of these facilities and schemes on the ground.

Interruptions in the institutional linkages are manifested in lack of innovation and technology up gradation, failure to arrange funds, attract investments and outreach support programs from different agencies. Even after facing these obstacles during the manufacturing process, some of these brave functional micro enterprises face the additional problem of marketing their products. Inadequate marketing skills and lack of institutional support have not helped them to survive competition from large scale industries and Chinese products.

To aid in the growth and development of these micro enterprises and household karkhanas, it is essential to deal with all the above problems. It is indeed imperative for agencies and institutions to provide requisite support and work in close cooperation with these micro enterprises.  Proper working and living conditions must be ensured. The clarion and timely call of the Prime Minister’s ‘Swachh Bharat Abhiyan’ might work as a tonic for the improvement of sanitation facilities along these localities, which ultimately results in better living conditions for workers. However, regular electricity supply, roadway networks and training should be provided. Child labour must be eradicated for a better future. Facilities for easy availability of funding must be ensured by the state. Besides funding, the risk exposure of these enterprises, as explained by owner of a fairly successful unit, clearly reflects the state of affairs. “Besides uncertainties of the market, the biggest challenge before us is in connection with safety of our workers. Due to the nature of our work, workers are susceptible to injuries to their hands in general and fingers in particular. Unfortunately, we do not have any insurance cover for attending to bigger mishaps caused by accidents like chopping of fingers or hand in the machines. Neither we could afford the medical cost nor are there any state sponsored mechanisms that attend to these needs. So we operate under a constant threat and pray that no unfortunate incident happens in my unit,” he said.

In order to make them sustainable these enterprises require government support, linkages with institutions for development of R&D and innovations, proper awareness and holistic training (With inputs  from members of DU Innovation Project SBS(E)-203 Team, Shaheed Bhagat Singh Eve College)