Subject: Economics

This editorial discusses various economic and socio-cultural benefits offered by the Geographical Indication (GI) Tagging.

What is Geographical Indication?

• A GI is a sign used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin.
• India, as a member of the World Trade Organization (WTO), enacted the Geographical Indications of Goods (Registration and Protection) Act, 1999 w.e.f. September 2003.
• GIs have been defined under Article 22 (1) of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement.
• GI is granted for a term of 10 years in India. As of today, more than 300 GI tags has been allocated so far in India (*Wikipedia).

Why must we promote GI?

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.

• Lost in history: Most GI are either assigned to the dusty pages of history books or left to rural artisans to propagate and preserve.
• Source of income: Today, with the emphasis on climate change and sustainability, these products can be ready revenue generators.
• Demand in e-com market: A modern distribution system exists in India’s robust global e-commerce backbone which will propel the nascent GI industry onto the national and world stage.

Need for govt support

• 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.

Role of GI in China’s rise

• 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.
• 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.

Socio-cultural benefits offered by GI

• 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 flows 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.

How can GI induce economic transformation?

(1) Promotes Entrepreneurship and ‘Passion Economy’

• 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.

(2) Employment generation

• The labour-intensive nature of GI offers the best solution to boosting the employment-to-population ratio in India.
• India presently has an abysmal 43 per cent compared with the 55 per cent global average.

(3) Women Empowerment

• GI production mostly involves artisanal work-from-home culture.
• Monetising this 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.

(4) Prevents migration

• The hyper-localised nature of GI offers solutions to reverse urban migration and conserve India’s ancient crafts, culture and food.

(5) MSME Promotion

• 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.

(6) GI Tourism

• Another revenue-earner, GI tourism, is typically a by-product of a strong GI ecosystem.

Hurdles in GIs progress

(1) Credit Facilities and Capacity Building

• Since GI businesses are micro, it is necessary to address the challenges of capacity-building, formal or easy access to credit.
• There is a need for forming marketing linkages, research and development, product innovation and competitiveness in both domestic and international markets.

(2) Issue of Intermediaries

• With the shift to digital platforms, the distribution margins of these gate keepers or mandi agents must be competitive.
• They often act as countervailing agents by getting into similar businesses or product lines which will erode GI producer incomes.

(3) Ensuring smoother transition

• 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.

Way forward

• Control: Guardrails like regular audits and consultations with the GI producers must be mandated.
• Cooperative management: Pulling it together will be local GI cooperative bodies or associations which can be nationally managed by a GI board.
• Ministerial support: The Department for the Promotion of Industry and Internal Trade (DPIIT) and the Ministry of Commerce department should be tasked with developing this new sector.
• Digital literacy: Finally, a required skill for GI producers is digital literacy. This should be a priority agenda item for NGOs and stakeholders like the DPIIT.

Conclusion

• 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 recalls and attributes of multi-cultural ethos, authenticity, and ethnic diversity are potential turbochargers for the country’s economy.
• It encompasses the concept of trusteeship, as advocated by Mahatma Gandhi and more recently, by our PM at the UN. It is truly Made in India.

 

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