Why ‘One District One Product’ is critical to U.P.

The Yogi Adityanath government in Uttar Pradesh is currently in the midst of a focussed, concerted effort to showcase its development agenda. And central to this initiative is the “One District One Product” (ODOP) scheme for the state’s over 90 lakh micro, small, and medium enterprises (MSMEs). The scheme completes three years in January 2021.

ODOP is the flagship scheme of the government and, by its sheer size and scale, has the potential to generate a major multiplier effect for employment and skill development, providing a boost to the state government’s efforts to project development as its central theme.

A key state government official who has been tasked with ensuring that many of these initiatives take firm shape is 1988 batch Indian Administrative Service officer Navneet Sehgal, who is Additional Chief Secretary, Information, MSME, Export Promotion, and Khadi and Village Industry in the state. Sehgal, who has worked with former chief ministers Mayawati and Akhilesh Yadav, has been handpicked by chief minister Adityanath to ensure the development agenda of the state gets due recognition.

In a lengthy video call with me from Lucknow recently, Sehgal spelt out key elements of the state’s development game plan, and how the government is pushing and fine-tuning ODOP to ensure self-reliance for its MSMEs.

“We have the largest number of MSMEs in the country, and the majority are in the unorganised sector,” Sehgal tells me. “Typically, such industrial units develop around clusters everywhere. So whether it is carpet weaving, handicraft, wooden carving or leather, many of these are very old, traditional industries. Earlier, there was no scheme to encourage traditional units. With ODOP, each district which is known for certain products gets special focus. Over 4 crore people are employed directly in the MSME sector.”

U.P.’s 90 lakh MSMEs account for 14.2% of the total number of MSMEs in the country. With the establishment of around 4.02 lakh new MSMEs, the state’s MSME sector generated direct employment for nearly additional 24.41 lakh people in the last three years. Additionally, MSMEs contribute around 80% to the state’s exports which have seen an increase of 35%, from nearly ₹88,967 crore in 2017-18 to ₹1,20,356 crore in 2019-20, state government figures show.

Fine-tuning ODOP

The objective of ODOP being to preserve, develop and promote local arts, crafts and traditional skill of communities spread across each district of Uttar Pradesh, a lot of hand-holding also takes place between the government and the units.

“For example, the artisans of the old wood carving industry of Saharanpur needed training. Now under the ODOP scheme, we are providing training facilities to them. This will not only improve the products, but will also decrease the production time. Additionally, the programme aims to add to income and local employment, hence preventing migration due to lack of employment opportunities,” Sehgal says.

In some cases, where one area is seen to be the hub for more than one product, ODOP now also allows more than one product to be added under the scheme. Explains Sehgal: “In Agra, while leather is the traditional industry, we found the marble inlay industry is also important there. So that was also added. Some districts, therefore, have two products also now.”

Artisans are now being encouraged to get on board online platforms so that their wares can be showcased to a much larger market, both national and global. Consequently, the first memorandum of understanding (MoU) which the government’s ODOP cell signed was with Amazon.in, and since then there is a concerted effort to ensure showcasing on e-commerce platforms.

Consultants Ernst & Young (EY) are now conducting a diagnostic study of all districts/ products under the ODOP scheme. This apart, EY is also assisting in categorisation of districts and products on the basis of:

Mature districts/products: Those which are stable and require intervention for upgrading the quality to match international standards.

Established districts/products: Those which have high scope of growth and require moderate interventions in infra, tech, and finance.

Budding districts/products: Those at early stages of maturity and require high level of interventions in infra, tech, and finance.

Declining districts/products: Those which have peaked and are declining and need intervention for reinventing and entering the cycle again.

EY is also reviewing the existing policies and regulatory framework, benchmarking and organizing stakeholder consultations, and drafting policies, schemes and implementation guidelines. It is also helping in value chain strengthening, strengthening the skill ecosystem, branding and marketing of ODOP and the products, apart from helping in product marketing and pushing them on social media and other platforms.

Sehgal points out that key tie-ups are being undertaken to fill the gaps in the ODOP product ecosystem. Amazon.in and Amazon Global will help in taking ODOP products to national and international markets, and a tieup with Flipkart.com is also in place for the national market, apart from partnerships with eBay for exports, and National Institute of Fashion Technology (NIFT) to improve the designs of ODOP products.

Bank of Baroda has also tied up with the government for offering ease of finance to ODOP artisans and units, while agreements with National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) are also in place aimed at taking ODOP units to the capital markets. Chief minister Adityanath had also recently visited BSE for the listing of the ₹200 crore Lucknow Municipal Corporation bond on the exchange.

The EODB jump and beyond

The U.P. government has had a good track record as far as recent rankings of the Ease of Doing Business (EODB) is concerned. The state jumped 12 slots in three years to finish at No. 2 in the latest Business Reform Action Plan rankings announced last year.

Sehgal points out that the state implemented a record 186 reforms spread across multiple areas such as labour regulation, inspection regulations, land allotment, property registration, environment clearances, paying taxes and others.

“The investor summit we held in 2018 was very successful and the who’s who of Indian business attended it. MoUs worth ₹4.68 lakh crore were signed, and over 50% of these have been implemented on the ground. That’s not really the success rate we’ve seen in other summits held elsewhere,” Sehgal says. “I make it a point to sit down every 15-20 days and find out the status of these proposals, and whether there are any problems people are facing.”

Sehgal concedes that despite the successes on the development front, the image of the state has somehow not reflected the good work done on the ground. “We may not have communicated these successes effectively to the people at large till now. But we are now making a sustained and concerted effort to communicate to the public that the government is extremely development-oriented.”

Sehgal is also bullish about the state’s film policy which, he says, can be instrumental in bolstering the film industry in the state and attracting investments into it. During Adityanath’s visit to Mumbai late last year, he also met film personalities, including actor-producer Akshay Kumar, and Sehgal says producers like Subhash Ghai, Pahlaj Nihalani, Boney Kapoor, and Manmohan Shetty have visited the state to explore possibilities.

“During our Mumbai visit we also realised many film personalities and producers are from U.P. So there is a connect,” he says. “There is a lot of hand-holding for film producers if they shoot in U.P. We give them a red carpet welcome. We have given ₹3 crore per film back to film producers as part of our subsidy scheme. So there is a friendly government and you get money back as well.”

The Jewar international airport, which is being developed in the state and is being projected as the largest in Asia, can also prove to be a major advantage since the proposed Film City is adjacent to it. Sehgal says not just Bollywood, the state could also turn out to be a profitable destination for producers even from Hollywood. “They can shoot at less than 50 times the cost of what they would otherwise incur. We are not just looking at Bollywood.” The government has earmarked an area of 1000 acres for the proposed Film City, which should be completed in about three years.