This article is a subject of my limited knowledge and observations on the concept. This, in no way represents any staunch research. Please refer to the industry reports and the references shared for more details.
Last month I was helping out my mother with the food license renewal process (we have a small packaged drinking water unit). Earlier the designated website was FSSAI (Food Safety and Standard Authority of India), now it has a sister website known as FOSCOS (Food Safety Compliance System). The process is now online, hence both of us decided to try it out on our own, without taking the help of the so called “agents”.
Our license was going to expire on 16th of Jan, 2021, hence we decided to look into this on 13th of Dec, 2020, hoping that the license renewal has to be done prior to one month of the existing expiry date, as usually happens in the offline mode.
To our dismay, we found out that we had already been slapped a fine of Rs 1200 as “Late Fees”. The cost of renewal itself was 3000 bucks! A full hundred rupees fine per day! For an MSME (Micro, Small and Medium Enterprises)!
Long story short, we had to run to the agent thrice to get our existing credentials for the registered account of mom’s factory and to learn more about the inputs and documentation required for the same.
Similarly, it has been difficult to navigate through other government websites, the most recent one being the “Parivahan Sarathi” for Driving License, but that is a different story for another day.
The Govt. of India has digitalised all the manual paperwork processes in the anticipation that the transition from offline to an online mode would be quick and hassle-free, but they surely have not taken many disruptions into consideration. What is the use of having the processes online if you still have to pay a middleman to do things for you? It is not the case with food license, it is the same for BIS (Bureau of Indian Standards) and other licenses as well. The agents take their own share of the commission before passing on the benefits to the government officials responsible for overlooking the license formalities.
You get what you pay for, but you pay a lot here, my friend!
Whenever I open my social media accounts, I see tons of new start-ups basking in the glory of sponsored Ads and “Make in India” campaigns. I applaud the government for taking such a beautiful initiative. This has definitely increased the number of start-ups in the country, that are largely focussed on bringing technology to the grassroots levels. Agritech remains my favourite.
However, when I look at manufacturing industries, the support has been dismal. There has been a lot of buzz around the same but the final output has been negligible.
MSMEs, I feel, are the foundation of this country. India is home to the second largest number of MSMEs, just after China. They are instrumental in job creation for the lower sections of the society. These jobs require unskilled or semi-skilled employees and pay in the range of 5k-20k p.m. Currently, there are 634 lakh small scale units in the country. They either manufacture their own products or are used as franchisee units for larger brands like Bisleri and Cocacola.
I have done the SWOT analysis to help us understand the current market of Packaged Drinking Water in Odisha:
From where I come from, natural disasters are a big issue. Odisha is hit by cyclones, floods and droughts every year. Even though it is experiencing a steady economic growth, there are a host of issues plaguing the small manufacturing sector:
- The rise of local mafia, who do not allow outsiders to do business, and harass the localites as well.
- Erratic power supply. Even while you have electricity, if you don’t have a required voltage, you won’t be able to run your machines. This is particularly an issue during the summer months. And it is unviable for small scale units to have their own transformers.
- A plethora of regulations. A small scaled food processing unit pays nearly 3 lakh rupees yearly as BIS and FOSCOS license renewals. Isn’t this too much? How can we grow if we have to spend a huge chunk of our turnover as licensing fees? (Regular checks by the concerned organisations are done on a semi-annual basis.)
- Lack of laborers. Most of the people are migrating to other states in search of work, as they are paid higher in state like Gujarat and Andhra Pradesh. In Odisha, the state government is paying through their nose for food grains, hence a portion of the working class has lost all the motivation to earn their own bread. It has become difficult to employ workers.
- Lack of support from the State Government
The entire system thrives on the extra money paid to the government officials to bypass the laws and get things done. This is an open secret. If you are honest, you cannot run a business here. Sometimes, I am concerned about the FDIs and the FIIs coming into the country. Maybe this is the reason why other South East Asian nations like Vietnam are suddenly seeming more lucrative to foreign investors now.
MBA has taught me words like sustainable growth and development, brand management and market potential, but there is perhaps no solution to the hardships faced by MSMEs. I can’t afford to change my bottle design immediately to ensure brand identification. I cannot drastically reduce my price to get a good sale. I cannot invest in automated machines till I get good returns from the market. I cannot afford advertising on traditional media. I cannot create brand loyalty.
I cannot do business here if I am strictly trying to walk on a straight line.
P.S. FOSCOS returned Rs 1400 that it had taken as fines, 2 weeks back. Life is not so bad after all 😛