Local economic development is integral for building sustainable and competitive enterprises in India

Opening address by Ms Dagmar Walter, Director, ILO DWT/CO-New Delhi at the inter-country policy dialogue for Andhra Pradesh and Odisha under the Promoting Sustainable Enterprises in India (PSEI) project.

Statement | Online Meeting | 28 January 2022
Respected Secretary Mr. Swain, Ministry of MSME, Government of India

Mr. Karikal Valaven, Special Chief Secretary to State Government of Andhra Pradesh

Ms. Ranjana Chopra, Secretary, MSME, State Government of Odisha

Officials from the various departments of the State Governments of Andhra Pradesh and Odisha

Representatives from the employers and industries, in particular, the MSMEs in India

Madam Destri Anna Sari, Director of Business Consulting and Mentoring, Ministry of Cooperative and SMEs, Republic of Indonesia

Dr. Md. Mafizur Rahman, Managing Director, Small and Medium Enterprise Foundation, Government of Bangladesh

Mr. Woochan Chang (donor) KOICA representative. And further representatives from KOICA.

Distinguished Speakers on the programme,

Participants from India, Bangladesh, Indonesia, South Korea, and Vietnam,

Ladies and gentlemen.

Namaste and Good Afternoon!

It is my sincere pleasure to welcome you all to this multi-stakeholder policy dialogue on “Building a market responsive, resilient, and inclusive MSME ecosystem for job rich and sustainable growth”, organized in collaboration with the State Governments of Andhra Pradesh and Odisha. The dialogue, supported by the Korea International Cooperation Agency (KOICA), is being organised at a time when the global economy is reeling under yet another COVID-19 wave, as Omicron has triggered market disruptions, alongside the health crisis.

Last year was solemn, yet significant, as 187 member states adopted the Global call to action for a human-centred recovery from the COVID-19 crisis during the International Labour Conference in June. The call substantially strengthens worker and social protections and supports the creation of sustainable enterprises, and it was also endorsed by the UN General Assembly, as well as by the BRICS Ministerial meeting that India presided over in 2021.

To translate this into action, the ILO is assisting its constituents in member states, including India, to adopt enhanced policies and make investments that support a broad-based, fully inclusive recovery. Technical support in developing and implementing local economic development or LED strategies is integral to achieving a job-rich growth. Since 1919, the ILO has been offering its expertise on LED strategies, which include private sector development approaches and tools such as value chain development, linkages with microfinance institutions, skills development, institutional capacity-building and green jobs.

We must do “more with less”, as economies shrink as a fall out of COVID-19. As recovery is unequal within countries, the strategy matters now more than ever. A ‘market systems development’ approach can help tackle the underlying causes of market failures to build back better and more resilient. Concerted efforts are required to facilitate the transition of informal enterprises into formality which will pave the way for a more dynamic economy that is economically and socially inclusive, and which generates revenues and investments that can be channelled back locally.

The impressive narratives behind the growth trajectory of newly industrialized Asian economies and emerging giants are centred around their innovative local development strategies. It has offered them opportunities for formulating multifaceted and comprehensive approaches to upgrade productivity of economic units, diversify, and move upward in value chain.

The policy dialogue today, will provide some glimpse of this and will bring in insights and learnings from four countries that already have or are currently, successfully orchestrating structural transformation in the economy. South Korea is a highly developed economy driven by MSMEs and is a global leader in electronics and automobiles. Resilience demonstrated by the Korean MSMEs in aftermath of COVID-19 has attracted the attention of policy makers globally. Speaking along with Korea will be the emerging economies, Bangladesh, Indonesia, and Vietnam, which have registered phenomenal performance in recent years and established themselves as global sourcing hubs for textiles, ready-made garments, and leather. Now, they are eyeing the fisheries and horticulture sector. These economies have promoted entrepreneurship and improved productivity and working conditions to enhance MSME competitiveness; innovation; and digitalization to emerge as sectoral leaders. The policy dialogue will provide a platform for peer-to-peer learning and exchange, intended to facilitate local adaptation of relevant global practices, by Andhra Pradesh and Odisha, especially against the backdrop of COVID-19 and return migration.

The country cases, as we will hear today, underscore that the strength of policy intervention lies not only in its design but also in the capacity and will of the implementing agents to convert the planned strategy into tangible action.

This is the focus of the ILO PSEI initiative in Andhra Pradesh and Odisha. The initiative aims to support both states in three areas. First, with the effective design and implementation of MSME policy initiatives. The second being the development of entrepreneurship and start-ups in the missing segments of value chains in the food processing, and the garments and textiles sectors. And third, to upgrade management practises of MSMEs in the two sectors to improve productivity and working conditions for integrating them into the global supply chain. The ILO, in collaboration with South Korea, will facilitate increased integration and network relationships in the form of linkages to markets, buyers and MSME suppliers, and business clusters; improve the efficiency in product and service creation; and promote formalisation to support access to untapped markets with the primary objective of boosting job-rich growth. The aim is not any jobs, but quality jobs.

In conclusion, I would like to say that COVID-19 presents both challenges as well as opportunities for economies to reconfigure their growth strategies, products, services and business models in light of the ‘New Normal’. This can be achieved only with a conducive business environment, and a supportive entrepreneurial and innovation ecosystem, which fosters investment in human capital and espouses decent work. It’s time for concerted efforts by the market actors – the government, the industry or employers, and the workers – to come together for adopting localised solutions.

I look forward to the deliberations today and hope this policy dialogue will make useful contribution in the State-level MSME policy making.

Thank you for your attention!