Business Ecosystem for Local
Green
Enterprises in India
An
enterprise irrespective of its size and scale is a small unit of a more
complex system. In order to comprehend the challenges faced by these
units, a zoomed-out approach to paint a macroeconomic portrait is the
first step. The term “business ecosystem” is a network of several actors
whose decisions, choices and actions affect enterprises. This becomes a
graver challenge, if these enterprises are smaller in scale referring to
Micro, Small and Medium Enterprises (MSMEs). There is data to support
that these units comprise a huge share of private businesses across the
globe accounting for greater part of the employment (Reeg et al., 2015)
with the potential of being inclusive and green. This leads to creation
of local jobs boosting the economy as a whole. In India alone, MSMEs
showed a growth of 13.9% in net jobs created over the last four years (CII,
2019). This data indicates the pivotal role played by MSMEs in
generating employment with the capability of being the key to solutions
targeting integrated development including resilience building and
environmental sustainability1. In other words, these have the potential
to become Local Green Enterprises (LGEs) which are essentially MSMEs
which build their models on principles on resource efficiency and
circular economy.
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In India, there are several structural
challenges that these LGEs have to face on a regular basis. To
understand these, it is necessary to map out the actors in the business
ecosystem for LGEs in India.
Below are the major actors in India with their roles and functions:
1. Government – The Government
includes ministries and regulatory bodies. The relevant ministries
identified in the LGE ecosystem in India include the Ministry of MSMEs (MoMSMEs),
Ministry of Finance (MoF) and the Ministry of Environment, Forest and
Climate Change (MoEFCC). The role of the Ministries would be frame and
put policies in place. On the other hand, regulatory bodies are mandated
to ensure that the policies put in place by the ministries are
implemented in a manner that is most effective. The National Small
Industries Corporation (NSIC) and the National Institute for MSMEs (NIMSMEs)
are relevant regulatory bodies to name a few.
2. Corporations – Industry consists
of corporations which provide a platform for networking and building
consensus with like-minded enterprises and organisations cross cutting
across various sectors which help build an enabling environment for LGEs.
The major ones in India include Federation of Indian Chambers of
Commerce & Industry (FICCI) and Confederation of Indian Industry (CII).
There are also large corporations which have the band-width to make
their value chains sustainable. They push demand for sustainably
procured products/services top-down towards the extreme end of the
value-chain with LGEs as suppliers. A few large corporations in the
Indian market currently in the sustainable value chain space include
ITC, L&T, TCS etc.
3. Support Organisations – LGEs require support of various kinds.
There are organisations with act as Incubators which hand-hold LGEs from
the starting point till they mature. A few examples include SFURTI and
CDP which fall under the MoMSMEs, FMC, KVIC and IMEDF. Another important
type of support organisation includes Aggregators which act at the meso-level
bringing several LGEs together to share experiences, learning and find
solidarity in coming up with innovative solutions. The Honey Bee
Network, udyaMe and core support groups of SEED (DST) are a few examples
of LGE aggregators in India. Policy research institutions, think tanks
and civil society organisations like SEED-finance, UNIDO and Development
Alternatives are a few examples which help analyse the policies of the
government, conduct need assessments on ground and study the reasons for
the gap and work towards bridging those ensuring that the voices of
local entrepreneurs reach the policy makers.
4. Educational Institutions – These
include training institutes and universities. Training institutes’ help
entrepreneurs develop new skills and provide support in surviving the
fast changing market. A few examples in India include MDI, ILO India and
MSME Tool Room. In order to nurture the spirit of entrepreneurship,
various universities in India offer courses and are also integrating it
as an elective in the curriculum. IRMA, Anand and XLRI, Jamshedpur are a
few universities in India that fall in this category.
5. Financial Institutions (FIs) are
the most crucial actors in the ecosystem for LGEs to start, sustain and
flourish.
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Development Finance Institutions
(DFIs) are specialised development banks or subsidiaries set up to
support private sector development in developing countries. They are
usually majority-owned by national governments and source their capital
from national or international development funds or benefit from
government guarantees. This ensures their creditworthiness, which
enables them to raise large amounts of money on international capital
markets and provide financing on very competitive terms (OECD). Examples
are SIDBI and NABARD.
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Non-Banking Financial Companies
(NBFCs) are companies in the business of acquiring
shares/stocks/bonds/securities and providing loans, advances to anyone
looking for credit including LGEs (RBI). These are alternative lending
models which have adopted modern technology for processing of loans and
underwriting of credit. Examples are Bajaj Fin Corp, Muthoot Fin Corp,
Mahindra Finance
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Public and Private Banks – A
bank is an organisition either public or private which provides safety
to its customers’ money and is a source of credit for many including
LGEs. Examples are SBI, PNB, UCO bank, ICICI, HDFC etc.
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Microfinance Institutions (MFI)
are organisations which provide a banking service to individuals and
groups (cooperatives etc.) with low-income, lack of collateral or little
access to financial services. Examples are Annapurna Microfinance Pvt.
Ltd., Arohan Financial Services Pvt. Ltd., Asirvad Microfinance Pvt.
Ltd. etc.
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Endnote:
1 PEP Working Group on Green
Micro and Small Enterprises
Stella George
sgeorge@devalt.org
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