ODOP: The key to unlocking India’s potential of exports?

With the experience in Uttar Pradesh as inspiration, ODOP has shown the promise to emerge as a major catalyst of export growth across districts. This blog examines the successes made by the scheme so far, and possible adaptations that can help it work on a pan-India level.

• India’s districts brim with diversity and offer it kaleidoscopic opportunities to emerge as a significant exporter of numerous products in the world. This has been the idea behind the One District One Product (ODOP) initiative.
• Seen as an extension of Make in India, the ODOP scheme will give fillip to domestic manufacturing, generate employment, encourage self-reliance, support rural entrepreneurship and fuel the growth of India’s economy by converting districts into export hubs.
• The example from Uttar Pradesh, the first state to implement the ODOP scheme, shows that with the targeted intervention and effective implementation, ODOP can be the missing key to unlock India’s full export potential.
• However, the policy should address some imperative concerns; for example, how can it be aligned with other policies, how are budgets allocated at a time when the country is cash strapped owing to the pandemic, how are products selected and so forth.

India is a land of diversity, brimming not only with a rich culture and heritage but also with different agro-climatic conditions, physiology, arts and crafts and variations in flora and fauna. Thus, each of the 718 Indian districts offer it kaleidoscopic opportunities to emerge as one of the top exporters of the world. This has been the idea behind the government’s One District One Product (ODOP) scheme.

Aimed at promoting the indigenous products of the country abroad, the ODOP scheme will give a fillip to domestic manufacturing and the country’s economy by converting districts into export hubs. The policy strives to reap the benefits of scale in terms of procurement of inputs, availing shared services and marketing of products.

ODOP will provide to its stakeholders a framework for value chain development and the requisite infrastructure. It will also fuel the growth and prosperity of rural regions by generating employment and rural entrepreneurship. To this end, it seeks to make India self-reliant (Atma Nirbhar) and reduce imports. So far, 106 products have been identified from 103 districts across 27 States and Draft Export Action Plans have already been prepared for 451 Districts. At a time when the country is struggling with the challenge of reviving the economy (which has been battered by the pandemic) and reimagining its future growth trajectory, ODOP could prove to be a game changer.

ODOP: Learning from the best?

Government of India’s One District One Product (ODOP) scheme emulates the state of Uttar Pradesh, the first state to implement the ODOP scheme. The state of Uttar Pradesh drew inspiration for this scheme from ‘One Tambon (meaning sub-district) One Product’ & Japan’s One Village One Product (OVOP programme). As IIM Lucknow’s Professor D. Tripati Rao opines:

The UP ODOP scheme with its initial success has become the role model to scale up to the national level. The scheme is considered to be a huge hit for the unique focus it lays on UP’s grand diversity in multiple artistic facets; given its large size and population. The government of UP is aiming to leverage its dominance and uniqueness of craftsmanship and artistry through this scheme.

Uttar Pradesh has 75 districts spanning across a a geographical expanse of 240,928 sq km and hosting a population of 204.2 million people. It encourages local produce exclusive to the region (some of these products are GI tagged) like ‘Kala namak’ rice from Siddharthnagar, jaggery from Muzaffarnagar and pulses from Gonda. At the same time, specialized products and crafts are encouraged too. Examples include the rare and intriguing wheat-stalk craft from Bahraich, world-famous chikankari and zari-zardozi work on clothes from Lucknow, Bareilly & Baduan and the intricate and stunning horn and bone work from Sambhal.

To enhance the export of these products, some of the interventions being done are establishing Common Facility Centres (CFC), offering them financial and marketing development assistance and skill development to ensure that the products are truly world class. Further, a SWOT analysis is done to ensure that the weaknesses of each district can be resolved and a district action plan is prepared accordingly.

The experiment has yielded encouraging results. For example, Agra has been identified for its leather exports. The government found that a major chunk of leather exports from the city were being rejected in Europe, owing to the lack of European level accreditation. To rectify this issue, a testing lab of matching standards has been established in Agra and monetary support was also given for the same. This was a turning point, which significantly reduced the rejection of the leather exports and boosted exports.

Another example is that of Sambhal. Prior to the intervention, the bone products were shipped to China for final finishing. To reduce the dependency on China & saved costs, a machine was set up at the CFC in the city and the artisans were trained to use it, so that they could produce quality products themselves. The same has been the case with the brassware industry in Moradabad.

Further, to keep up with the changing times, the government has signed MoUs with e-commerce platforms like Amazon India & ebay. It is estimated that 50,000 products worth INR 24 crores were were sold on Amazon in FY 2018-19 & 28,000 youths were employed through it.

Navneet Sehgal, Additional Chief Secretary, Information, MSME, Export Promotion, Khadi & Village Industry, Govt. of Uttar Pradesh states:

The UP government has made efforts to augment their presence on many of e-commerce platforms like Amazon and eBay by signing MOUs with these institutions. This enables their products to be represented on these online channels of sales. And we have also got our own e-commerce platform for ODOP. All these initiatives have helped us to increase our exports by 38% in the last three years.

Yellow light: Questions for a better tomorrow

While ODOP is proving to be the light at the end of the tunnel in these dark times for the state of Uttar Pradesh, there are quite a few key concerns that need to be factored in when it comes to scaling up the scheme. The first question that arises is that how will state governments allocate budgets for this scheme at a time when they are struggling with more immediate challenges like securing vaccines for their inhabitants. Some states might deem this expenditure as unnecessary and this might push the scheme on the backburner for now.

Secondly, focusing on just one district for one product may have its limitations. For example, what would have happened if all the oxygen in the country came from just one or two cities? This can create serious demand & supply imbalances in the country. Also, how are these products being selected? In the context of gem and jewellery, for example, there is potential to develop Surat for cut and polished diamonds; Bagalkot, Madurai & Kolkata for gold jewellery, Azamgarh, Firozpur and Sitapur for silver and gold; and Thrissur for plain and studded gold jewellery in Kerala. Colin Shah, Chairman, Gems & Jewellery Export Promotion Council, explains:

GJEPC’s recent cluster mapping study of the gem and jewellery industry undertaken with National Council of Applied Economic Research (NCAER), has identified 390 districts of India as G&J clusters. As of now, only Jaipur district in Rajasthan has been included in the ODOP scheme for the gem and jewellery sector. Similar to Jaipur there are several other districts with gems and jewellery clusters which, if included in ODOP scheme, can be of great potential to boost the economy.

Agri entrepreneur Chalasani Bhaskar suggests that setting up of clusters may be a better bet for certain products. Also, trade should be conducted between these states to meet demand and supply gaps. This would promote greater self-sufficiency. The surplus can then be exported.

Thirdly, the industry would do well if ODOP scheme is aligned with some of the other schemes in the country. Dr Arpita Mukherjee, Professor at ICRIER, suggests, for example, that model ODOP can be used to promote eco-tourism and attract foreign investments. She also believes that the exports of GI products can be augmented through ODOP scheme. She says:

From marketing perspective some model districts can be developed which can be showcased to foreign clients. These can be linked to eco-tourism can well. Also, many products in India are GI tagged. More products can be under GI through this scheme. 

Lastly, while the government is doing well to impart skills training to the youth through the ODOP scheme, it needs to be ensured that these are in sync with the changing needs of the industry. Training the trainers is therefore equally important to ensure the employability of the youth.