Standardisation can help bring the unorganised MSMEs into the formal economy, says Rajesh Maheshwari, Secretary General, Quality Council of India. In an interaction with ET Digital, he explains how to go about this and also about how small businesses should adopt green standards. Edited excerpts:
ET: Do you think standards can play a role in bringing unorganised MSMEs into the organised sector?
Rajesh Maheshwari (RM): Standards play a pivotal role in ushering unorganised MSMEs into the organised sector, catalysing productivity, quality and wider market access. By adopting standards and best practices, unorganised MSMEs can improve operations and efficiency, and enhance reputation. Compliance with industry standards provide these businesses access to formal markets, including government tenders and international trade, fuelling sales and revenue. Standardisation, compliance with technical regulations and accredited conformity assessment are the gateway to stronger supply chain integration, facilitating partnerships with larger companies and opening doors to substantial contracts.
The Zero Defect, Zero Effect (ZED) scheme, a flagship initiative by the Ministry of MSME, plays a crucial role in this transition. It focuses on zero defects in products and zero adverse environmental and social impacts. The scheme assists in enhancing the quality and competitiveness of MSMEs, making them better equipped to thrive in the organised sector.
ET: Many standards and certifications like ZED have been introduced for MSMEs along with efforts around sustainability. How has the response been? What have been the challenges for MSMEs to avail these certifications?
RM: With a growing emphasis on sustainability in India, the MSME Sustainable (ZED) Certification Scheme has emerged as a transformative force, under the Ministry and implemented by the Quality Council of India (QCI). The ZED Certification Scheme is leading the way in empowering MSMEs to not only elevate product quality but also minimise their environmental footprint.
The response to this initiative has been phenomenal. More than 50,000 MSMEs have received ZED certifications and more than 1 lakh MSMEs have registered for it. These certifications have enhanced brand reputation, saved costs, expanded market access and increased employee morale. This significant growth can be understood by the fact that in January 2023 to July 2023, the certifications were around 9,008, and now there are more than 58,000.
MSMEs can face some challenges in getting the certification. There can be a lack of technical expertise as sustainable practices and complying with certification requirements may require specialised technical expertise. However, the government is providing benefits to encourage more and more MSMEs to become ZED certified.
MSMEs can also seek other globally accepted certifications of international standards such as ISO 14001 on Environmental Management Systems from certification bodies accredited by the National Accreditation Body for Certification Bodies (NABCB), under an accreditation system established by the government.
ET: What key practices in sustainable standards can India adopt from other countries?
RM: Adopting circular economy initiatives like Germany can benefit India in reducing waste, extending product life cycles and promoting resource efficiency. Besides this, India can also create green building standards, as the US has implemented, to promote energy-efficient construction practices.
India has made significant strides in promoting sustainable standards, as exemplified by the recent global benchmarking recognition of India Good Agricultural Practices (IndGAP). The benchmarking process, overseen by GLOBAL G.A.P. through the National Technical Working Group (NTWG) mechanism and the creation of National Interpretation Guidelines (NIG), has a far-reaching impact, benefiting approximately 12,000 farmers.
NABCB demonstrates compliance to various sustainability requirements and to facilitate access to international markets also provides accreditation to various international certification schemes such R2 Certification Scheme of the Sustainable Electronics Recycling International (SERI), USA for e-waste recyclers; GlobalGAP Certification Scheme of the FoodPLUS GmbH, Germany, for good agricultural practices; Global Organic Textile Standard (GOTS) of the Global Standard gemeinnützige GmbH, Germany, and many more.
ET: What challenges do MSMEs face when it comes to following high-tech standards?
RM: A major challenge for many MSMEs in adopting high-tech standards is the lack of technical expertise and capacity within their organisations. High-tech standards often require a deep understanding of complex technologies and processes, which may not be readily available within small businesses. This can make it difficult for MSMEs to implement and maintain compliance with these standards.
Lack of awareness is also one of the factors. Many MSMEs may not be fully aware of the existence or requirements of high-tech standards. This can be due to a lack of access to information, resources, competence and guidance on compliance. Without proper awareness and support, MSMEs may find it challenging to navigate the complexities of adopting and maintaining high-tech standards.
Moreover, the regulatory landscape surrounding high-tech standards can be complex and ever-changing. This can make it difficult for MSMEs to stay up-to-date with the latest requirements and ensure compliance. Additionally, the interpretation and application of standards can vary across industries and regions, further complicating the compliance process for MSMEs.
ET: How is technology leading the standardisation of MSME products in India?
RM: It allows MSMEs to efficiently address customer complaints and requirements through various communication channels, including email, telephone, and social media. The increasing use of digital technologies in processes and operations has transformed their functioning and led to better integration with global value chains. Adopting energy-efficient systems and use of renewable energy have also led to sustainable practices.
The benefits of technology for MSMEs are manifold. It boosts efficiency, reduces costs, and expands market reach, both domestically and internationally. Given the pivotal role MSMEs play in the Indian economy, the cumulative benefits to the sector result in job creation, revenue generation and improved competitiveness at the national level.
