CENTRE for POLICY ANALYSIS

CENTRE for POLICY ANALYSIS

“Social progress can be measured by the social position of the female sex” - Karl Marx

ARTICLE


Geographical Indication - India's Untapped Resource


A significant number of agricultural goods or handicraft goods are eligible or recognised under the Geographical Indication (GI) of Goods Act, 1999 as GI, but either their implementation or recognition processes are ineffective for the actual recognition. The government of India launched 'Make in India' in 2014 to boost local production, but in fact the initiative seems to be unfavourable to local production, as it has opened the door to 100% foreign direct investment (FDI) in most of the sectors. However, there is tremendous potential associated with it for generating sustainable employability, or a source of stable income for residents of India.

25 sectors have found a place in the grand 'Make in India' initiative, but there are hardly any initiatives to incentivise the utilisation of local potentiality in the agricultural sector or in handicrafts. However, two sectors indirectly linked to the agricultural and handicraft sectors have found a place in 'Make in India' – food processing and textiles and garments – but the policy mandate does not include small-scale industries in these locally driven sectors.

Approximately 50% of the total working population in India works in agriculture or allied activities. Census 2011 reported that 968 villages are uninhabited and 3.36 lakh houses are locked in 13 districts of Uttarakhand. This report highlights the lack of employability and basic facilities (the lack of a stable source of income) as the main causes of rural to urban migration. So any action for the betterment of these sectors will have a direct impact on half the working population.

According to the TRIPS (Trade Related Aspects of Intellectual Property Rights) agreement, "Geographical indications are indications which identify a good as originating in the territory of a Member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin" (Article 22.1, World Trade Organisation, 1995).  

In present times, people are obsessed with brand consciousness because a brand is seen as a carrier of quality and value. Whenever a customer buys a product of a specific brand, the value of the brand is always kept in mind. If the value is not intact with the products, it means that the producer will lose customers. For example, Darjeeling tea and Banarasi sarees are two world-famous items known for local quality or local brand.

It is evident that agricultural products or handicraft goods, termed as 'experience goods' because their quality cannot be judged before using them, are best suited to geographical indications. In the case of experience goods, asymmetric information exists between buyers and sellers, which causes the problem of 'adverse selection', where low-quality products drive out high-quality products from the market (Akerlof 1970). This can be termed a specific type of market failure, which needs some sort of government intervention. India will benefit from significant government intervention in this issue that would give more accurate information on the attributes of such products, so consumers can make better purchasing decisions. In this regard, geographical indications can function as an important method of market signalling, to assure the quality of the product, and thus reduce the degree of asymmetric information between buyers and traders (Josling et al 2004, Rangnekar 2004).  

GI has been recognised as property rights under the WTO's TRIPS agreement. Within it, states have been given rights to bring legislation for defining GIs. Unless a state brings legislation for protecting a particular GI domestically, it will not be able to claim protection for it in other parts of the world. There is a provision in the TRIPS agreement saying that products will not be protected as GIs unless or until they are registered within their respective country. Under Article 23 of the TRIPS agreement, however, wine and spirits have been given universal coverage, which means they no longer need to register in a respective country for protection. The formation of a multilateral register is mentioned in the agreement, but a lack of procedural clarity among member countries over keeping a register at the WTO has delayed the same. The carrot and stick policy of developed countries and unprepared developing countries did not allow them really to negotiate better GI protection for agricultural and handicraft goods. Since India enacted the law in 2003, it has been seen that a lack of supporting documents is typically the cause of rejection. Handicrafts workers or even those who are doing agricultural work are either just literate or largely illiterate. As a result, their level of awareness about legal protection of their traditional knowledge is very limited. Those who do know are not able to provide enough justification for registration. A current example is Merrut scissors community, which submitted an application that was rejected due to insufficient documents. Currently, the intellectual property appellate board shows 264 pending applications, 13 abandoned, 6 withdrawn, and 12 refused, while 323 have been registered.  

The central government should bring in legislation to strengthen the GI Act. A system should be created for strengthening the documentation process, so that concerned communities are not denied GI registration. The central and state governments should take part in providing selling platforms for these indigenous products, because leaving them to the market system will not help them find their place. These goods are less competitive in comparison to those of corporate companies, it terms of marketing, advertising, and reach among potential customers. Leaving the documentation processes in the hands of the concerned communities only discourages them from reaching the markets. Even filling the application at the Geographical Indications office is costly, along with the bureaucratic hurdle in finalising the process of registration. Unless the government is pushed for a quick solution to these problems, bureaucrats tend to delay.    

To understand how government initiative would be helpful for cultivating a community of agricultural or handicrafts producers, or any other products, we can look at the Ethiopian government's initiative, which has been benefiting the indigenous community. The Ethiopian Commodity Exchange (ECX) is the centralised trading agency that regulates coffee marketing in the country. It was established in 2008, and is mandated and required to generate a marketplace which "serves all market actors, from farmers to traders to processors to exporters to consumers." The Exchange looks after quality control and works as a channel between local collectors, wholesalers, exporters and foreign importers, through a competitive command system (ECX, 2011b).

While the ECX has provided a trading mechanism for selling all types of coffee, whether made by producers large or small, it has been bypassed by some farmers' cooperatives and large-scale producers (Oguamanam & Dagne 2014, 84). However, a report by the ECX in 2011 reflected that prices of coffee range between US $2.01 and 2.04 per pound, when sold by the ECX system, whereas coffee sold outside (by cooperatives or large scale growers) was only getting US $0.20 (ECX, 2011a).      

A centralised agency will be beneficial to Indian producers of GI products because it would signal the rights of products of specific regions and recognise traditional rights. At present, small-scale producers of these goods are unable to reach the market as they are located at a distance from it. As a result they can't reach consumers directly. Middlemen for these goods either delay their quick delivery, or mislead consumers, because there is no guarantee of genuineness.

Secondly, producers of GI are unaware of the advertising system, except for Darjeeling tea and basmati rice. So their packaging, processing and selling system are old which can't stay in competition to the substitute.  

Third, although a Darjeeling Tea Board has been created, it is not taking care of workers in the sector. The Darjeeling Chronicle reported on September 2, 2018 that workers were working in a feudalistic bonded labour system, where they are being paid just Rs 132 per day. This completely destroys the concept of geographical Indication, whose purpose is to empower workers, not middlemen.    

To meet the needs of small-scale producers, including individual family-based productions, the Indian government should create a platform involving the states. It will be a step forward for the GI Act of 1999, as government agencies will assist in the required documentation process for GI recognition, as well as advertising and selling in the market. Not only would such an agency document the historical factsheet of particular products, it would bring them into the market from remote areas. In this way, the government will be able to generate sustainable employment, meet the rising demand for local and organic foods, and reduce rural to urban migration.  

In 2014, the people of India elected the Bharatiya Janta Party led by Narendra Modi to power, with the hope of seeing a better future for employment, development and the eradication of poverty, yet the government has not tapped this incredible opportunity. While the Commerce Ministry of India has come up with the idea to install GI product stalls in all Indian airports, the initiative represents only a partial fulfilment of the goal, as it will help only those GI products that are already on the market, without government support, such as Darjeeling tea, Tirupati laddus, Banarasi sarees, and Basmati rice.  

A vast, abundant "Invaluable Treasure of Incredible India" is left in darkness, with no hand to support them. The use of GI with a rigorous government system in place would improve the lives of many Indians by providing them much needed support.  


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