ONE DISTRICT ONE PRODUCT

By: Kuhuo Bajaj

The One District One Product (ODOP) program, an initiative under the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce & Industry, is an initiative to boost economic growth at the district level by promoting and branding one product from each district of the country. The idea is to leverage the local potential, resources, skills, and culture of each district and create a unique identity for them in the domestic and international markets. Over 1000 products have been selected from all 761 districts in the country. The initiative covers a wide range of sectors, including textiles, agriculture, processed goods, pharmaceuticals, and industrial items.

The original concept of associating a product to a particular district to boost socio-economic productivity was introduced in Japan in 1979 under the policy One Village One Product (OVOP). OVOP was the movement structured by the government but led by local residents voluntarily, based on the concept of developing one village by promoting at least one product where regional resources such as local agricultural products, specialty products, and tourism resources are accepted not just locally but worldwide. After the success of OVOP, Thailand and Indonesia came up with their own versions of the policy. 

Combining these approaches, keeping in mind India's geographical and cultural diversity, Uttar Pradesh launched One District One Product scheme in 2018. The primary objectives of the scheme were to pPreserve and develop local crafts and promote traditional art, increase incomes and local employment which will in turn result in decline in migration for employment, transform local products in an artistic way through packaging, branding and to resolve issues of economic difference and regional imbalance. Uttar Pradesh aimed to make the scheme a model to be replicated at the national level. After successful launch, the scheme was also adopted by Punjab, Telangana, Madhya Pradesh, etc. 

The scheme adopts the One District One Product (ODOP) approach to reap the benefit of scale in terms of procurement of inputs, availing common services and marketing of products. Under the scheme, a baseline study is carried out by the State Government to identify a product for each district. This is based on the district’s existing production patterns, agricultural and industrial categorization, inclination of artisans and scope for infrastructural development. ODOP products are given support for their processing, branding, assaying, storage and marketing. 

Under the scheme, a combination of indirect benefit and Direct Benefit Transfer (DBT) is provided to existing individual micro-units for capital investment as well, but preference is given to those producing ODOP products. A certain margin of the project cost is also paid to the applicants in the form of subsidy to set up the project. Financial assistance is also provided to participate at national and international fairs/ exhibitions for display and sale of their products selected under ODOP programme. Moreover, ODOP also focused on skill development and transfer of knowledge. Skilled artisans are trained through RPL (Recognition of Prior Learning) and are certified through relevant Sector Skill Councils (SSCs), while the unskilled artisans are provided a 10-day intensive training and an advanced toolkit free of cost. 

The One District One Product brings forth numerous advantages, contributing to the holistic development of districts and fostering economic growth. One of the notable pros is the significant boost it provides to Micro, Small, and Medium Enterprises (MSMEs) within each district. By focusing on a unique product from each district, the scheme empowers local businesses, encouraging entrepreneurship and enhancing the overall economic ecosystem.

Craftspeople, artisans, and entrepreneurs receive crucial financial and technical aid under the ODOP scheme. This support is instrumental in promoting skill development, ensuring the preservation of traditional arts and crafts, and fostering innovation in product processing and branding. The infusion of funds and technical assistance not only enhances the quality of products but also helps in creating a more sustainable and competitive market for local artisans. This competition acts as a catalyst for innovation, quality improvement, and increased efficiency in production processes, ultimately benefiting consumers and the overall market dynamics.

The ODOP scheme prioritizes gender inclusivity through the empowerment of women entrepreneurs.Through special subsidies for women entrepreneurs, the scheme enables them to start their own businesses and be financially independent. Further, by formalizing the production of ODOP products, it acts as a safeguard against the exploitation of labor. This not only protects the rights of workers but also contributes to the overall upliftment of the local workforce.  Uttar Pradesh implemented a record 186 reforms spread across multiple areas such as labor regulation, inspection regulations, land allotment, property registration, environment clearances, paying taxes and others.

Most importantly, ODOP eases the barrier of entry for local entrepreneurs and artisans by providing them with the necessary resources and support. The financial assistance, along with skill development programs, reduces the challenges associated with starting or expanding a business, thereby encouraging more individuals to participate in economic activities, reducing unemployment. After the implementation of ODOP, Uttar Pradesh jumped from the 12th position in Business Reform Action Plan (BRAP) 2017-18 to the second position in 2019-2020.

Although the scheme has proved to be beneficial in many ways, it also has its set of disadvantages.  On the ground, there are many challenges — weak infrastructure, limited access to raw material, broken supply chains, poor marketing, and an absence of consensus on what constitutes ‘handicraft’. 

A significant boost in the production of a particular product within a district does not necessarily guarantee a corresponding increase in consumption, exports, or revenue. This misalignment between production and demand can lead to oversaturation in the market, resulting in excess inventory and potential economic losses for local businesses. For instance, although the production of traditional bead necklace from Longding district in Arunachal Pradesh recognizes a traditional and ethnic uniqueness, it has limited contemporary demand and is easily replicated by mass-produced alternatives. Thus the boost in production may not translate into increased consumption or revenue. On top of it all, artisans walk a tightrope between preserving traditional skills and innovating for the contemporary marketplace. Weavers, for instance, often replace expensive raw materials with cheaper imitations, only to end up devaluing their craft and the customer’s experience of it.

Secondly, inadequate market research during the selection of the ODOP product could lead to the production of goods that do not resonate with consumers, both locally and globally. This may also disrupt the existing production patterns of that district as many small producers may migrate to production of the subsidized and supported ODOP product. 

Additionally, transport and infrastructure issues pose a significant challenge for perishable ODOP items. Limited transportation facilities and inadequate infrastructure in certain districts can hinder the sale and export of goods to other markets, affecting the overall success of the scheme. For example, Sitamarhi district of Bihar specializes in Litchee based products, but lacks efficient cold storage and transportation facilities, hence the quality and marketability of these products may be compromised.

The sustainability of the scheme is a critical concern. Questions arise regarding how long the government can subsidize and incentivize the production of ODOP products. While subsidies may initially boost local businesses, a gradual withdrawal of these incentives could pose challenges for entrepreneurs and artisans who have become dependent on government support. The long-term viability of the ODOP scheme depends on a careful transition plan to ensure that businesses can thrive without continuous subsidies.

The One District One Product (ODOP) initiative has significantly empowered local businesses, fostering entrepreneurship and gender inclusivity. Despite these commendable successes, challenges loom, including market misalignment, inadequate research, and infrastructure issues. ODOP's transformative impact on district-level economic development is evident, yet careful planning and continuous evaluation are essential to navigate potential pitfalls. The initiative, rooted in leveraging local potential and culture, stands as a model for economic resilience, emphasizing the need for adaptive strategies to balance the benefits and challenges inherent in boosting regional economies. In navigating these complexities, ODOP has the potential to serve as a blueprint for inclusive and sustainable economic development, contributing to the overall diversity and resilience of the nation's economy.