Author: Lt Gen Jastej Singh Matharu (Retd)
Traditionally, progress in various sectors has been driven by policy-making. Policies involve setting rules, providing direction, and empowering certain areas of the economy with the expectation that they will follow these guidelines for growth. For instance, in the context of the Micro, Small, and Medium Enterprises (MSMEs) sector in India, numerous policies have been implemented. These policies aim to support MSMEs through various means, such as providing finance, offering incentives for others to purchase from them, and giving them direction for development.
However, despite these policies, the desired results are not always achieved. The policies, while well-intentioned, often have gaps that hinder their effectiveness. For example, financial policies may impose strict requirements for MSMEs to qualify for certain opportunities, such as having a minimum turnover. These stringent criteria can stifle competition and innovation, which are essential for the growth of MSMEs.
In contrast to the policy-driven approach, a new perspective is emerging that focuses on creating ecosystems and networks. Rather than relying solely on policies, this approach aims to build enabling ecosystems that facilitate growth organically. For example, consider the Open Network for Digital Commerce (ONDC). ONDC is not a policy; it is an enabling ecosystem that allows large and small players to come together on a common platform. Similarly, the Government e-Marketplace (GeM) platform enables MSMEs to participate in government procurement by allowing them to place orders and quote for orders. These platforms create networks where competition thrives, enabling businesses to grow based on merit rather than pre-set criteria.
The advantage of this ecosystem-based approach is that it overcomes the limitations of traditional policies. Policies often create barriers to entry, preventing smaller players from participating in opportunities that require a certain turnover or other qualifications. This can be counterproductive, as it discourages innovation and reduces competition. In contrast, ecosystems allow all players, regardless of their size, to compete on a level playing field. Competition, in turn, drives quality, innovation, and better pricing, which benefits both the MSMEs and the entities procuring goods or services.
Therefore, rather than focusing on micromanaging through policies, the emphasis should be on creating systems that are inclusive and allow for healthy competition. Policies should not preclude certain players from participating but should focus on enabling everyone to compete fairly. In such an environment, the best ideas and the most innovative solutions will naturally rise to the top, benefiting both the economy and society as a whole.
In conclusion, for a diverse and innovative country like India, the shift from policy-driven approaches to ecosystem creation could be the key to unlocking the true potential of MSMEs. By fostering competition and innovation through enabling networks, we can create a more dynamic and resilient economy where the best ideas succeed, regardless of the size of the enterprise.
