Development and Governance

Tag: Ethical supply Chain Management

  • Ethical Consumption and Indian Industry 2.0

    First published on 8 February 2015

    I started this blog to counter the current Indian Government’s proclivity for mega pronouncements without thinking through the implications. The latest buzz phrase is ‘Make in India’. But make in India for whom? The domestic consumer or the European and American consumer, where India hopes to replace China as the key provider of the basic essentials of life?

    Update 1:

    Despite various bans and boycotts imposed by the Government of India on Chinese goods following a border clash, Indian imports from China in 2021 reached a whopping $97.5 Billion, a 30% rise from 2019. Moreover, these imports are largely ‘manufactured’ goods like electrical and mechanical machinery, auto components, pharmaceutical ingredients, and medical supplies like oxygen concentrators and PPEs.

    So much for ‘Make in India’…

    India is also not able to compete in export markets for manufactured goods because of its relatively poor infrastructure and tedious red tape, widespread petty corruption, an ill-educated workforce (by international standards) and the prevalence of child labour and forced labour somewhere in every corporate supply chain, which creates a very negative image of the country in the minds of the western consumer, who is tech-savvy, globally connected, well-informed and increasingly believes in conscious consumerism.

    Update 2:

    Need for Regulating Supply Chains

    In the early years of this century, the movements for ethical supply chain management gathered momentum, and every time there was a furore in the western media about environmental damage, animal experimentation, poor labour practices, or unsafe working conditions anywhere down a long and trailing multinational supply chain, the most high-profile retailer bore the brunt of boycotts and protests. This was unacceptable in economic terms and extremely expensive in transnational legal terms, and so a global standard had to be put in place to assure ethical supply chain management.

    The best known of these is the SA8000 initiated by Social Accountability International, a US-based non-profit. The SA8000 looks at human rights in the workplace, worker safety, child labour and forced labour and other issues, based upon ILO guidelines, the UN Declaration of Human Rights, and the UNICEF Convention on Rights of the Child.

    Its 9 principles for certifying a business as SA8000 compliant are:

    1. Child Labour: No child labour; remediation of any child found working
    2. Forced Labour: No forced labour; no lodging of deposits or identity papers at employers or outside recruiters; no trafficking
    3. Health and Safety: Safe and healthy work environment; system to detect and prevent threats to health and safety; regular health and safety worker training; access to clean toilet facilities and potable water
    4. Freedom of Association and Right to Collective Bargaining: All personnel have the right to form and join trades unions and bargain collectively; where these rights are restricted under law, the company shall allow workers to freely elect their own representatives
    5. Discrimination: No discrimination based on gender, race, caste, origin, religion, disability, sexual orientation, marital status, family responsibilities, trade union or political affiliation, or age; no sexual harassment
    6. Discipline: No corporal punishment, mental or physical coercion or verbal abuse
    7. Working Hours: Compliant with applicable law, but, in any event, no more than 48 hours per week with at least one day off following every six consecutive days or work; voluntary overtime paid at a premium rate and not to exceed 12 hours per week; overtime may be mandatory if part of a collective bargaining agreement
    8. Remuneration: Wages paid for a standard work week must meet legal and industry standards and be sufficient to meet the basic needs of workers and their families and to provide some discretionary income
    9. Management Systems: To earn and sustain certification, facilities must go beyond simple compliance to integrate the requirements into documented management systems and into their supply chain, including complaints response, workplace dialogue, and stakeholder engagement.

    Compliance with SA8000 includes compliance with ILO conventions, local and national law, openness to worker concerns, and a commitment to continuous improvement. Research I undertook in 2012 threw up the following interesting facts about the 614 SA8000 compliant businesses in India at that time:

    • The most common businesses opting for SA 8000 were small and medium enterprises, (the reasoning is that large, heavy manufacturing businesses already have the statutory framework in place in compliance with the existing labour legislation in India, and therefore do not require an SA 8000 type of certification for their international trade activity).
    • Most of the SA 8000 certified Indian businesses are essentially part of the supply chain of large multi-national retailers, who insist on such certification, while domestic retailers seldom do
    • Most of the SA 8000 certified Indian businesses manufacture consumer nondurables like apparel, textiles, footwear, processed foods, leather and sports goods
    • Most of the SA 8000 certified Indian businesses are likely to be located in the States with niche manufacturing small and medium sector enterprises, like Tamil Nadu, where the overwhelming number of SA8000 compliant companies were in Tirupur, a cotton apparel town, sometimes called the ‘ganji’ or capital of the world for its exclusive production of men’s vests and T-shirts.

    However, just 600-700 ‘ethical’ businesses in a country with hundreds of thousands of small and medium enterprises is indeed laughable, and this ‘tokenism’ in the name of ethical supply chains by the manufacturing sector is bound to take its toll in the international market, where the conscious consumer is now king.

    Whatever claims of equitable work conditions are made by corporate India, the sad fact is that India’s image abroad has steadily declined as it continues its downward slide in various international rankings like the World Hunger Index and the World Press Freedom Index; besides the negative press it gets abroad for its growing communalism, casteism, curtailment of dissent, and treatment of protesters.

    The aftermath of the COVID19 pandemic too has added to India’s woes as huge masses of rural children have dropped out of the education system into forced and child labour, and general poverty, unemployment, informalisation and inequality have reached frightening levels.

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    Thus, before proclaiming grandiose schemes like ‘Make in India’, perhaps the Government should overcome its aversion to ‘leftist’ ideals of a rights-based approach to human development – especially, education, vocational training, and public health. This was the path so successfully followed by Japan, Singapore, South Korea and China. Let India not go down in history as the country which so carelessly threw away its priceless demographic dividend.

  • Indian Diaspora

    A rather strange picture of Indian women IT professionals wearing hijab, with the occasional bindi (the dot on the forehead worn by Hindu women) eagerly clicking selfies with a visibly discomfited Indian PM visiting that bastion of conservative Islam – Saudi Arabia! Oh what shapes and flavours does the Indian diaspora take!

    MODI IN RIYADH

     

    Indians in the old days (like their Chinese contemporaries) had a taboo against overseas travel, as crossing the ocean meant loss of caste. So it was only the acute labour shortage in the colonies after the abolition of slavery, that saw large scale migrations of indentured Indian labourers, sent forth to sweat and build in the distant outreaches of the British Empire – from the rubber plantations of Malaya, to the sugarcane farms of Mauritius and the Caribbean, to the railways of East and South Africa… Indentured labour began in 1833, at the end of slavery, and continued until 1920. Most persons of Indian origin in these countries are descendants of these indentured labourers, 25-40% of whom would be women, allowing those who decided to settle in these distant lands to remain endogamous, procreate, and retain their distinct Indian ethnicity to this day.

    In East Africa, after the efforts of these pioneers had opened up the countries and their vast resources, a second wave of Indian migrants headed that way from the western State of Gujarat – not to build railways, but build economies through trade, industry and business. The East African Gujaratis were to become immensely wealthy, powerful (and some would say arrogant) throughout East Africa, when Idi Amin burst their bubble by ordering out thousands of them in 1970. Most of those expelled migrated onwards to the UK, USA and Canada and only a few chose to return home to India. It is these families who are now most prominent in the medium grade hospitality sector in North America – often referred to as the ‘motel Patels’.

    The next wave of migrants came essentially from Kerala to the Gulf, after the quadrupling of oil prices, post-1973. The first arrivals may well have been blue collar workers, but following the rapid socio-economic development of the Gulf countries, the demand grew for Indian professionals like architects, engineers and doctors. Back in India, the Gulf boom was to have a tremendous impact on the families of these workers (many from minority groups) who had their first experience of some financial security, enabling them to purchase property and educate their children. Thanks to the remittances of these hard-working folk, entire families could move up the social ladder from working to middle class in a single generation.

    Of course, the IT boom was to push another generation of worker-migrants further afield to Silicon Valley, and along with the Chinese, the Indian diaspora ranks among the most successful communities in the US and Canada.

    Whenever we talk numbers in India, comparisons with China are inescapable. The Economist had this very interesting infographic shading in the Diasporas of both countries:

    Chinese Indian Diaspora

    The Chinese spread in South-East Asia is phenomenal, although such a high presence in distant Peru is indeed intriguing. It is believed that the post-globalization surge that China witnessed was made possible only because of the heavy investment in the motherland by the Chinese Diaspora, already close knit, well networked, wealthy and influential. Sadly, the Indian Diaspora has not contributed even a fraction of this to India’s development.

    In the CARIM report on “India´s Engagement with its Diaspora in Comparative Perspective with China”, Kathryn Lum points out that while China can claim success in attracting a significant number of “sea turtles” back to Chinese universities and research parks, and has also been very successful in attracting ethnic Chinese Foreign Direct Investment, the FDI figures from the Indian diaspora have been disappointingly low, although India is still the leading recipient of remittances worldwide. The challenge for India, according to the report, “… is to build upon its already significant diaspora infrastructure in order to attract higher levels of investment, business formation and to boost diaspora-related initiatives in Indian states that have been relatively deficient in this area to date.”

    However, in my humble opinion, no amount of pop star type rallies or selfie-fests or ‘diaspora infrastructure’ are going to garner results for the most diaspora-friendly Prime Minister in Indian history, unless his government gets its act together to:

    • Enhance its human development ranking and shed the eternal Indian image abroad of inequity, poverty and injustice
    • Vocationalise its secondary and tertiary education to build up a highly skilled workforce
    • Ensure ethical practices throughout the supply chain in the manufacturing sector with tighter controls over child labour and forced labour, so that Indian goods do not get blacklisted abroad, and
    • Guarantee that the institutionalized corruption at Local and State Government level is rooted out completely – despite the election promises, the scale of graft has, if anything, gone up dramatically in scale…