Service sector

ZED Program to Amplify India’s Manufacturing Services Sector Experts

The central government’s recently launched Zero Defect Zero Effect (ZED) program will help micro, small and medium-sized enterprises (MSMEs) establish a successful track record in a globally competitive world, experts have told BW Businessworld .

In April, Minister of Union for (MSME) Narayan Rane launched the Zero Defect Zero Effect (ZED) certification program to develop a targeted approach to prepare the ecosystem for the future.

ZED has the potential to become a national movement as it aims to provide a roadmap to global competitiveness for Indian MSMEs, Rane said. He added that ZED will not only try to improve productivity and performance, but also has the ability to change the mindset of manufacturers and make them more environmentally conscious.

According to the Ministry, this program aims to enable and facilitate the adoption of ZED practices by MSMEs and to motivate and incentivize them towards ZED certification while encouraging them to become MSME champions.

“ZED puts both consumers and the environment at its heart. We believe that this new program – ZED by MSME is an excellent initiative by the Ministry of MSMEs and a step forward in helping to encourage quality-based production without no effect on the environment.” said Nikhil Arora, Vice President and General Manager of GoDaddy India.

Arora added that this is a big step in motivating the ‘Make in India’ policy and encouraging our country’s guns to spearhead the global market. With an innovative scheme like ZED, the infrastructure and the quality of production will be reinforced.

“Disruptions to global supply chains and their impact on China open up a significant opportunity for India to step in and meet global demand and help ease global inflation. As our neighbors have shown of Bangladesh, like many other Asian economies before it, exports are the way forward to more sustainable prosperity for the nation,” said Meghna Suryakumar, Founder and CEO of Crediwatch.

The ministry said that through the ZED certification course, MSMEs can significantly reduce waste, increase productivity, enhance environmental awareness, save energy, make optimal use of natural resources, expand their markets, etc

Under this scheme, MSMEs will receive a subsidy according to the following structure, on the cost of ZED certification. Micro-enterprises make up about 80 percent, small businesses about 60 percent and medium-sized businesses about 50 percent, according to the ministry.

There will be an additional 10% subsidy for women-owned MSMEs, SC and ST entrepreneurs or MSMEs in NER, Himalayas, LWE, island territories and aspirational districts, he said .

“ZED will benefit MSMEs in a variety of ways, including drastically reducing waste, increasing productivity, expanding their market as IOPs, becoming CPU vendors, having more IPRs, developing new products and process, etc. said Sumit Sharma, Co-founder, GoBolt.

There will be an additional 50% subsidy for MSMEs who are also part of the Ministry’s SFURTI or Micro and Small Enterprises – Cluster Development Program (MSE-CDP).

In addition, a limited purpose membership reward of Rs 10,000 will be offered to every MSME once they take the ZED Pledge. A provision of up to Rs. 5 lakh (per MSME) will be made available for support and advice to MSMEs under ZED certification to help them move towards Zero Defect Zero Effect solutions.

“The global value chain (GVC) helps companies to increase their productivity and structurally transform. Also, rather than waiting for entire industries to develop, they can specialize in specific activities and stages of production,” Sharma said.

Sharma added that GVC offers many advantages in attracting foreign investment, helping domestic companies to internationalize and facilitating the global growth of multinational corporations and national enterprises.

“The implementation of the ZED will help Indian MSMEs to access cheaper and larger global capital. Therefore, large and cheap capital will help them scale faster to global scale which brings with it a much better economy, thus creating a virtuous circle,” Suryakumar said.

To mitigate the effects of the pandemic, foreign direct investment (FDI) has proven resilient during crises. For example, the investment remarkably stabilizes financial crises during tough times and helps the country shine globally, Sharma added.

Meanwhile, experts say India’s MSMEs need help as they recover from the deadly impact of the Covid-19 pandemic and government programs can help them move forward. With this program, new businesses, especially regional ones, will be anchored by government business support, making them more successful in their respective sectors, they said.