One district one product: Failed
Cluster manufacturing: Failed
SEZ mfg : yet to succeed.
If we look at a self sustaining, self sufficient micro townships – it cannot be by product or by industry cluster. That was a pre climate change paradigm.
For it to work now, it has to be selection of units so as to achieve a circular economy. This necessitates a fundamental rethink of the development model based on interconnectedness and consequences.
It cannot be on survival of the fittest, on the basis of power or control. That is why in the coming age which stands on the three pillars of machine intelligence, trustless crypto systems and climate change – one has to view every decision from the lens of sustainability, accountability and consequences.
The key is consequences given the interconnectedness. And that is where the need to design clusters based on circular economy and not on product or industry comes in. Like we have unit economics in startups – and the whole is viable only if unit economics work out. Similarly here we have to define a unit and then look at unit sustainability from a self sufficiency, net zero, livelihood type of perspective.
In the agrarian age, we could say “work to all hands and water to all fields”. However when we went to the industrial age, it became capital to all enterprises and raw material to all manufacturers. Then in the Information Age we added connectivity as a key enabler. And now in the nationalist cyber age – it is about privacy, self sufficiency and market access.
Self sufficiency is a tricky concept. We may say all our telecom services are provided by local companies. But does that make us self sufficient.
Similarly market access is even more tricky. In the area of providing email, fintech, navigation maps or OTT video distribution – we may say that India is a liberalised market with no regulatory barriers to entry. But is it a free market. The “free” offerings of global players ensure that Indian competitors will never be able to play.
We call this market failure.
It happens when incentives are mis aligned. Google has incentive to be evil. Meta, more so. WhatsApp telephony has made voice telcos irrelevant. The voice codec on free WhatsApp is better than that on circuit switched telephony. Free Gmail works better than most paid email services.
When you consume a free service, you become the product. In a non circular cluster – the key raw material being used is the environment. And it is free. There is no real tax for causing air or water pollution. Or for consuming other natural resources. Financial accounting systems and related standards don’t capture these costs. And therefore they overstate profitability. There is no financial incentive for good behaviour. And no penalty for bad actors.
Waste to wealth is a good paradigm. With no real takers. Unless waste is segregated, we don’t manage to recycle it optimally.
It is all about incentives.
And a circular economy.
