Sustainable Community Enterprise Development: The Cooperative Way

The United Nations’ (UN) unequivocal declaration of 2025 as the International Year of Cooperatives highlights the maxim that cooperatives can contribute significantly to ‘people, planet and purpose before profit’. The role of cooperatives in sustainable development, particularly in socio-economic and environmental spheres cannot be overstated. The setting up of a separate Ministry of Cooperation on 6th July, 2021 not only endorsed the vitality of this sector for India, but also the importance the Government of India accords to it.

It is an opportune moment to reiterate the guiding principles of India’s cooperative movement, viz. Sahkar se Samriddhi, inclusive growth, Aatma Nirbharta through community entrepreneurship, and Cooperation: Beyond Cooperatives.

Democracy, economic development and social mobilization are the underlying triad of cooperation. There are more than 8 lakh registered cooperatives in India. The number of people associated with these is manifold. The heterogeneous nature of cooperatives makes them amenable to spread to diverse fields like dairy, oil, sugar, textiles, housing, transport, tourism, hospital, State Cooperative Banks, District Central Cooperative Banks, Primary Agricultural Cooperative Societies (PACS), Primary Cooperative Agriculture and Rural Development Banks and State Cooperative Agriculture and Rural Development Banks. 

The launch of a taxi service based on cooperative models and an insurance company owned by cooperatives are in the offing. Cooperatives in diversified sectors are disparate in nature and solutions for similar issues in different sectors need to be customized. This is more so, because the cooperative movement is not uniform across the nation. While Gujarat, Maharashtra, Kerala, Karnataka, Tamil Nadu and Goa witness larger spread of cooperatives, northern, north-eastern and eastern States have relatively lower shares. 

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Yet, one issue which remains common among them is information asymmetry. Besides, training, capacity building, skill development and upgradation, technology upgradation, timely and affordable credit, procurement, market access, mentoring, remunerative prices, digitalization, etc. are some of the challenges faced by cooperatives. 

Given that cooperatives may be defined as communities whose members are entrepreneurs, there is a definite, inextricable relationship between cooperatives and entrepreneurship. Out of the registered cooperatives, there are 37,000 which are also registered as MSMEs. Effectively, this implies that these cooperatives have been granted the identity of MSMEs and have the related entitlements.

They can be considered under Priority Sector Lending, besides benefiting from the schemes meant for MSMEs. They can also gain from two recent decisions of the Central Government made with the objective of dissuading enterprises from stunting their growth to remain eligible for MSME benefits.

One of these decisions which became effective on October 19, 2022 allows enterprises to retain for three years their earlier classification as a micro, small or medium enterprise despite an upward mobility. The second and more recent one which became effective on April 1, 2025 enhanced the ceilings for MSME classification. Accordingly, an enterprise with an investment in plant and machinery up to Rs. 125 crore and a turnover of up to Rs. 500 crore is now classified as an MSME.

The following seven points would push the spirit of convergence between entrepreneurship and cooperatives, and would ensure ease of doing business for cooperatives:  

Firstly, dual registration as cooperatives and MSMEs adds to the advantages from which cooperatives can benefit. Benefiting as either a cooperative or an MSME does not preclude benefiting from the other. In this context, while short-term credit cooperatives are already notified as Member Lending Institutions by Credit Guarantee Fund Trust for Micro and Small Enterprises, non-credit cooperatives registered as enterprises on Udyam Registration Portal for MSMEs can avail of financial assistance like any other MSME. 

Moreover, common infrastructure facilities and other cluster-based approaches, reaping benefits of economies of scale, work well for enterprises. Registered MSMEs can benefit from the Online Dispute Resolution mechanism recently launched to address issues related to delays in timely payments, which hamper their performance because of capital being locked up. 

Secondly, a national database of cooperatives, linked with MSME databases and portals such as those of banks will help in the creation of a valuable digital infrastructure. Thirdly, smaller cooperatives can learn from the bigger and more successful ones and mentoring would definitely add value.

Fourthly, entrepreneurs can enroll in sector-specific schools of the recently established national Tribhuvan Sahakari University to hone their theoretical and practical entrepreneurial abilities. Fifthly, digitalization of PACS will enhance their operational efficiency. Sixthly, the creation of a fund for cooperatives may aid them in mitigating credit risks, developing brands, adopting technology, and may also be utilised for marketing, advertisement and marketing research. 

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Seventhly, marketing through cooperatives, especially for brand creation and onboarding and transacting on Government e-Marketplace and other e-commerce portals may be effective for micro entrepreneurs like those engaged in traditional arts and crafts, e.g. under the central Government’s flagship programme viz. PM Vishwakarma. 

The newly launched Trade Enablement and Marketing initiative can be used by enterprises to benefit from assistance provided for catalogue preparation, account management, logistics and packaging material and design, besides participation in awareness workshops. Further, promotion of sector-specific export-oriented cooperatives would help in accessing international markets. 

Cooperative enterprise development is the means to achieve Sahkar se Samriddhi. Cooperatives are relevant in an inclusive milieu, especially in the architecture of Viksit Bharat and renewing commitment to the UN’s theme for 2025, ‘Cooperatives Build a Better World’.

The author is an officer of the Indian Economic Service.