Institutional Innovations in India: An Assessment of Producer Companies as New-Generation Co-operative Companies

There are many types of innovations such as technological, social, product, process, marketing and organizational, and institutional innovation is one type. The producer companies (PCs), which are a case of legal institutional innovation in the Indian domain of primary producer organization are more market-oriented co-operative companies and can help farmers buy and sell more effectively. They have gained currency across India during the past 15 years since the amendment to the Companies Act made this possible in 2003, and India now has thousands of such PCs, with many of them being supported by state agencies. This article examines the uniqueness of these entities as an institutional form wherein principles of co-operation and corporate entity have been combined so that they could be more relevant entities in a globalized and liberalized market environment. It discusses their competitive edge over other forms of producer organizations like co-operative societies in India and farmer companies in Sri Lanka, and new-generation co-operatives in other parts of the world. After discussing some innovations in their governance and management, it concludes by making suggestions for augmenting this institutional innovation for inclusive and sustainable agricultural and rural development.