Memos from Asia

Asia’s Largest Slum Dharavi – a Thriving $1-billion Informal Economy

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Mumbai, India – February 26, 2019: View of Dharavi Slum near Suburban Railway

Dharavi, a thickly populated slum area of about 520 acre in central Mumbai, is a gold mine of circular economy driven by waste recycling businesses.

This urban settlement comprising mainly migrant workers and poor is a vibrant center of small-scale industries such as the leather industry, waste recycling industry, pottery, and textile. The products manufactured here are also exported to various countries. This informal economy spread over just about 2.1 sq km is estimated to be around $ 1 billion.

Mumbai, India – February 26, 2019: On the street in Dharavi Slum at Mumbai

Set up in 1884 during the British colonial rule, Dharavi now houses about 5,000 business units with 15,000 in-house single-room production units. Migrant workers from Uttar Pradesh, Bihar, and Gujarat are working in the small industrial units of Dharavi.

This settlement has a population of about one million and it is one of the most densely populated areas in the world with over 277,136 people live in a square kilometer area. It has grown as a totally diverse settlement — both religiously and ethnically.

About 60 percent of Mumbai’s segregated waste is brought to Dharavi, which is Asia’s largest slum dwelling, for processing. It has not only a business angle but the waste recycling and processing units of Dharavi play a vital role in managing Mumbai’s solid waste as well. This densely populated area houses about 30,000 rag pickers and they are not only clearing the waste, but are earning handsome income also.

Dharavi’s major small-scale businesses

Leather industry

Leather tanneries are the most thriving sector in Dharavi and take away the highest share of turnover of among all the business units operating there. Leather industry of Dharavi is said to be one of the biggest in the world. A major chunk of its products are exported helping them earn handsome income.

In fact, the leather units earn huge profit margins and it draws a large number of new business owners to this sector. Availability of raw material is another major advantage. Skins of sheep, goat and buffalo from the slaughter houses in the city and its sub-urban areas are transported to the leather units in Dharavi. There are several leather processing units where the animal skin is cleaned in machines and shaped in different patterns according to requirements of the manufacturers of various leather products.

Mumbai, India – May 20, 2016: A leatherworker sorting tanned leather hides in the Dharavi slum area of Mumbai, India.

The processed leather is used for manufacturing bags, shoes, belts, and the like in Dharavi itself and even big companies are sourcing leather products from these units. The leather products of Dharavi have their own branding and logo. They change them while delivering to big brands at a high price.

Plastic recycling units

In a way, Dharavi solves Mumbai’s plastic menace to a great extent. A rough estimate says that about 9,400 tonnes of waste is generated daily in Mumbai.

The small-scale plastic recycling units in Dharavi recycle about four tons of plastic waste daily. The small-scale units dedicated to recycling and sorting Mumbai’s waste, Dharavi provides employment to about 250,000 people and these workers give new shape to the 80 percent solid waste materials of Mumbai.

Most of the plastic wastes from Mumbai and its sub-urban areas are brought to Dharavi’s units. After sorting the plastic waste, it is sent to crushing machines to convert into chips, which is washed for removing dirt. The recycled plastic will be melted for converting it into plastic tablets or pellets.
A study said that 60 percent of the city’s plastic is processed in this slum and comparing with Singapore’s 19 percent recycling rate what is happening in Dharavi is found to be quite a great job by the people.

Wax printing

Apart from leather processing, wax printing is also a major business activity in Dharavi. It is one of the oldest industries there and it requires high level skill. About 50 wax printing units are operational in the slum area. The employees working in these units earn up to $13 per day.

Pottery units

Pottery industry mainly depends on the festival seasons that begin in August and continue till March and the business surges during this time. Summer is another season that increases the pottery activities in among the slum dwellers. Products are exported to US, Europe, countries in the Gulf Cooperation Council and African nations.

This profession is mainly done by Kumbhar community and about 7,500 families are associated with pottery industry in Dharavi, says Devji Bhai Chitroda, vice president of Prajapati Sahkari Utpadak Samiti, the association of the pottery units.

Mumbai, India – October 02, 2018: The picture was shot at the potter’s colony in Dharavi. Many of these are 6th or 7th generation potters, whose ancestors, either Kachchhi or Gujarati, migrated to Mumbai between 1935 and 1940. These families remain engaged in the traditional pottery business. They are highly skilled workers, who make various items out clay to be sold seasonally.

Most of the pottery business is operated by individual households from their own pottery kiln. Each of the unit has road-facing shop in front of the house.

The coronavirus outbreak spoiled their business for the year and the community is looking to the government for reviving the businesses, says Chitroda.

A circular economy

A unique kind of economy exists in Dharavi – an economy thriving on recycling and reusing waste materials. Locals say that nothing is wasted there. In this special economic zone created by the poor, waste is the raw material which is primarily available at no coast and it is converted into raw material for several industries.

Even the scrap from one unit is a useful raw material for another. All leather scraps are reused as fuel for other industries like pottery and bakery units in the locality. Thus they save on fuel expenses scraps from leather and textile units. As they cannot afford costly and green fuel like LNG, they also use abandoned wooden logs being collected from the city to operate their units.

Mumbai, India – January 12, 2015: Indian workers sew in a clothing factory in Dharavi slum. Post-processed with grain, texture, and color effect.

That is why it is said that nothing is wasted in Dharavi and one industry helps another grow. This informal economy gradually developed this kind of a family networking system and it has proven to be a sustainable model.

Redevelopment plan

As part of overhauling the slum area and to provide proper housing as well as business space for the residents besides the entrepreneurs, the Maharashtra state government had brought out about $3.5 billion new redevelopment plan in 2018.

The slum reform plans began in the 1980s by the successive governments and due to several issues the plan was delayed. The campaign entered into the next level in 2004 when the government passed a resolution to issue global tenders for the slum overhaul plan.

Mumbai, India – February 26, 2019: Indian man making wicker basket on the street in Dharavi Slum at Mumbai

In 2019 global bidding, Dubai-based Seclink Technologies Ltd emerged as the top bidder. However, the redevelopment is yet to commence due to a couple of administrative problems.

According to news reports, about 67,000 families living in this urban settlement are expected to benefit from the plan. Each family will get 350 sq ft carpet area residential space in towers. Apart from this, the redevelopment plan includes schools, parks and roads for the families. There will be separate business space as well.

Finds place in online retail

The business owners and artisans from Dharavi forayed into India’s thriving e-commerce market. In a tie-up between India’s e-commerce major Snapdeal and in 2015, the exclusive Dharavi Snapdeal store agreed to sell luggage, shoes, accessories, pottery, apparel and jewelry made in the slum.

With this pact, over 200 entrepreneurs from Dharavi through the online retail marketplace got a nationwide reach.

The purpose of Snapdeal was to help them enter the online marketplace as part of its vision to create 1 million successful entrepreneurs in three years and empower thousands of artisans and small businesses to sell nationally while supplying locally, said a report in a local financial daily, Financial Express.

Most business owners in this settlement are illiterate or semi-literate people and have not much idea about the e-commerce chances of their products.

The outbreak of COVID-19 had shaken Dharavi as the pandemic started spreading quickly there due to its high density of population. However, the authorities swung into action and in a short span of time controlled the situation. Though the positive cases are very low, the pandemic has totally blocked means of their livelihood. They are waiting for normalcy to return to resume their businesses.

A unique tourist destination

The slum/reality tourism in Dharavi grew rapidly after Slumdog Millionaire. In 2019, it was even voted the best experience in India beating even Taj Mahal on the Tripadvisor Traveller’s Choice Awards where it currently stands on 7th spot. (Tripadvisor)

The movie brought a sad and ugly reality of Dharavi to the international stage but that is not the complete reality. Tourists enjoy visiting Dharavi as ‘reality tourists’ rather than ‘poverty tourists’.

The tours usually include walking around the slum and visiting homes and businesses. In some cases, tourists even spend a night in the slum. The homes in Dharavi are small and jam-packed but the people have aspirations and joys that no movie can show you.

The business tour shows a side of slums that many don’t focus on.

Slum tourism is often criticised for earning from the everyday lives of poor but the supporters show Dharavi and how it creates awareness about life in slums.

Even many Indians don’t know what life is like in Dharavi and slums in general. The slum tourism gives people a chance to take a closer look at the workings of slums and appreciate the people that usually keep the big cities moving.

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