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Modis Manufacturing Initiative: The Impact on Small Indian Firms – My MBA Career



Modis Manufacturing Initiative: The Impact on Small Indian Firms – My MBA Career
Modis Manufacturing Initiative: The Impact on Small Indian Firms – My MBA Career

Last Updated on September 7, 2023 by Robert C. Hoopes

Cycle parts factories in Ludhiana, India, are facing tough times as demand for basic bicycles has declined. This has resulted in these factories operating at low capacity, leading to closures and layoffs. The cycling industry initially saw a surge in demand during the COVID-19 pandemic, but it has since experienced a decline.

However, some relief has come in the form of state governments placing orders for bicycles. These bicycles are being distributed during the election season or to low-income schoolgirls. While this helps temporarily, the overall decline in demand remains a challenge for the industry.

One of the factors contributing to the decline in demand for bicycles is the lack of availability for loans. Many individuals prefer to purchase automated two-wheelers, as these are more affordable with financing options. This preference for automated two-wheelers has affected the demand for basic bicycles, further impacting the industry.

Micro, small, and medium enterprises (MSMEs) play a significant role in India’s manufacturing sector, contributing to the country’s GDP, national output, and exports. However, MSMEs have faced numerous challenges in recent years, including demonetization, the implementation of a new national tax, and the impact of the COVID-19 pandemic. These challenges have resulted in closures and job losses within the sector.

To survive and thrive, MSMEs must adapt to changing industrial trends and consumer preferences. Some businesses, like Kudu Knit Process Pvt Ltd, are diversifying their offerings to stay afloat. For example, Kudu has started producing personal protective equipment kits during the pandemic to meet the increasing demand. Additionally, MSMEs, including Kudu, are investing in new technology and preparing for potential increases in demand from global brands seeking to diversify their supply chains.

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However, concerns exist regarding government policies that seem to prioritize large-scale manufacturing. Incentives provided by the government often benefit larger businesses at the expense of smaller suppliers, further exacerbating the challenges faced by the MSMEs.

Representatives of the MSME sector are scheduled to meet with Prime Minister Narendra Modi to address these concerns and advocate for support for small businesses. These representatives will highlight the importance of the sector in the Indian economy and urge the government to implement policies that promote the growth and sustainability of MSMEs.

In conclusion, Ludhiana’s cycle parts factories are struggling due to a decline in demand for basic bicycles. The COVID-19 pandemic initially provided some relief, but the industry has since experienced a decline, leading to closures and layoffs. MSMEs, which are crucial to India’s manufacturing sector, have also faced numerous challenges in recent years. To survive, businesses within the sector must adapt, diversify their offerings, invest in new technology, and prepare for potential increases in demand. Concerns about government policies that prioritize large-scale manufacturing will be addressed in a meeting with Prime Minister Narendra Modi, where representatives of the MSME sector will advocate for support for small businesses.

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