Modis Manufacturing Plan Squeezes Small Indian Firms: Insights from My MBA Career

Last Updated on September 8, 2023 by Robert C. Hoopes

Title: Indian Cycle Parts Factory Rebounds Amidst COVID-19 Challenges

Ludhiana, India – Gurmeet Singh Kular’s cycle parts factory was struggling to stay afloat, operating at less than 40% capacity due to the adverse effects of the COVID-19 pandemic. However, recent developments have provided a glimmer of hope for Kular’s business and others like it.

Several state governments have stepped in to place sizeable orders for bicycles, providing a much-needed boost to the struggling industry. Initially, the pandemic created a surge in demand for cycling as people sought socially distanced transportation alternatives. However, as the situation began to stabilize, the demand faded, impacting businesses.

One major obstacle faced by the cycling industry is the lack of available loans for purchasing cycles. Loans have historically made automated two-wheelers more affordable for consumers, but without this financial support, sales have taken a hit. As a result, many micro, small, and medium enterprises (MSMEs) – a significant component of India’s manufacturing sector – have suffered closures and job losses.

The MSME sector has been hit hard by a string of shocks in recent years, including demonetization, new national taxes, and of course, the ongoing pandemic. These challenges, coupled with changing industry dynamics and evolving consumer preferences, have made it increasingly difficult for MSMEs to remain competitive.

However, some businesses are adapting to the changing landscape by diversifying their product offerings. Kudu Knit Process Pvt Ltd, for example, has shifted production lines to produce personal protective equipment kits and invested in high-end technology to cater to future demands. Such adaptability and innovation are vital for MSMEs to survive and thrive.

Recognizing the importance of MSMEs to the industrial value chain, representatives from the sector are scheduled to meet with Prime Minister Modi on September 17th. During the meeting, entrepreneurs will express concerns over government policies that seem to favor large-scale manufacturing, often at the expense of smaller suppliers.

As MSMEs continue to navigate the challenging post-pandemic environment, it is crucial for policymakers to address their concerns and provide support. These enterprises contribute significantly to India’s GDP, national output, and exports, making their survival essential for the country’s economic recovery.

In the coming months, the fate of MSMEs will likely hinge on their ability to adapt to changing trends, innovate, and secure adequate government support. Only through collaboration and understanding can the industry bounce back and contribute to India’s economic growth once again.