In India, small and medium-sized businesses face hurdles that make it hard for them to compete on a global scale. One major issue is their reliance on old machinery. Many manufacturers use equipment that’s 20 to 40 years old, which slows down production and lowers product quality.
At a recent meeting called the Reverse Buyer Seller Meet in Pune, this problem stood out. Vinod Kumar, President of the India SME Forum, shed light on these challenges. He noted that outdated technology limits efficiency and prevents Indian products from meeting international standards.
Rising Concerns
Kumar highlights that without modern machinery, Indian manufacturers struggle against countries like China and Vietnam. Feedback from MSME owners and declining market demand reveal the extent of the crisis. A survey covering over 7,500 MSMEs showed that 82% of micro enterprises and 61% of small enterprises urgently need to upgrade their machinery and processes.
During the Pune meet, international buyers pointed out that tasks done in two hours elsewhere take four to six hours in India. This significant delay translates to higher costs and reduced pricing power for Indian businesses. Many of the models still in use in India were phased out in other countries two decades ago.
Steps Being Taken
In the past, the Indian government had a Technology Upgradation Fund Scheme to help businesses replace old machines, but this support is no longer available. Kumar’s organization is now working with the United Nations Industrial Development Organization (UNIDO) to push for technological improvements.
UNIDO has already collaborated with several Indian states to set up technology labs aimed at helping businesses modernize. These labs would provide access to new machines and training on modern production techniques. Kumar explained that the initial funding of $4 million from UNIDO will help kick-start these efforts.
Bigger Picture
Globally, countries are modernizing their production facilities to stay competitive, and this trend is essential for India’s growth too. A large percentage of Indian MSMEs lack awareness of modern technologies like Industry 4.0 and AI. Despite having the manpower and cost advantages, India risks falling behind without tech adoption.
Kumar believes that if Indian businesses embrace modern technology, India could accelerate its journey toward becoming a developed economy. The combined effects of lower costs and increased efficiency could significantly boost productivity and export opportunities.
By focusing on upgrading technology and machinery, Indian businesses not only stand to improve their competitiveness but also contribute to a stronger economy overall.
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