Promoter of decently successful SME on why we haven’t been able to realise our potential in manufacturing: “At heart most entrepreneurs in India still have a trading mentality.” He was obviously referring to peers in the SME space not large industrialists. (THREAD) /1
2/ Got me thinking. Connecting the dots from a recent book I read, almost all of India’s large industrial houses today started as traders, agents. Ploughing profits of trading to backward integrate in mfg.
3/ Similar trend among todays SMEs. Over the last year I have met many entrepreneurs who have sought private equity to grow new ventures within their groups. A vast majority started out as traders a generation or two ago. Some as late as 10y ago.
4/ Many have educated their kids overseas who are now coming back to head the “new” venture. But many 2nd gen guys prefer some svcs/tech angle for the new venture. So papa/uncle or lesser ambitious brother runs the factory. Observed across industries
5/ Also many have a strong South East Asia/China supply chain. Some guys are thinking of indigenisation. The story again is mixed. Scale is an issue. And China has upgraded quality in many categories.
6/ The only quickest way is to get serious mfg done is to use the Auto model which is our biggest success. Get MNCs to expand here. Over time they will develop their supply chains and possibly over a generation we will have some local guy evolving into an OEM of sorts
7/ Apart from earning / saving forex mfg can solve some of the employment problem. 36 lakh candidates appeared for the entry level Railway exam in Sep (Railways employee strength is 14 lakh). Tells you there is a real problem out there
8/ I wonder if anyone ever follows up on the fancy marketing many CMs do by signing MOUs worth their state GDP in investment fairs.
9/ Mfg needs special focus from the govt. Make in India needs to move the needle. Regional political parties need to support industrialisation. No large country has become a developed nation only through services. (Fin)
