The stage is set. The leading players are ready to take centre stage. All the elements for success have come together. And a global audience is watching. In a sweeping analysis, India’s leading cleaning machines, tools and chemicals manufacturers describe the alchemy of current and desired factors that will leapfrog the expansion of Make-in-India cleaning equipment.
Conducive environment for growth
When the right catalysts are introduced, there will be no stopping the Indian cleaning industry.
Pan-India differences
No generalisations are possible in a country that is as geographically vast and economically diverse as India; despite the inequalities in resource availability, trained workforce and ease of doing business rules across states, India is still on track to become a manufacturing powerhouse. “A strong labour force, an ever-growing supply chain network and access to the latest, cutting-edge technology from the best universities in India have all contributed to the success of India’s cleaning manufacturing sector”, said Ashwin Suresh, MD, Megamorph Marketing Pvt Ltd.
Global changes
The weakening of the rupee against the dollar is making the import of cleaning equipment financially unviable. This, coupled with highly inflated international freight and logistic costs, as well as forbidding customs duties that need to be paid, has persuaded distributors and procurement heads to look within their own country for affordable cleaning products.
The continuous volatility of China’s manufacturing segment – which supplied a majority of the products shipped to India and around the world – has caused businesses worldwide to look for a more stable, reliable source of cleaning equipment; India is poised to capitalise on this need.
Geopolitical advantage
Consider India’s position as the lynchpin of the Indian subcontinent. As it emerges from the shadow of China, it becomes the largest, most reliable supplier of inexpensively produced goods to its immediate neighbours, Africa and the Middle-East.
Debtosh Chatterjee, MD, Mrinmoyee Supply Pvt Ltd opined: “The government should try to promote Indian-made cleaning tools and equipment for export by using the trade promotion resources of its foreign service representatives in various important markets. It is high time, since there is a vacuum right now due to the absence of our South-East Asian competitors”.
Post-Covid
“Prices of cleaning equipment raw materials such as steel, plastic and aluminium, which had heated up during the pandemic, have cooled to pre-Covid levels. On the demand side, sectors like IT, retail, hospitality, quick service restaurants, education and entertainment have opened up completely, restoring the demand for professional cleaning”, continued Chatterjee.
Post-pandemic, business dynamics have changed completely. Mohit Vij, Director-Exports, Kibble Enterprises said: “Earlier, for any business, extra costs paid for ‘overheads’ like cleaning didn’t matter too much. Today, this is no longer the case. Every business needs to be fiscally prudent. Inventory management is the name of the game and needs extra vigilance; if equipment is being imported, one needs to plan for 3-6 months of inventory, which is a very expensive proposition and unfeasible in the current climate”.
Government support
By imposing a higher import tax, the government has created market conditions for Indian manufacturers to become the pick of the lot. Recognition of cleaning equipment as essential products for health and safety, and assigning them the lowest GST slab will also make investing in cleaning equipment production and expansion, an attractive proposition.
“The current support for MSMEs will be a great driving force for manufacturing cleaning equipment in India”, said Jigar Shah, Director, Revachemical Pvt Ltd. “The only concern is the viability v/s volume question, and whether Indian manufacturers can compete against imported machines which are produced in bulk.”
User attitudes
What remains to be changed is how purchasers perceive Indian-made products vis-a-vis foreign-made goods. Will they continue to perceive the latter as superior, irrespective of the quality of the product? Will the mindset of prioritising cost over quality continue to plague the industry? Or will there be a gradual understanding of products themselves, and the accompanying acceptance of Make-in-India products? Only time will tell.
What will stimulate significant growth?
Although not very glamorous, the cleaning industry is one of the few manufacturing segments that can be relied on to exhibit sustained growth over time.
Ease of doing business
Infrastructure is a basic necessity for any sector to thrive. “In industrial areas, easy and transparent allotment of industrial land to enthusiastic entrepreneurs can fuel a higher growth rate of the cleaning industry”, suggested Suresh. The single-window clearance system that many states have introduced to grant permits to new businesses must be actively extended to and adopted by the cleaning industry too.
Instead of relying on private logistics partners, players should also explore tying up with the railways and postal department for more affordable options.
One industry insider requested the government to include existing Small and Micro cap units in its efforts to spur manufacturing, other than startups and foreign players setting up in India.
Implementing standards
Saurabh Chopra, Head – India Institutional Business, Reckitt Benckiser said: “Along with economies of scale, we also need to adapt global standards to ensure that our solutions are globally competitive. Consistent quality control is a must.”
What is solely lacking is an association or organisation of domestic cleaning equipment manufacturers who can collectively define standards, create a growth plan for the industry and then leverage their strength in numbers to influence key government decision makers.
Growth vis-a-vis economy
Vij strikes a note of caution: “We believe growth should be sustainable and constant rather than rapid and inconsistent. The cleaning industry can only grow at an overall rate that corresponds to the pace at which the economy grows. If there is ‘overgrowth’ in one phase, there is bound to be stagnation in the other.”
Growth must be led by demand and not the other way around; as more and more demand is realised organically, the industry – which does not face supply-side issues – will piggyback on rapid urbanisation and industrialization, and is bound to grow.
Ancillary industries need to grow
No man is an island, nor is any industry. Each one requires a number of smaller, supporting industries that produce various components of the final product manufactured by cleaning businesses. These specialised ingredients are not being produced domestically in volumes that can meet the demands of the larger cleaning industry.
Chopra laid out the present situation: “Chemical industries need to evolve: with trade challenges between major global economies like the US and China, India is currently the sixth largest chemical producer in the world, with opportunities to accelerate. However, India still relies heavily on China for chemicals”.
But things are changing. “With large chemical plants, semiconductor plants and battery plants coming up across India, the evolution of the cleaning manufacturing segment is guaranteed”, said Suresh. “These need to be scaled up. High-performance concentrated surfactants also need to start being manufactured in India”. Needless to say, transport, logistics, warehousing and other services for these ancillary industries need to be scaled up as well.
Chatterjee has a laundry list of demands from domestic ancillary manufacturers for the tools segment: PVC (huge shortage at this stage), monofilaments (essential for making brushes), re-ground plastic granules, tufting and injection machines, powder coating and painting, recycled cotton and more. In the machines segment, development of indigenous motors is the need of the hour.
How can India become an export hub?
What is immediately apparent is that a pure sales approach won’t work. Indian manufacturers will have to separately analyse the requirements of overseas clients and adopt a service-based consulting approach instead. Tying up with international players in joint ventures to Make-in-India – as is already happening – is a good starting point.
Quality control
“Attention to quality, consistency, precision engineering and communication of the value proposition are the key aspects that can lead to a strong export market. Though we have some of the cheapest labour in the world, we lose out on exports mostly because we don’t pay attention to detail”, said Suresh.
Vij vehemently agreed. “We are not able to match half the quality of our international competitors at even double our prices; we need to adopt gold standards for manufacturing. The day we start having zero tolerance to substandard quality, we will also be able to produce more at low costs”.
Government funding
Meeting global standards requires state-of-the-art manufacturing facilities, which may be out of reach for many in the not-yet-fully-mature cleaning industry. Viability Gap Funding for this sector will ease the burden of Capex investment for cleaning equipment entrepreneurs. Collective development of centralised manufacturing hubs/trade zones for cleaning supplies could help facilitate exports.
Regulatory reform
This includes simplifying export documentation requirements and regulatory requirements of export of products containing active ingredients (e.g. alcohol content in cleaning chemicals), an immediate increment in import duties on any cleaning material from the South-East Asian market, patenting and trademarking assistance.
