For 198 micro, small, and medium enterprises (MSMEs) across 21 clusters in Gujarat, this advice came in the form of the Lean Manufacturing Competitiveness Scheme of the Indian government.

These businesses saw a 25% drop in product rejection rate, 20% improvement in productivity, 20% improvement in inventory management, space savings by 15%, and 10 % reduced lean time, according to a study by the National Productivity Council (NPC) centre in Gandhinagar.

An offering of the Ministry of Micro Small and Medium Entreprises, the scheme has been implemented across 500 industrial clusters of India.

Of these, 50 clusters are in Gujarat. Since 2008 it has been rolled out in in about 840 units across 120 clusters in the state.

“The government is trying to improve the efficiency of MSMEs. We focus on practices, monitor them through smart instruments, get reports which guide the businesses to cut waste and improve efficiency,” Rahul Kirkire, Regional Director of NPC in Gandhinagar, said.

But, he said, there is a need to spread more awareness so that more MSMEs can improve their operational efficiency.

Many MSMEs in India still have a traditional mindset or are too engrossed in day-to-day firefighting to look at such schemes, say experts.

According to a joint report of OECD and Economic Research Institute for ASEAN and East Asia, SME Policy Index: ASEAN 2024 – Enabling Sustainable Growth and Digitalisation, MSMEs in India are 26% as productive as large companies compared to 29% in emerging economies like Vietnam, Malaysia, and Thailand. 

Culture And Commerce

Take the case of the Rajkot-based auto-component manufacturer, Madhav Automation.

A small intervention by NPC involving the installation of an IoT-based monitoring device on a manufacturing machine in Madhav Automation’s factory resulted in about 20% increase in productivity, reduction in rejection rate, and better manpower management.

Ashish Raiyani, who runs the unit, told The Secretariat that about three months ago NPC installed the IoT device on one of its 30 machines, each of which do around 350 tasks per shift. The company has a shift of about eight hours.

The IoT device revealed that about one man-hour per worker per shift was lost as the workers left the machine to drink water, eat, and spit mava pan-masala, which is very popular in the Rajkot – Saurashtra region.

“The mava culture is so deep-rooted here that we could not tell workers not to eat mava or waste time in spitting. They would rather leave the company. So, we provided a box of mava and a can for spitting right at the terminal. Water was also provided at the machine. Now a person visits each employee at regular intervals and refills the water and mava,” said Ashish.

“Workers now stay longer at the machines. Production has increased to 410 tasks per shift, a rise of almost 20% with no additional cost.”

The company is now planning a phase-wise upgradation, which will include digitisation and the use of AI. “The machine also reduced paperwork. It produces the data, which not only saves time but is also more accurate,” he said.

Upping Efficiency

Gandhinagar-based Quick Circuit designs, which makes Printed Circuit Boards (PCBs), is another MSME which has reaped benefits. 

Its owner Viral Vaghela was offered the IoT- based monitoring device by NPC, which displayed real-time data on machine utilisation, idle time, and how many units were made in a given time, among others. “Production increased 25-30% with the same manpower and in the same timeframe. While this is an encouraging outcome, there is still room for a 30-40% increase,” claimed Vaghela. 

Earlier, he was planning to increase production by buying a new machine. “With the IoT-based insights, I am getting an equivalent rise in production, so I dropped the idea of investing in a new machine. I was able to save ₹15 lakh,” he said. 

His machine is electricity-hungry and works at about 200 degrees Celsius. Now lunchtime and tea breaks are planned in sync with the temperature requirements of the machine. Even minor reductions in electricity usage lower his expenses considerably.

Vaghela feels such interventions play a role in significantly increasing the operational efficiency of Indian MSMEs. 

Experts say there is huge scope for improvement in India. 

Scheme Adaptation

Officials running the scheme say that the government recognises the role of MSMEs in the Indian economy and the fact that they have to stay competitive relative to businesses in countries like China, Taiwan, and Vietnam.

Indian businesses have persisted with their traditional approaches, while those in foreign countries got a headstart by adopting practises for efficient manufacturing earlier on, they say.

Jayanth Murthy, Joint Managing Director Kaizen Institute - India, South Asia and Africa, attributes three reasons for this: “Small entrepreneurs believe that such schemes are for large corporates and not for them. They are so engrossed in their day-to-day firefighting that initiatives to improve efficiencies do not occur to them.”

“Last but not the least, they fear that their employees will leave the job after getting trained. The onus is on the entrepreneurs,” said Murthy, a pioneer of Kaizen and other Japanese management techniques in India.

Proven Results

Harsha Gandhi, founder and Managing Director of Pure Temptations, a company manufacturing chocolate and confectionery products, told The Secretariat that NPC intervention at the company’s unit in Ahmedabad has result in several benefits.

These include enhanced visibility of energy consumption at machine level, allowing better control over utility costs; improved identification of energy-intensive operations and wastage during idle or non-productive periods, better production planning through shift-wise and hourly energy analysis, faster detection of abnormal consumption patterns, proactive corrective actions. 

She said such initiatives provide objective data for performance evaluation and energy optimisation, contribute to the company’s sustainability goals through improved monitoring, and efficient use of resources.

“The system has helped us establish greater accountability for energy usage, identify improvement opportunities, and support cost optimisation initiatives without impacting productivity or product quality. The energy monitoring system has transformed the way we manage utilities by providing real-time visibility into machine-wise energy consumption. This has enabled better operational control, improved energy efficiency, reduced wastage, and strengthened our data-driven approach to continuous improvement and sustainable manufacturing," said Gandhi.