The Domestic Market

Small and medium enterprises established at low capital cost, with less automation and more labour could be the answer for operating in this market. With all the existing constraints, possibly the Small and Medium Enterprises will be able to cater mostly to the neighbourhood markets.

This will be a logical growth from individual carpentry levels to small workshops that still cater to the immediate neighbourhood. This approach has proved successful in many segments of the wood industry such as in the manufacture of blockboards and flush doors. A similar approach possibly in segments like furniture making would probably be appropriate.

Why?

•   Even though a market may exist all over India, there are no formal distribution channels as such for many of the manufactured goods especially in the wood sector. Therefore, small and medium enterprises catering to customers directly or through their own outlets would be the answer.
  
•   No standardization exists in buildings. This is a major factor in mass production and distribution in the domestic market. Often, everything has to be custom built especially fixed furniture and joinery. The standardized product will not fit into a normal building in India. It has to be tailored. It is possible to do this only if the factories are not designed for real mass production.
  
•   As mentioned earlier in this article, logistics and transportation hurdles pose a problem and add to the expenses considerably.
  
•   Tax structures often favour localized production and distribution and small quantities. Larger production quantities and larger values attract more taxes and this may be a disadvantage in competing with local production.
  

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