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New Delhi/Lucknow. Nowadays there is an era of ‘reverse migration’. Leaving the hustle and bustle of the city and the hustle and bustle of jobs, the youth now want to establish their own empire i.e. ‘Small Scale Industry’ in the soil of their village. It is natural to get excited after hearing about cheap land and low cost labor in the village, but before getting down to the ground, know that the challenges of the village are completely different from those of the city. If you are also planning to set up a factory on your farm or plot, then these 10 points will act as a ‘protective shield’ for you.
1. Mathematics of electricity: Not just meter, 3-phase connection is necessary
The biggest hurdle in the village is power cuts and voltage. Industrial machines do not run on domestic single phase meters.
Fact: You have to get a commercial 3-Phase connection. If there are no electric poles or transformers till your plot, then its expense can drain your pocket. Before starting the factory, get the feasibility check done from the electricity department.
2. Transport costs: distance should not eat up profits
Setting up a factory in a village means that the raw material will come from the city and the finished goods will be sold in the city market.
Calculation: If the freight charges exceed your profit margin, the business will fail. Always choose a place which is close to the main road.
3. Lack of skilled labour: Wages will be available, but workmanship will not be available.
There is no shortage of helpers in the village, but finding a machine operator or technical staff is a difficult task.
Solution: Either you yourself become a master in operating the machine or be ready to give accommodation facilities and higher salary to the artisan coming from the city.
4. Legal issue of land: Is your land 143 (NA)?
Installing machines on farm land may be legally wrong.
Rules: Agricultural land has to be converted to non-agricultural or residential land (called Section 143 in many states). Setting up a factory without conversion may result in heavy fine from the administration.
5. Machine repairing and maintenance: The wait for the mechanic will be heavy.
In the city the mechanic comes within hours, in the village it may take days.
Tip: Always select machinery for which spare parts are easily available. Also, learn how to fix minor problems yourself so that production doesn’t have to stop for weeks.
6. Market access: Don’t rely only on the village
Purchasing power of village people is limited.
Strategy: Your product should be such that it is in demand in the nearby big town or wholesale market. It will be difficult to meet the expenses of the factory by relying only on local customers.
7. Roads and connectivity: ‘threat’ of rain
Can loading truck (14 tire or 10 tire) reach your factory?
Caution: The unpaved roads of the village become swamps during the rains. If the truck can’t reach your factory, the supply chain will be disrupted and orders may be cancelled.
8. Working capital and credit cycle
‘Credit’ is a part of business in rural markets. Often shopkeepers promise to give money after the harvest.
Important: You should have at least 3 to 6 months of working capital extra, so that even if the payment gets stuck, purchasing raw materials and paying salaries do not stop.
9. Benefits of Government Subsidy: PMEGP and Mudra Loan
Take advantage of government schemes before investing your money.
Suggestion: The government gives subsidy of 25% to 35% under PMEGP scheme for setting up factories in rural areas. Contact your District Industries Center (DIC) and understand the loan process.
10. Digital Connectivity: Internet and Payment
Today’s business runs on WhatsApp and digital payments.
Check: How is the mobile network and internet speed in your location? If there is any problem in taking UPI payments or online orders, then you will lag behind in the modern race.