This forces some 200 million people to settle for employment within walking distance, hampering their aspirations for growth and income. But we will come to that in a moment. First, let’s look at the other contrasts between motorised transport and bicycles.
In the 1970s and 1980s, the automotive industry was concentrated in just a few pockets in Mumbai, Kolkata, and Chennai. Over the next two decades, it spread out and formed new clusters in Maharashtra, Tamil Nadu, Gujarat, Haryana, Andhra Pradesh, and Uttar Pradesh in order to be closer to markets and suppliers.
The bicycle industry, though, has stayed where it was — more than 90 per cent of the manufacturers and suppliers are in Ludhiana.
The car industry has come a long way since the duopoly of the Ambassador and Fiat. Two-wheelers have left Bajaj Chetak and Lambretta far behind. However, the largest selling bicycle model — the standard black Roadster — has not changed all that much in the last 110 years.
No such efforts were made for the bicycle industry, despite its being the primary mode of daily commute for a majority of Indians that belong to the lower end of the income pyramid. The industry has just four major players, with a few smaller ones joining them in the last 10 years. The industry hasn’t attracted new players despite low barriers to entry. No international player has come in.
In the last 10 years, a fourth of the market in India — 5 million — has gone to unorganised players who follow no quality norms, run sweatshops with zero compliances, use unregistered labour and pay them abysmal wages, and have no research and development or technology road map. They continue their set-up in dusty lanes of Ludhiana and adjoining areas by assembling parts sourced from the thousands of component making micro, small and medium enterprises. With low capital and operational expenditure, where even the assembly of the bicycle is done by the dealer, these players are able to keep their costs low while giving healthy margins to dealers.
Another 5 million bicycles are purchased by state governments for distribution among the needy. While some of these programmes have demonstrated a visibly beneficial impact, such as increased school attendance by girls who can now traverse the distance to their schools in the safety of groups, the benefit of many other such schemes is far less visible.
Now, let’s get back to the 200 million people who have to walk to work. A two-way bus ride or a shared autorickshaw ride to work can leave a person poorer by Rs 70-80 every day, which they simply cannot afford — more so, if their vocation fetches irregular income from seasonal or project-based work. As a result, most of them are constrained to find work within a limited radius, somewhere they can go on foot. That often means having to settle for lower wages.
The reason why these 200 million people cannot get a bicycle is that they do not have enough disposable income to pay for it in one go. They do not necessarily want a cheaper bicycle; on the contrary, they will be willing to pay more for a more reliable and easier ride. The trick is to help them make the purchase through financing options.
The spread-out loan repayment smoothens out the difference in price but the quality stays on and helps the users avoid recurring repair and maintenance expenses, such as punctured tyres, rusty frames, and broken saddles. Financing, which has been greatly responsible for the growth of cars and motorcycles, couldn’t reach bicycles because of its small ticket sizes. The same processing cost can facilitate larger loans. A few microfinance companies do finance bicycles but it will take much more to reach critical mass.
If the access gap of bicycles can be filled, the nation can witness the biggest ever upward movement from the bottom of the pyramid.
The need of bicycle for the bottom of the pyramid is only a subset of unlocking its full potential. The health, fitness, and urban commuter segments are the fastest growing as pricier bicycles see an upsurge in sales. A lot of these bicycles have to be imported, because it is difficult to localise the technology for alloy frames, suspension, and gears at a viable cost. India should actually be exporting these bicycles.
China exports no less than 50 million of these bicycles every year to Europe, the United States, and elsewhere. India can easily capture a greater share of these markets because China is subject to anti-dumping duty by the EU and the US, and is not a preferred trade partner. However, no one can match China’s manufacturing prowess.
The very latest trend shows a huge jump in sales of bicycles and e-bicycles in Europe and the US during the Covid-19 pandemic as people look to avoid mass transport.
India is not homogeneous. It is multiple countries within one, and very few in the world that have customers from all segments — from super premium to no-frills entry-level, and the bicycle industry must evolve to serve them all, as well as the world through exports.
That will need enormous institutional support to the industry akin to the automotive, textiles, and mobile industries with support packages. The industry needs technology upgrade, as well as foreign partners.
The world might emerge from this pandemic riding on bicycles. India has a chance to lead the pack.
The writer is former managing director of Maruti Udyog
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