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Ravi did not expect that he would have to face a crisis in such a short period of his life as industrialist. Ravi took a loan from the bank to start his own company producing capacitors in 1992 in Hosur, an industrial town in Tamil Nadu. Capacitors are used in many electronic home appliances including tube lights, television etc. Within three years, he was able to expand production and had 20 workers working under him. His struggle to run his company started when the government removed restrictions on imports of capacitors as per its agreement at WTO in 2001. His main clients, the television companies, used to buy different components including capacitors in bulk for the manufacture of television sets. However, competition from the MNC brands forced the Indian television companies to move into assembling activities for MNCs. Even when some of them bought capacitors, they would prefer to import as the price of the imported item was half the price charged by people like Ravi. Ravi now produces less than half the capacitors that he produced in the year 2000 and has only seven workers working for him. Many of Ravi’s friends in the same business in Hyderabad and Chennai have closed their units.
Question (i)
What are the ways in which Ravi’s small production unit was affected by rising competition?
Answer:
- His main clients have changed their product as they are now producing TV sets for MNC companies.
- The removal of import taxes on imported capacitors has also resulted in a decrease in his output and sales.
- Due to his inability to recover his costs with such a small amount of production, he is going into a loss.
Question (ii)
When did the Government remove restrictions on imports of goods?
Answer:
From the paragraph
His struggle to run his company started when the government removed restrictions on imports of capacitors as per its agreement at WTO in 2001
The government removed restrictions on import s of goods as per its agreement at WTO in 2001.
Question (iii)
Why did Ravi take a loan from the bank?
Answer:
From the paragraph
Ravi did not expect that he would have to face a crisis in such a short period of his life as an industrialist. Ravi took a loan from the bank to start his own company producing capacitors in 1992 in Hosur, an industrial town in Tamil Nadu.
In 1992, Ravi took a loan from the bank to start his own capacitor manufacturing company .
