Anand Mahindra couldn't stop watching this 15-cent cigarette lighter video; What it revealed holds lessons for building the next Apple or Tesla in India

A simple plastic gas lighter has sparked a bigger conversation about the future of manufacturing in India. Industrialist Anand Mahindra recently shared a detailed post on X, explaining how a disposable lighter costing just 15 US cents offers important lessons about industrial competitiveness, supply chains and manufacturing clusters.

"I ran across this video a few days ago and couldn't stop watching it," Mahindra wrote.

"It's about something ordinary & boring, a plastic gas lighter. But it changes how one thinks about manufacturing."

Anand Mahindra on the economics of a disposable lighter

According to Mahindra, the humble lighter found in homes around the world is far more complex than it appears. The product contains pressurised gas, more than 30 tiny components and must comply with international safety standards before being shipped across the globe.

"That lighter in so many of our homes, holds pressurised gas. It has over 30 microscopic parts, has to pass international safety codes, & travel 10,000 miles by sea, & the total cost of doing all that, materials, labour, freight, every middleman along the way, comes to fifteen U.S cents."

The observation led Mahindra to ask a fundamental question.

"So how does anyone make money on this?"

Shaodong manufacturing cluster powers global lighter industry

Mahindra pointed to Shaodong, a county in China's Hunan province, as the answer. According to his post, the region has become the world's leading disposable lighter manufacturing hub.

"Turns out almost the entire world's supply comes from one place: a county called Shaodong, in China's Hunan province."

The area is now home to 114 lighter-related companies that source more than 200 different components from suppliers located within a 20-kilometre radius.

Between them, these businesses reportedly supply around 70 per cent of the world's disposable lighters and support more than 80,000 local jobs.

Mahindra noted that success no longer comes from cheap labour.

"Nobody there is winning on cheap labour anymore. They're winning by shaving a thousandth of a cent off the thickness of a plastic wall, or redesigning a base so a few thousand more units fit into the same shipping container."

Michael Porter's industrial cluster theory explained

The business leader said the example reminded him of the work of his former professor, Michael Porter.

Porter's influential 1980 book, Competitive Strategy, introduced concepts such as the Five Forces framework. However, Mahindra highlighted another aspect of Porter's work that receives less attention.

"It took my thoughts back to an old professor of mine, Michael Porter."

According to Mahindra, Porter argued that regions become globally competitive not because of cheap resources but because specialised companies and suppliers operate close to one another and continuously push each other to improve.

"His argument was that nations and regions rarely win because of cheap inputs. They win when rival firms and specialist suppliers crowd into the same small geography for long enough that they keep pushing each other past what any one of them could manage alone."

Morbi's success story offers lessons for Indian manufacturing

Mahindra also pointed to Morbi in Gujarat as an Indian example of a successful manufacturing cluster.

He noted that the city has grown into the world's second-largest ceramic manufacturing cluster and now produces more ceramic tiles by volume than Italy.

"Interestingly, it's the SAME blueprint which built Morbi, in Gujarat, into the world's second-largest ceramic cluster, now outproducing Italy by volume."

According to Mahindra, neither Shaodong nor Morbi started out as industrial giants.

"None of these started out as giants. The neighbourhood made them giants."

India manufacturing growth needs more than industrial parks

Mahindra acknowledged that India has made significant progress in manufacturing through larger industrial parks, increased foreign direct investment and expanding production capacity.

He also referred to the role played by the Mahindra Group in developing integrated business cities.

"I should declare an interest here, because the Mahindra Group set up 2 of India's first integrated, plug-and-play business cities, in Chennai in 2002 & Jaipur in 2006."

He added that Chennai's business zone alone now employs around 45,000 people.

However, Mahindra argued that India's next stage of manufacturing growth will require a different approach.

"A park brings in investors and hands them a ready plot, power, water & roads."

"A cluster is a completely different animal: hundreds of small, specialised suppliers, each obsessed with doing a tiny thing better than anyone else, feeding off each other's presence for years until no outsider can compete with the whole."

Why Anand Mahindra believes India should build clusters deliberately

Mahindra believes policymakers and developers should actively encourage the formation of industrial clusters rather than waiting for them to emerge naturally.

"I think that's the work ahead of us now."

"Not just more factories, and not just more parks."

He suggested bringing suppliers, toolmakers, testing laboratories, logistics firms and other specialised businesses into the same geographic area.

"Policymakers & developers like us need to start consciously pulling as many of the inputs and resources a sector needs, the toolmakers, the component suppliers, the testing labs, the logistics specialists, into the same neighbourhood."

Concluding his post, Mahindra argued that India cannot rely on chance if it wants to strengthen its position as a global manufacturing powerhouse.

"Shaodong and Morbi both got there by accident."

"We don't have the luxury of waiting for accidents anymore."

"We need to do it on purpose."