Earlier quoted context omitted.
The article mentions that commercial napkins sold for 4 rupees despite cotton being 1/4000th the cost, but also says farther down that the locally produced ones sell for an average of 2.5 rupees each. That's a 38% discount: significant, but it doesn't seem like a game-changing difference to me. I imagine that if this catches on, the larger manufacturers will likely just cut their margins to compete. On a more general…
"I imagine that if this catches on, the larger manufacturers will likely just cut their margins to compete." That'll will never happen because these village women have never been their customers.
And they would have no choice but to sell them in a shop, which as the article mentioned, are predominantly run by men.
The inventor effectively cut off any chance for a multinational brand to enter this market, because he is selling the people their own manufacturing capital and distribution network, rather than trying to capture all the consumers for himself.
It would be like Microsoft trying to sell Windows 8 on an island where every inhabitant already uses the island's own distribution of Linux, and 10 people in every village contribute to it regularly.