I can't tell what your nationality is, so my apologies if you have had experience in the developing third world, but it sure doesn't seem like you do.
I used to work in the 3rd world, and I can tell you that most people who have long-term experience in doing relief and development work in developing countries will tell you that the most sustainable way forward are locally targeted initiatives, with simple machines that step a local group forward, generally along the same lines that innovations happened in the developed world. For example, in Afghanistan, the best thing to happen to the infant mortality rate in several regions has not been the creation of a new, relatively modern hospital, but instead mid-wife training programs. (I'm sorry I don't have citations at hand, I was at some presentations in country when I heard this) Especially in places like rural India that have the potential to be conflict zones, this man inventing a cheap, simple machine and selling the machine instead of selling napkins, is an overall net win, it will make him money eventually and it will increase access to sanitary napkins.
Finally, check into the Howard G Buffet foundation for modern success stories on teaching farmers to use non-industrial techniques, and check out a UNDP project, I think in Loghar province in Afghanistan, where they spent time teaching farmers some American 1930s level farming techniques to increase crop yields three fold without machinery and in a fairly sustainable fashion. (Again, I don't have a citation because this came from talking to a project guy in country, I can't even remember who he was working for now)
Basically, what this inventor is the right way to create a sustainable, inexpensive way to increase the usage of sanitary napkins throughout India. Your way might make more money, but has problems if the goal is to increase women's health, which this man's goal clearly is.
*edited for clarity in a couple spots.