“With its ranking going up by three places, India has now been ranked sixth among the world’s 10 largest manufacturing countries” – International Yearbook of Industrial Statistics 2016- published by UNIDO.Co-Authored by B.S.Krishna
The role of Manufacturing in economy has changed over time. As economies developed, the share of manufacturing GDP has peaked in most countries. Consumption as well as employment has shifted towards Services. Share of Services in most Products is increasing, with the evolution of Smart products, productivity improvements, outsourcing of business services like R&D, Logistics and Marketing (which used to be part of Manufacturing GDP), and new “service-like” pricing models.
Of late, manufacturing is regaining its importance for other factors such as its ability to drive productivity growth, innovation and trade as well as the base for increasing services. This is evidenced by the recent Annual Meeting of World Economic Forum, held at Davos where “Fourth Industrial Revolution” was the key topic.
India is no exception to this Global trend and is steadily increasing its share of Global Manufacturing GDP. All leading countries are embarking on major initiatives to promote manufacturing by adopting the advancements in Internet and Information Technology arenas. German government announced “Industry 4.0” while governments in China and India have their own focussed programs, “Made in China 2025” and “Make in India” respectively. In the USA, it is “Industrial Internet Consortium (IIC)” which is leading the efforts towards launching the Industry to the next level. Interestingly, USA is Germany’s Partner Country at this year’s Hannover Messe where the lead theme is “Integrated Industry – Discover Solutions”.
The heart of the “Industry 4.0” idea is intelligent manufacturing, i.e., applying the tools of information technology to production. In the German context, this primarily means, using the Internet of Things to connect small and medium-sized companies more efficiently in global production and innovation networks. This will enable them to not only engage more efficiently in mass production but just as easily and efficiently, to mass customize products. With a well-developed Industry and excellent infrastructure in Germany, this is more of an Enterprise focused initiative.
Industrial Internet Consortium which originated in the USA, brings together industry players — from multinational corporations to academia and governments — to accelerate the development, adoption and widespread use of Industrial Internet technologies. Specifically, the IIC members are concerned with creating an ecosystem for insight and thought leadership, interoperability and security via reference architectures, security frameworks and open standards, and real world implementations as well as to vet technologies and drive innovations.
As the efficiency and quality of Chinese producers are highly uneven coupled with serious environmental degradation, “Made in China 2025” initiative focus is far broader. Its guiding principles are to have manufacturing be innovation-driven, emphasize quality over quantity, achieve green development, optimize the structure of Chinese industry, and nurture human talent.
Similarly “Make in India” initiative is more broad-based. Idea is to encourage multi-national, as well as national companies to manufacture their products in India. With a plethora of crippling regulations and a highly under-developed infrastructure, the Government is focusing more on enabling policies and improving infrastructure for certain key Sectors. According to IBEF, the Government of India has set an ambitious target of increasing the contribution of manufacturing output to 25 per cent of Gross Domestic Product (GDP) by 2025, from 16 per cent currently. Building the right framework for manufacturing competitiveness is the key to success.
There is no escape from integrating principles of Industry 4.0 with the “Make in India” initiative, if Indian Manufacturing has to win against global competition.
India has a unique opportunity to innovatively pave its own road to Smart Manufacturing. It can skip several steps that other countries adopted in their evolution from an agrarian society to their current stage of development.
With the intellect, energy and creativity of a young nation, we strongly believe that it is possible for India to strike out a new path by leapfrogging a generation of technology even in the Manufacturing sector. We are optimistic about this transformation, as India has done this in the past with Telecom, IT and Financial Services, where the latest of technologies were rapidly adopted by skipping a generation.
But the question is “How can India achieve this?”
We are exploring this in a series of articles on the subject, with an emphasis on how the latest generation of technology can enable “Make in India” program to be the launch-pad for leapfrogging India to become a manufacturing powerhouse.