Challenges before Indian manufacturing sector in the next 25 years

  • Articles
  • Sep 14,22
In the Independence Day speech, PM Narendra Modi explained his idea of a new India by 2047. This is a sufficiently long term for transforming a country. R Jayaraman explains how the manufacturing industry in India can contribute to this ‘revolution’.
Challenges before Indian manufacturing sector in the next 25 years

On the August 15, 2022, the Prime Minister Narendra Modi gave a rousing speech about his vision for the India after 25 years. It was as illuminating as much as aspirational. Achieving the ends that he propounded on is a worthwhile goals-based activities that the country will have to undertake in the next many years. 

This government has set many benchmarks for using the BHAG’s (Big, Hairy, Audacious Goals), first described by Jim Collins. Jim Collins may not have foreseen how his idea will be used by PM Modi, but he should be feeling glad that it has been used to such good effect. Although meant for corporates, especially for corporate planning and strategy formulation, the BHAGs can be applied in many other situations also. When attempting large scales changes, the BHAGs can be very useful, but very risky too. The Jan Dhan, the Swachh Bharat, the Demonetisation, LPG distribution, Digital India are all examples of successful implementation of BHAGs. And the results that they have produced are for all to see. 

In the Independence Day speech, PM Modi explained his idea of a new India by 2047. This is a sufficiently long term for transforming a country, although one would have liked a shorter time frame. But, given the magnitude and the complexity of the task, a 25-year time horizon can be challenging too. Let’s see how the manufacturing industry in India can contribute to this ‘revolution’. 

Although not in sequential order of implementation (all these initiatives have to be concurrently run, to keep the momentum of results going), these were mentioned ad seriatim by the PM. The first one, of the ‘Panchpran Pledge’, is to see a developed India by 2047. Given that the manufacturing industry in India has seen a degrowth, in terms of contribution to GDP, in the last few years (see Figure 1), it is time that the industry bucked up and reversed the trend. 



In terms of value, at a GDP of $ 3 trillion in 2022, the share of industry works out to about $ 750 billion. This has to double in the next five years. That is the task at hand. Which means a growth rate of almost 14% compounded. Not easy, but not impossible. The industries to watch are iron and steel, power generation, infrastructure, automobiles and defence production. If the target is to achieve a GDP of 20 trillion by 2047, an average growth rate of about 7.5% per annum should do. By the current indicators, the population of India should stabilise around 1.5 billion, and the GDP would make India a developed country, with a per capita GDP of about $ 13,500. Not bad. 

The second point of the ‘Panchpran’ is ‘removing every ounce of gulami in us’. This might seem to be a social goal, but thinking like that would be a mistake. The manufacturing industry has a leading role to play, with the principle of ‘atmanibharatha’ being the guiding star. Atmanirbharatha does not mean ‘buy only from India’ or ‘make everything in India’. It is a call for becoming industrious, working hard and smart, using IT, and the newly emerging Industry 4.0 methods of work. Using Industrial Internet of Things (IIoT), Artificial Intelligence (AI), IT, Virtual Reality (VR), 3D printing and such advanced technologies, India must lead the world in sustainable development. The Indian industry must learn and deploy Industry 4.0, adjusted for sustainability. 

Although sustainability is in-built in Industry 4.0, it would take a lot more efforts to make India a leader in the climate control, low fossil energy using manufacturing. Just like the revolutions in UPI and aadhar cards driven transactions framework, Indian industry will have to become more standardised, less fuel and water consuming, more eco friendly, using circular economy concepts for ensuring uniterrupted growth, but not get into the trap of consumption oriented demand. This is a new paradigm that has to evolve. This is where the challenge lies. 

The third point is ‘work on the pride of our glorious heritage’. How this relates to the Indian industry is also a topic for discussons and evolution. Increasingly, Indian management schools are making changes in their curriculum, to introduce Indian philosophy, thoughts, outlook, and ‘Science of Spirituality’. These subjects are intended to create a balance between ‘western efficiency and eastern ethos’, a concept which will help industry align itself with sustainability. ‘Value based growth’ will have to become an increasing reality, new paths have to be found to grow without sacrificing either the environment or the social fabric. Both these have to be integrated into a long term ‘jugalbandi’, which will ensure a path of ‘least destruction with maximum construction’. 

In the long term, one would expect to see lots of changes in the manufacturing processes of iron and steel, electric power, aluminium, and allied metals, oil and gas, mining and chemicals. The impact of Industry 4.0 will be felt the highest in these industries, and rightly so, since the ‘triple bottom line’ benefits will be magnified. In a report prepared by CSTEP, Bangalore, under the aegis of the Bureau of Energy Efficiency of the govt of India, in 2013, the authors found that the specific energy consumption in the Indian iron and steel industry was 27.3 Giga Joules per tonne of crude steel, whereas global benchmarks for the same through various technology routes varied between 16 to 19. There is indeed a good scope for improvement. 

The fourth and fifth points refer to ‘unity amongst all’, and ‘fulfilling our fundamental duties’. These have been reiterated through many media talks and posters/ writings, about how ‘Sarve Janaaha Sukhino Bhavanthu’ and ‘Vasudaiva Kutumbakam’ are fundamental concepts embedded in the Indian ethos and psyche. Such a thinking creates an atmosphere where synergy can develop, unfettered creativity can lead to universally beneficial actions. If every person were to realise that whatever one does, should be in consonance with the overall environment of which one is a part, then production of defects, wasteful consumption, hurtful behaviours can all be avoided. 

In this context, it is useful to recall the words of Toyota leaders in the 1950’s, when the ultimate aim of creating Quality Circles was ‘self development’, to be achieved through team work. Quality Circles did not work only in companies or factories, they also worked in the homes of the families of the employees. Similarly, lean management is all about avoiding waste. Six Sigma leads to high efficiencies, thus aiding in low consumptions and consistent production. And the use of tools like TPM (Total Productive Maintenance), 5 S (another Japanese concept which leads to shop floor cleanliness and orderly and systematic working), ISO 9000 etc will lead to satisfying the two slogans spoken of by the PM. It is important that the Indian manufacturing quickly and speedily deploys all these tools and techniques across the organisations, to not only reap the benefits, but also serve as a role model for worldwide manufacturing.

So, the bugle has been sounded, the call has been given, it is now upto the Indian manufacturing industry to rise upto to the occasion and provide the necessary leadership in its sphere of activities, and to thus serve the nation.



About the author:
R Jayaraman is the Head, Capstone Projects, at Bhavan's S P Jain Institute of Management & Research (SPJIMR). He has worked in several capacities, including Tata Steel, for over 30 years. He has authored over 60 papers in academic and techno economic journals in India and abroad. Jayaraman is a qualified and trained Malcolm Baldrige and EFQM Business Model Lead Assessor.

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