SMEs are the foundation on which industry is built

  • Interviews
  • Feb 01,18
New opportunities are expected to be unleashed with the government aiming to increase the share of manufacturing in GDP from currently 15% to 25% in a five-year timeframe.
SMEs are the foundation on which industry is built

New opportunities are expected to be unleashed with the government aiming to increase the share of manufacturing in GDP from currently 15% to 25% in a five-year timeframe. While sectors like automobiles have been early adopters of technology, there are the dark horses like paints, cement and steel, who are also taking the next step to be digitalised, says Madhav Vemuri, President, Industrial Automation division, ABB India. In this interview with Rakesh Rao, focuses on importance automation and digitalisation for Indian manufacturers.
 
As India gears up to become global manufacturing hub, what are key challenges before manufacturers in the country?
While there are several challenges before the Indian manufacturing sector, these challenges when viewed as areas of opportunity and addressed accordingly can help India leapfrog to the next level. At 129%, India's energy consumption growth to be highest among major economies and India's share of global energy demand to rise to 9% by 2035. This in itself is a huge opportunity to deploy digitally-enabled products and solutions that help lower energy consumption and costs through better power and process management. Tremendous benefits can be gained through better power management - quality, availability and reliability. On the process side, one can look at lower more energy efficient processes, which to a certain extent can be achieved by using high efficiency motors and operating them with drives.
 
The faster RoIs (return on investments) on energy efficiency products and systems (typically at most a couple of years) could be great enablers. Lack of standardisation on items like cabinets, machinery, layouts, mechanical and electrical drawings can add tremendous efficiencies. Digitalisation can drive integration that customers will benefit from design to delivery, component layout, assembly and testing, thermal design included. This improves productivity through better accuracy, faster assemblies and reduced engineering effort. Most importantly, a true integration of information technology (IT) and operations technology (OT) – combining digital delivery with domain knowledge will help unleash the full potential of digitalisation. It is also important that one learns from the best practices of other discrete sectors like automotive industry – their adoption of technology and handling cultural changes, which can contribute immensely to other sectors. 
 
What are the strengths of India which can be leveraged to attract global manufacturers? 
India has a great history of leapfrogging as proven with the exponential growth in mobile phones and Internet on phones as well as bringing down costs of LED bulbs and manifold growth in their usage. India demonstrated how the nation can make rapid strides when it comes to adoption. The flexibility and scale to ramp up is present. On the one hand, India innovated the software services-led global delivery model. To be able to combine that with the OT knowledge built over decades – this makes the condition conducive for the convergence of IT and OT and transition to and leverage the next wave of growth in manufacturing through digitalisation.
 
Abundance of mineral resources and government push for infrastructure growth are proving to be catalysts for growth in manufacturing – India is the second largest cement producer and the third largest steel producer globally. Our other core strengths are the ability to handle scale which has been proven through multiple government programs, and finally, the robust engineering and R&D ecosystem in the country.
 
Which are the sectors where India has the potential to emerge as a major manufacturing powerhouse by 2020? 
Given the huge consumption-driven economy, India will continue to focus on steel and cement manufacturing including refining and petrochemicals (all fostered by investments in infrastructure). Food and beverage (F&B) and pharma offer a huge growth opportunity as well, with the growing disposable income of the steadily expanding middle class. 
 
The telecom and electronics sector will be a dominant player in manufacturing – given the growing emphasis on and adoption of digitalisation. There is likely to be considerable consolidation through the mergers and acquisitions (M&A) route. Technology pertaining to energy efficiency, productivity, quality - doing more with less across sectors will assume a much bigger play.
 
How can new manufacturing technologies (such as 3D printing, advanced robotics, AR/VR, AI, etc) help India to become a global production hub?
Currently, the manufacturing sector in India is on a low maturity curve when it comes to automation. Automation being a key starting point for digitalisation, the Indian manufacturing sector needs to automate much of its operations - discrete manufacturing, process related system and power management. There are significant opportunities to leverage in terms of energy usage and optimising plant uptime, yield, quality etc. Digitalisation offers valuable insights into operations and helps focus on decisions that need to be taken to ensure higher productivity. A sizeable component of the benefits that 
can be realised will come also through automation.
 
How important is the role of small & medium enterprises (SMEs) in shaping the future of Indian manufacturing sector? 
As global examples clearly illustrate, small-medium sized enterprises are the foundation or bedrock on which the industry is built and advances, and are a critical cog in making India a global manufacturing hub. Approximately around 40% or slightly more of global economy is powered by SMEs. In Germany, MSMEs contribute 52% of the country’s economic output, employing more than 15 million people. SMEs contribute 60% of China’s industrial output and create 80% of China’s jobs. Their development could also create the value differentiator or competitive advantage for India. For instance, Japan is known for lean manufacturing while Switzerland is known for precision. 
 
In terms of larger strategic models for the SMEs, the requirements of different sectors vary from technology, training and finance to industry linkages. So, the solution lies in creating our own model of SMEs development taking elements from successful examples which give us the best from all corners as well as address the issues of SMEs spanning different sectors. Instead of focusing of multiple corners, best practices can be developed for different sectors which aids SMEs in focusing on particular areas and adopting a long-term approach to leverage next level manufacturing like digitalisation.  
 
What is your outlook for Indian manufacturing industry by 2020?
To remain competitive and relevant, the Indian manufacturing sector will adopt better practices – not just in operations but also for the workforce including health and safety and better wages. Global standards of quality will be key to the sustainable growth of this sector. Given the increasing focus on digitalisation, the electronics sector is likely to see some rapid growth, subject to quality and acceptability of ‘Made in India’. The government initiatives to increase the share of manufacturing in GDP from currently 15% to 25% in a five-year timeframe will unleash opportunities. Precision and high-end manufacturing coupled with the focus on smart cities, defence, transportation will set off significant manufacturing growth options. A lot of companies will increasingly make India their base market for exports. 
 
Skilling is a significant factor that will determine how well the manufacturing sector will mature and grow; however, India is also the base for cost effective engineering and science domain expertise. The defense sector is just opening up; the first few successes will determine the role of privatisation in this sector. While sectors like automobiles have been early adopters of technology, pharma and food and beverage are upcoming ones. There are the dark horses like paints, cement and steel, who are also taking the next step to be digitalised.

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