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Indian manufacturing industry roaring ahead
Technical Articles- Apr 26,18
Announced in 2014, Make in India has placed the country’s manufacturing sector on the global map as far as being the chosen destination for global producers is concerned. The industry is all set for taking the next leap in manufacturing by adopting advanced technologies and Industry 4.0.
Announced in 2014, Make in India has placed the country’s manufacturing sector on the global map as far as being the chosen destination for global producers is concerned. The industry is all set for taking the next leap in manufacturing by adopting advanced technologies and Industry 4.0.
Recently, Foxconn, the world’s largest contract manufacturer for phones, stepped up its manufacturing efforts in India by starting the assembly of printed circuit boards (PCBs) – which make up about 50% of the cost of making a phone.
Similarly, in March 2018, the Germany-headquartered Rolls-Royce Power Systems formed JV with Pune-based Force Motors, an automobile and auto components manufacturer, for production of MTU Series 1600 engines and power generation sets in India. Two companies have agreed to set up a plant in Chakan to produce these engines and generator sets for the Indian as well as global markets.
These are just a few examples of ‘Make in India’ success stories.
Launched by Prime Minister Narendra Modi in 2014 with the intention of developing India into a manufacturing hub, the Make in India program aims to increase the manufacturing sector’s contribution to national GDP from the current 16% to 25%, and create 100 million new jobs by 2022.
The government has given further boost to the manufacturing program by reforms like Goods and Services Tax (GST) and policy initiatives like:
- Bank recapitalisation
- The steel policy
- Re-establishment of coal linkages
- Establishment of industrial corridors
- Formation of the national grid for energy distribution
- Reduction of income tax rate for MSME companies
“India has risen 30 places on the global list of ‘ease of doing business’ in a recently released report. They wish to make a mark amongst the top 50. The recent elevation to rank 100 amongst 190 countries was primarily due to the Bankruptcy and Insolvency Act, 2017. This act will make it easier to exit or attempt a revival of a business, thereby improving the non-performing assets (NPAs) dilemma for the financial services sector. This will make it easier for financial institutions and banks to deal with NPAs arising from failed businesses,” opines K Shankar, CEO, Feedback Consulting.
With the Make in India drive, the country has attracted many global giants from various sectors like automotive, industrial and home appliances to establish manufacturing facilities to tap a market of more than a billion consumers. Niteen Inamdar is the Chief Operating Officer - Global Operations at Sigma Electric Manufacturing Corporation, states, “India is an attractive hub for foreign investments in the manufacturing sector. Several mobile phone, luxury and automobile brands, among others, have set up or are looking to establish their manufacturing bases in the country.”
Today, India is the 6th largest manufacturing country in the world, with FDI (foreign direct investment) inflows touching $ 60 billion in 2016-17, the highest ever annual inflow. Vijay Wadhawan is the Business Head of System Solutions Division at Panasonic India Pvt Ltd, explains, “Manufacturing over the past few years has been focal to the government’s ambitions of making India an attractive destination for investment. Its much fabled ‘Make in India’ campaign has dedicated itself towards establishing the nation as a perennial powerhouse in the global manufacturing segment.”
Global majors are looking to increase localisation levels in their products. The implementation of GST has also contributed to creating greater transparency in the business chain which in turn, presents an opportunity for the manufacturing sector to grow through means of significant value creation for the Indian economy. “We believe that only 1/3rd of India has been built and that 2/3rd of India is yet to be built. With the rising growth of the infrastructure sector, industries have begun to understand the importance of incorporating energy-efficient solutions that reduces both the monetary and environmental cost,” says Ravichandran Purushothaman, President, Danfoss Industries Pvt Ltd.
Following global footsteps
Global manufacturing landscape is rapidly being transformed by digital technologies such as the ‘Internet of Things’ (IoT) and ‘robotics’ which collectively are being referred to as the 4th industrial revolution or ‘Industry 4.0’. “While the revolution that preceded it was all about automation of isolated machines, Industry 4.0 concentrates on end to end digitisation of all physical aspects that make up the digital ecosystem. This concept is the heart and soul of the smart factory which constitutes of real time connections between humans, machines and objects,” explains Wadhawan.
India needs to leapfrog into manufacturing attractiveness. The country 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 operations technology (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 digitalization,” says Madhav Vemuri, President, Industrial Automation division, ABB India.
Industry 4.0 has altered the manufacturing landscape has given rise to the concept of connected factories, where senor-enabled machines effectively communicate with other machines, devices, and people, garnering the humongous amount of data that can be used to make informed decision-making.
Probodh Chiplunkar is the Global Head - Digital Transformation Business Unit at KPIT Technologies, explains, “A key enabler of connected factories in India will be the Government’s Make in India initiative, which aims to develop the country as the factory of the world and create highly skilled jobs in the sector. Connected factories will be crucial for their ability to integrate global production and supply chains by enabling the flow of information in real-time and creating opportunities to develop analytics frameworks for driving efficiency.”
Focus on exports
India has natural advantages in a variety of industries to address export markets. “By improving productivity, skill, and enabling the business to be industry 4.0 compliant these businesses can achieve considerable export revenues and create jobs,” says Shankar.
Speaking at the inauguration of India Engineering Sourcing Show (IESS) organised by Engineering Export Promotion Council (EEPC) of India in Chennai from March 8-10, 2018, Commerce Secretary Rita Teaotia said that engineering exports from India, which have already on a healthy growth trajectory, were likely to witness a ‘new high’ in the ongoing fiscal. Exports from the engineering sector have reached $62 billion, recording a growth of around 22% during the period April-January of 2017-18.
The shipments to developed nations are increasing at a rapid pace with exports to Europe and North America accounting for around 40% of the overall exports from engineering sector. The initiatives taken by the Government such as Make in India, Digital India and Start Up India would further enhance the growth of industries in the country, she added.
Advantage of early-mover
The manufacturing sector of India has the potential to reach $ 1 trillion by 2025 and India is expected to rank among the top three growth economies and manufacturing destination of the world by 2020. The implementation of the GST will make India a common market with a GDP of $ 2 trillion along with a population of 1.2 billion people, which will be a big draw for investors.
Inamdar says, “With an aim on developing industrial corridors and smart cities, the government aims to ensure holistic development of the nation. The corridors would further assist in integrating, monitoring and developing a conducive environment for the industrial development and will promote advance practices in manufacturing known as Industry 4.0.”
Today, India is not just looked upon as a manufacturing hub, but also as design centre for the world with globally reputed brands like Ferrari (in automobile) and Airbus (in aviation) using the services of Indian institutes, such as National Institute of Design (NID), to design the latest components.
By enhancing skillset and adopting ‘smart manufacturing’, India can surely take the lead in adopting new-age technology and emerge as one of the top three manufacturing destinations in the world by 2020.
Hannover Messe
Germany
Foxconn
Printed Circuit Boards
MSME Companies
Shankar
Global Footsteps
Digital Transformation Business Unit
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