Prof M K Bhat
Manufacturing sector is the pivot of Indian economy. It contributes 17% of our GDP at present and employs 27.3 million workers . India expects to export goods worth $1 trillion by 2030 and the manufacturing policy of the Government aims to raise the manufacturing GDP share to 25% by 2027 .This sector helps in the growth of both primary and tertiary sectors by producing the necessary machines and bears every potential to provide jobs to the educated youth of the country but over the years , growth of this sector has not been appealing. It has failed to develop international brands of its own due to low quality. This sector faces lack of innovation in production process, planning and machine capability. There is shortage of skilled persons and those produced by educational system of the country are not industry useable and need initial training which adds to the cost. The low financial power makes entrepreneurs to use traditional technologies and thereby makes their products unfit for the market. The other impediments in the way of this sector are low infrastructure, power shortage and bureaucratic barriers. It is no doubt that the ease of doing business has improved a lot in last decade still much remains to be done. According to the World Bank, India ranked 63rd in 2022 in ease of doing business across the world among 190 countries, improving its rank from 142 in 2014. All these factors have led to low labor and capital productivity in this sector. Manufacturing productivity in Indonesia is twice than ours while as it is four times higher in China and South Korea. In certain sectors this disparity is too much e.g. South Korea’s electronic manufacturing is 18 times more productive than India’s and its chemical manufacturing sector is 30 times more productive than ours. This low performance becomes evident by comparing India’s share of world manufacturing with China. Both the countries got their independence at the same time yet China’s share of world manufacturing is 28.4% while as India’s share stands at 3.3% despite its demographic dividend, democratic set up and cheap labor costs. The problem is likely to further deteriorate due to Russia – Ukraine and Israel – Iran War. Currently Indian manufacturing sector is facing a tough competition at the hands of China.
In order to boost the productivity, we may have to offer more value-added goods, with higher productive quality, better packaging and stronger brand appeal. There is an immense need to explore new markets rather than striking again and again in saturated markets. This requires continuous innovation in all the business spheres. There is a drastic need for the export of finished goods and stress should be on the export of non- agricultural goods as they can help the country to fetch higher earnings in the international market.
In order to overcome the problem of low productivity, adoption of technological revolution 4.0 becomes quite important on the one hand but on the other its adoption raises certain pertinent questions like: Do we have enough skilled workforce to meet the requirements of the industry? What will be its impact on the job market? How much costs it will reduce? How it will increase the productivity of the manufacturing sector? How it will lead to better decision making? How it will improve our supply chain, product finish etc.? Skeptics doubt that it will curtail jobs in the market but matter of the fact is that the nature of jobs will only change, the demand for advanced computing will escalate in the market and those with specialized skills will find enough avenues. Business will grow.
Smart factories are born of technological revolution 4.0. It is worthwhile to mention here that technological revolution 4.0 unlike earlier technological revolutions adds nothing new to the manufacturing sector but integrates the system for industrial development. The first technological revolution revolutionized the production by adding steam engine to the production process and the second increased the production through the use of electricity, while as the technological revolution 3.0 saw the advent and rise of the information technology ,internet, renewable energy, mobile phones and other connected devices .This revolution lead to a remarkable changes in the business world and influenced the modern business functioning. It laid the foundation stone for the technological revolution 4.0. The technological revolution 4.0 involves artificial intelligence, Robotics, automation, advanced analytics and internet of the things etc. It is worthwhile to mention here that every small step taken to digitalise the manufacturing sector is a step towards technological revolution 4.0.
The application of technological revolution 4.0 requires smart factories. These factories apply advanced technologies to analyse data, drive automated processes and learn as it goes. It is an interconnected network of machines, communication mechanism, and computing power. Its proper application will not only help to increase the production but will also go a long way in reducing the production, logistic, transportation and other costs. The low cost will help entrepreneurs to fulfill; the growing aspirations of people, face market competition and may help to reduce business hiccups borne of global business supply chain disruptions. The escalation in demand will ultimately increase their profits which will help them to attract more capital. They can reinvest their capital surpluses rather than being dependent on foreign investments.
The smart factory uses smart technologies like cloud connectivity. It helps in the flow of information in a smart factory. It ensures that each area of business operates in real time data and also ensures smooth functioning of connected assets within the supply chain. The artificial intelligence technologies have speed, power and flexibility to gather and analyse disparate data sets and to provide real time insights and responsive recommendations. The automated processes and intelligent system within a smart factory are continually optimized and informed by artificial intelligence. Machine learning helps a smart factory for advanced predictive maintenance, alert can be sent before system failure takes place or if required human intervention can be recommended.
The best thing about smart factories transformation is that, to be effective it does not happen all at once nor does it require existing activities to be interrupted or paused. It is a continuous process and every initiative in business taken to modernize and optimize the digital system brings the enterprise a step close to a fully integrated smart factory.
In order to revigorate the manufacturing sector and to make smart factory working possible, Government of India has continuously taken various steps in last 10 years. Mention can be made of National Infrastructure Pipeline, PLI scheme for manufacturing, Make in India, Atma Nirbhar Bharat, PM Gati Shakti, Mega Investment Textile Parks, Samarth Udyog Bharat 4.0. All these steps have yielded good results for the country. This is well elucidated by the fact that India exported first time BrahMos supersonic cruise missiles to Philippines under $375 million deal signed in 2022. India’s defence exports have soared to a record-breaking height of RS.21083 crore (approximately $ 2.63 billion) in the financial year 2023-24 making a significant growth of 32.5% over the previous years figure of Rs 15920 crore as per ministry of defence. The Defence Ministry has set a target of achieving a turnover of INR 1.75 lakh core in aerospace and defence manufacturing by 2025. India’s defence exports have increased from RS.686 crore in Financial year 2013-14.
The skeptics may doubt the efficacy of smart factories as per Indian situations but it is the need of the hour for earning more from the international market. The hard fact is that every technology was doubted in its initial phase.
(The author is Professor (M.A.I.T) Guru Gobind Singh Indraprastha University, Delhi)
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