Ram Venkataramani
Ram Venkataramani
Dear Member
 
Manufacturing Sector in India – Are we Smart enough?

The recently published Niti Ayog & IDFC study on EoDB (ease of Doing Business) Report starts with the phrase that India needs to create an environment that fosters globally competitive firms, capable of driving and sustaining economic growth.  There cannot be any two opinions on this.

In fact the Chamber proudly recalls the study we took up a couple of years  back on the Regulatory Roadmap for manufacturing in Tamil Nadu which also touched upon many of the procedural issues which the industries, particularly manufacturing and more particularly the SMEs face in the State.  Though the Niti Ayog report states that a future volume will analyze the state of business environment in individual states, it has mention about Tamil Nadu in many contexts, as ours is one of the high growth States, obviously.

The manufacturing sector in India is a major economic driver.  Though India’s manufacturing sector have crossed many milestones from the initial industrialization and the license raj to liberalization and the current phase of global competitiveness, It has been plagued by the complex tax structure, inadequate infrastructure etc., diminishing its capacity to perform well in the global arena.  The April – June’17 quarter figures on manufacturing do not present anything to cheer.  The reasons could be many which may also include the lingering effects of “demon” and the current transformation to The Goods and Services Tax (GST).

GST which became a reality from July 1, 2017 by its transformational shift from complex multi tax structure to a unified tax structure and overall reduction of cascading effect of taxes, is expected to revive the manufacturing sector which has become more or less stagnant with only 16% share of GDP.  Though the initial switch over to the new system is comparatively smoother than expected, concerns remain on specific issues such as the additional 1% origin tax, cash flow issues on account of GST payable on stock transfers, lack of clarity on exemptions and increased costs owing to exclusion of petroleum fuels from the ambit of GST and so on. The technology also has its hiccups and things are yet to settle down fully both with the business and with the Government.  Though these are the initial reactions, we still hope that the GST would have a positive impact on the roadmap drawn by the Government to make India the fifth largest manufacturing country in the world by the end of year 2020.

While the GST impact is phenomenal on one side of the coin, the other side reveals the potential for the manufacturing sector to grow manifold by aligning with the latest technologies that is causing a revolution in the manufacturing sector worldwide.

A new paradigm that is in tune with the digital 21st Century is fast emerging, driven by Industry 4.0 (I 4.0), which is a collection of nine cyber physical and data technologies.

With Robotic technologies, robots are more trainable and have a very high artificial intelligence (AI) coefficient.  In many cases, robots are employed to complement rather than replace workers.  This concept known as “cobotics”, teams operators and machines in order to make complex parts of the assembly process faster, easier, and safer.  Collaborative robots, popularly known as Co-bots are all set to drive the next wave of technological innovation in the manufacturing sector.

New information technologies are offering not only to make the management of manufacturing more effective, but the work itself smarter.  Technologies based on the Internet of Things have the potential to radically improve visibility in manufacturing to the point where each unit of production can be “seen” at each step in the production process.

The yet another driver of change in the manufacturing is the 3D printing technology which produces solid objects from digital designs of different materials.

We find that the Government apart from boosting the manufacturing sector along with the opening up of the sector for foreign direct investment is also having mechanisms such as clean development mechanism.  PAT Scheme, SEBI guidelines to propel the Industry to incorporate sustainable measures.  This proves that we are moving towards a mature state wherein though the traditional approach related to increasing production, operational quality and price cannot be ignored, the manufacturers are intensely focusing on areas like energy, water, emission, waste, production, awareness etc.

Indian manufacturing should particularly be cautious to balance the man vs machine components in the most appropriate manner suitable to our condition.

Let me conclude by saying that if we seriously think about “Make in India”, then the Government, both Centre and the State should ensure the Ease of Doing Business in letter and spirit and the industry on its part should gear up to join the technological wave to have an edge over its global competitors.  As speed is the essence, it is time to move forward and grab the opportunity to scale new heights in the economy,
December 2017
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