Future of Manufacturing in India: Reclaiming the Glory of our past!

When asked for my prediction on the future of manufacturing in India, I vehemently stated that India will be the second largest manufacturer in Asia within this decade itself. My prediction is that manufacturing will grow to 25% of GDP. My son then asked, “What makes you so confident?”. In response, I placed a bet of Rs. 380!! Yes, I placed crisp notes of 200, 100, 50, 20, and 10…all face down. What stared at us were the images of the engineering marvels of India. Konark, Ellora, Hampi, Sanchi, Rani ki Vav…all of them have been standing tall as symbols of our audacious vision, unwavering resolve, ingenious craftsmanship, and rich illustrious heritage.

Till about a few centuries ago, India accounted for 25% of global trade. One of the big exports from India was cloth (muslin). With the advent of the Spinning Jenny in 1770s, Britain started to gain leadership in cotton cloth. The machines brought down the manufacturing cost by 85%. Since then, colonized and economically constrained India lost its global trade leadership. India fell behind in economic growth and prosperity.

India’s participation in the past Industrial revolutions (3 of them) has been lukewarm and significantly delayed versus the developed countries. Surely, early industrialization brought lots of wealth to a select group of developed countries.

Oh…Yes, there have already been 3 industrial revolutions! The first industrial revolution happened in the 18th century; it changed the life of cottage industries through large-scale use of water and steam energy-driven machines. The second revolution saw the use of electrical energy for mass production in factories. Later in the 1970s, we saw the start of the 3rd revolution which was driven by the large-scale use of electronics and basic automation.

Now is the age of Industrial Revolution 4.0. This time it is driven by digital power. Digitalization impacts not only the industries but every aspect of the human lives. This revolution changes the way we consume (not just the way we produce). While the 3rd and 4th phases focused on mass production to lower costs, the current phase builds capability to deliver mass customization at lower costs and quicker speed to market. Industry 4.0 is the decisive opportunity for India to reclaim its glorious leadership in manufacturing and trade.

The following key trends dictate and set ever-high expectations for our manufacturing function:

  • Today’s customer expects anytime, anywhere services and products. This creates an interesting task for sales and supply chain to be agile while maintaining low-cost Customers are connected through various social media channels and have multiple point-of-purchase options. This makes demand furthermore volatile, making forecasting perplexing.
  • Sustainability is an important agenda that requires immediate interventions. Customers and shareholders both keenly look for initiatives taken by their choice brands.
  • Geopolitical disturbances have prompted businesses to work on SC resilience strategy and build capabilities (read flexibility) in sourcing, manufacturing, and distribution. Localizing and ‘Complexity reduction’ are among the top agenda items for supply chain heads.
  • Rapid advancements in digital technologies have made data transfer, storage (cloud), and big data analytics affordable. Companies that make early breakthroughs shall enjoy the first-mover advantage over the competition.
  • The ‘China+’ sourcing approach gives a definite boost to Indian manufacturing.
  • Government initiatives like ‘Make in India’, National Logistics Policy, SEZs, and incentives to the digital industry pave the way for India to become the second largest manufacturing hub in Asia.

This is an abridged version of the article published in the November edition of Logistics Insider Magazine. To read the complete article, click here.

Leave a Reply

Your email address will not be published. Required fields are marked *