> India has the third largest startup ecosystem in the world.
> It is the largest exporter of generic pharmaceuticals.
> When it comes to exports of cars, it does not even rank in the top 15.
> Overall, India’s manufacturing sector makes up around 17% of the GDP.
> The services sector makes up over 65%.
Individually, these numbers might not make much sense but put them in context, and there is a big problem staring right at us. Experts have argued about it, the government has put its might behind it, but the manufacturing sector in the country needs more than just incentives and tax breaks.
That is the question which brought together a host of experts over three discussions at the ET India Inc Boardroom – the manufacturing sector in India, what needs to be done to make the country a manufacturing hub and how can technology help there, as well as the seemingly never-ending debate on Make in India versus assemble locally or import altogether.
ET India Inc Boardroom, presented by TXN NXT powered by NPCI, brings together industry leaders, policy makers and economists to discuss and deliberate key sectors of the economy. Over the five-day conclave, experts uncover trends and challenges in the BFSI, Retail, Manufacturing and MSMEs sectors, as well as the economy as a whole.
Indian manufacturing, for decades, has been operating at a growth rate of 6-8% a year. But the real issue is that it is not enough. Double-digit growth in manufacturing is required if the $5 trillion economy target is to be met, said Maruti Suzuki Chairman RC Bhargava in a fireside chat.
Kamal Bali, President and MD, Volvo Group India, said for his company, India is the engine manufacturing hub, but there are many other sectors where demand is low, which has kept out localisation. On the government’s initiatives, he said ‘ease of doing business’ was on the right path, but there were several reforms needed to boost manufacturing. He also said $4 trillion global value chain would rebalance in the near future, creating a huge opportunity for India.
Suvojoy Sengupta, Partner, McKinsey & Company, added that India has a good technological backbone, but what it needs to focus on is technology. He said the government could help here by setting up digital capabilities centres and making manufacturing a technological mission.
R&D push
There is a strong difference between research carried out in India versus overseas, said Alok Nanda, CTO GE South Asia & CEO GE India Technology Centre, GE Global Research. There is innovation for today, tomorrow and for the future. Indian companies invest their funds in innovation for today and tomorrow, but research for the future is lacking. The world over, long term innovation has participation from the government, academia and the industry. However, In India, industry participation is lacking, which needs to change.
What we have is a good number of problem statements to be solved. Large companies have R&D centres based out of India, doing research for global markets, said Sanjeev Sharma, MD and CEO, ABB India and South Asia. He added that IoT, digitalisation, automation, and robotics is the future of manufacturing.
For the country to be a manufacturing hub, there needs to be mass customisation, focus on technologies such as IoT and 3D, and companies need to adhere to compliance standards. “Manufacturing has to be environmentally friendly, socially inclusive, economically efficient, morally ethical,” said Kamal.
They also agreed on the important role MSMEs have, and will increasingly play, in setting up manufacturing. MSMEs, they said, have access to technology, making them the ideal growth drivers.
Guenter Butschek, CEO and MD, Tata Motors, Narayan Krishnamohan, MD, BASF India, Ramesh Ramadurai, MD, 3M India and Sandeep Makkar, MD, Johnson & Johnson Medical India, in their session, spoke about other aspects to making India a manufacturing hub. “We have among the most expensive power on the planet,” said Ramesh, while Guenter emphasised streamlining logistics.
Sandeep laid out some important factors for the medical manufacturing sector. Resiliency in healthcare is critical, as seen with the pandemic. Constant demand for healthcare, a low doctor-patient and nurse-patient ratio, and almost no skilled labour for manufacturing medical devices means there is a significant opportunity for specialised manufacturing and upskilling of people in the sector. “Upskilling to get to medtech, compliance, and quality standards are of utmost importance, and we have to change the ‘chalta hai’ culture,” he said. He also said creating a skilled supplier base and increasing the number of women who occupy management roles in manufacturing companies will go a long way in improving the sector as a whole.
Watch all sessions of Day 4 (Manufacturing) of ET India Inc Boardroom
Also Read: MSME sector is the key to unlock India’s economic growth
