Indian manufacturing industries are excitedly stepping up to adopt digital technology, but it’s not going to be easy as they will have to grapple with challenges, says Jayadipta Chatterji Mehta. The benefits, however, will be more than adequate.
Computer-aided manufacturing, with the support of digital devices to automate manufacturing processes, is disrupting our legacy businesses. ET India Leadership Council members Dinesh Aggarwal, joint managing director, Anchor Electricals, Pankaj Bhardwaj, general manager, South Asia, Avery Dennison, Shujaul Rehman, chief executive officer, Garware-Wall Ropes, Ranganath N Krishna, managing director, Grundfos, Rohit Saboo, president, National Engineering Industries, and Deepak Garg, director, South Asia, SANY Heavy Industry, share their thoughts on the challenges and benefits that digital transformation in manufacturing industries will bring.
THE REALM OF CONNECTED, COMMUNICATING THINGS
In the simplest sense, inanimate objects like machines, devices, sensors, and even manufacturing processes have come alive, with artificial intelligence that makes them intelligent. These are storehouses of data, and can perform human tasks. Humans can capture this data in real time and after analysis take timely business decisions to stay ahead of their competitors, and ahead of the market with newer, and more innovative products and processes. The fast changing nature of this technology makes it imperative for companies to adopt it, or get left behind.
While big and mid-level companies that can make the investment are embracing digital technology, half the members feel that the investment justifies the Return on Investment, RoI, because of the production and operating efficiencies it will bring. In fact, the payback on the investment is as low as 1.5 years, says one member. However, given the impending general elections in May, manufacturing businesses do not wish to make big investments currently. But they are willing to consider a part-approach for adoption, depending on their need. According to one member, the place to start digital adoption will be automating the manpowerintensive, repetitive tasks of companies, as this will bring cost savings. However, this still leaves the large section of MSME manufacturing companies completely out of the game.
Digital adoption is and has been ongoing for several years in India and many manufacturing companies have invested in IT infrastructure and automation of business processes. Now, they even hope to reap the benefits of an IoT platform as it provides flexibility, scalability, and interoperability.
The biggest challenge is the change management that this activity engenders, disrupting legacy systems to bring in the new change technologies. It requires changing mindsets, holding employees’ hands; coaxing many, re-training and encouraging those who show enthusiasm, as they can be the new change agents. Once they understand and learn how to use the new technologies, they lead the way for others to follow. There is also heartburn when having to retrench unskilled employees who could not be integrated into the workforce. This can be later rectified to some extent because the new processes allow production to double and as the company continues to grow, it will re-hire at least half the old staff back, says a member.
INDIA’S DEMOGRAPHIC DIVIDEND – WILL IT PAY OFF?
Today this is the biggest fear whether we will have a technically qualified, right skilled manpower to manage the new-age businesses. Skilling, re-skilling, and imparting technical education must be undertaken on a war footing involving all stakeholders including the government of India and academia. Right now we do not have the skills, but we also know that 65% of our population is below 35 years. An ILO report says in 2030, we will have 160 million people on the job with the starting age group at19-23. We will gain nearly 10-12 million working age people every year over the next decade, leading to a ‘working age majority’. The government of India has already initiated intervention programmes for skills development like the Task Force for Closing the Skills’ Gap in India, launched in October 2018 by the Ministry of Skill Development and Entrepreneurship in collaboration with the World Economic Forum. But this is still only scraping the bottom of the barrel.
Bandwidth and connectivity issues are so challenging that the system just will not work unless we have this infrastructure in place. This is a big impediment particularly in the rural areas, but also in urban areas. The government of India has initiated flagship programmes like Digital India, which envisions transforming the country into a digitally empowered society and a knowledge economy centred on key programme pillars such as broadband connectivity and universal access to mobile connectivity.
CYBER SECURITY IS A BIG RISK
The biggest risk for all members is cyber security. They seek government of India’s intervention in evolving a stronger regulation. Right now the onus is on individual manufacturing companies to build enough security systems to protect their own data. Not just is the law weak but there is also no authority that can exercise the law; so arbitration is never resolved. If resolutions do happen, it will instill confidence in the industry.
The ‘to do’ list for the government of India includes the right sort of regulatory framework, adequate bandwidth, and infrastructure to support manufacturing industries. From industry bodies is a demand to provide adequate information and support, along with examples of success stories of manufacturing companies that have adopted digital technology, and definite areas of opportunity. This is particularly for those in legacy systems, as they will have to shed all their systems, and put in new digital technology. This can only happen at an enormous cost, but the RoI calculation is not easy. This is the biggest impediment, says one member. Then again, industries like specialty textiles are partnering with companies in Japan and Germany for their technological upgradations as this expertise is not currently available in India. Finally, IT companies are requested to provide hardware and software as a service on a monthly pay basis to MSMEs, while ensuring data security.