Industrial Automation Magazine India

A major entry barrier is the cost of acquiring the required skill-sets

Published on : Friday 03-04-2020

Vikas Dhawan, Entrepreneur, Futurist, and essentially a Technologist.

How do you assess the current state of Indian industry in terms of modernisation?

We are in a much improved state as compared to 5 years ago. Industry 4.0 has moved from being just a buzzword, to a priority on the dashboards of C-levels, and industry is now willing to look at methods less conventional. Customer-centricity is a key mantra, and Mass Customisation is becoming the new normal. In fact, in the technically advanced verticals such as Automotive, many of the larger OEMs are moving towards flexible assembly lines that in future can accommodate a batch size of one individually customised vehicle! In this super-connected age, condition-based predictive maintenance (to minimise loss of production) and the IoT-based Digital Twin are other trends that are catching on fast. Apart from Automotive, the other leading verticals that have seen modernisation and transformation, have been Chemical, Defence, Electronics, and to some extent Textiles. In most other manufacturing verticals, however, we still suffer from lack of sufficient modernisation and adoption of the Industry 4.0 technology stack. India being a very price- sensitive market, many Industry verticals lack the skilled personnel, the willingness to upgrade to emerging technologies, and the vision to know the importance of such adoption.

Many do see this importance, but are hampered by barriers to adoption: In the absence of interoperable platforms, the integration of legacy systems is proving difficult. Then, finding people with the right technical skills remains a challenge, and neither are the necessary investments being made in training and skill upgradation. Then again it is the Data; while most organisations now realise the value of data, the data being collected from the grass-roots or the OT (Operational Technology) stream, is not being fully integrated to the IT stream, and very few really have a clue on what to do with the data.

We do have a small percentage of manufacturers with a strong focus on Digital Transformation of the Enterprise. However this is not yet widespread, is still being implemented only in silos, and most such DT efforts are focused only on the productivity and efficiency aspect. And DT is not just about Efficiency and Productivity: It involves stitching the entire enterprise from a single fabric, removal of silos, digitalisation and connectivity, and integration of all its internal and external processes.

Of the existing efforts, the digital transformation exercises that look successful, are typically seen to occur under digital-savvy leaders: Leaders who have had the vision to build innovation management and the emerging technical skills into their workforce, and thus enabled a seamless integration between the traditional analog and the new digitalised sections of their business. The digital vision is certainly coming into place, but apart from the top 4-5 industry verticals in India, and the market leaders in other verticals, the bottom of the pyramid – the SME’s – have some way to go yet.

What could be the reasons for the slow pace of modernisation of industry in general despite the availability of technology?
A major entry barrier is the cost of acquiring the required skill-sets and the transformation technologies to implement the Industry 4.0 stack. Of course, most Industry 4.0 technologies have a clear return on capital employed, (ROCE) that pays for itself, but this is not widely known.

The second barrier is the fear of change, and the necessity to move out of individual comfort zones: These tech-enabled transformations bring huge changes in not just the process, but the organisation structure itself, which translates into insecurity for many within. Third, in many older organisations, the mind-set exists to avoid change if things have been working well for the past many years, and there is complete unawareness (or even denial!) of the inevitable tech and business disruptions coming, as well as of the consequences of not embracing this wave.

The automotive industry is a good example but the success is not replicated in, say textiles, where exports are not in line with the potential?
In terms of exports our Textile sector is one-fifth the size of the Textile sector in China, and is also receiving very stiff competition from the other Asian tigers such as Vietnam and Bangladesh. Two major reasons for not performing to our potential are, one, the Business environment, and, two, the Technology environment. The former has already led several of the larger Indian textile manufacturers to set up units in LDC countries in Africa and elsewhere, to take advantage of lower costs, easier regulations and more favourable Trade terms. Constraints in the business environment include multiple factors such as high input costs, regulations on fibre, slow processing of rebates, trade policy, inadequate Free Trade Agreements, and very expensive institutional credit. The new Textile Policy, expected towards the middle of this year, is being eagerly looked forward to, to solve some of these issues.

Indian textile exports are dominated by SMEs, and they face roadblocks such as lack of scale, overdependence on cotton, shortage of skilled manpower, lack of technical knowhow, lower productivity as compared to Vietnam and Bangladesh, and very low investment in productivity-enhancing equipment and technology (which China has set up very well). Fortunately, most of these can be solved using emerging technologies. Low productivity and efficiency, and lack of skilled manpower can be overcome using the Industry 4.0 technology stack, which includes robotics, IIoT, process automation, additive manufacturing, data analytics, cloud computing, AI and digital security. Over-dependence on cotton can be minimised by moving up the value chain, and focusing on MMF (man-made fibres) and Technical Textiles (including agro-textiles, special-use Industrial textiles, and Medical textiles).

The Textile Policy being rolled out in mid-2020 is also expected to encourage the setting up of giant 1000-acre Textile Parks to solve the issue of scale, as well as remove several of the hindrances that are stopping the Indian Textile vertical from achieving its potential in terms of exports.

At the moment the renewable energy segment in India is growing, but so is the demand. What should be the ideal energy mix?
India is well placed in the renewable energy segment. We have fast growing capacity in terms of power from solar, wind, biomass, and large and small hydropower. By the end of this year, it is expected that almost 20% of the electricity generated in our country will be from renewable sources. The MNRE (Ministry of New and Renewable Energy) plans for this figure to double by 2030. Going by current trends, it looks like we will achieve this goal much faster. Achieving these targets will put us among the world leaders in renewable energy. A goal of 40% to 50% of our power from renewable sources, should be a suitable desired mix for the coming decade.

What more can the government do to boost manufacturing in India with the vision for a USD 5 trillion economy by 2025?
The Government of India has laid a strong emphasis on Industry 4.0 adoption, and is also working on upgrading the physical and digital infrastructure required to support the same. The GoI has also taken a number of steps to provide financial and other assistance (such as on IP registration) to small entrepreneurs and startups. In fact India has moved up on the Ease of Doing Business index.

However we still lag behind in enforcing contracts, as our legal processes need sprucing up. The process of starting up a business still needs streamlining, and the cost of commercial credit needs rationalisation. Then again, the complex regulations, red-tape, and reporting formalities are making the going tough for the SME’s who are at the heart of our economy. While a lot of good has been achieved, clearly some more work – and simplification – is required on the ease of starting and running a business in India.

Is sustainable development a difficult goal to achieve for a growing economy like India?
Well, sustainable development need not be difficult, provided we can get over the popular misconception that sustainable development cannot be lean! The common assumption seems to be that adding environmentally friendly practices will inevitably add to the cost overheads. This in turn leads to the question of whether customers would be willing to pay these additional costs, particularly for products that have cheaper alternatives available in the price-sensitive Indian economy. Nothing could be further from the truth! In fact Sustainable development looks at minimising factors such as Wasted Resources (material, energy, workforce), and Adverse Environmental impact. Of course we need more data to be sure, but a focus on lean sustainable development, will ensure that positive bottom-line impact will drive sustainable development in India (rather than reasons such as risk of regulatory non-compliance and penalties, or for reasons of compliance with the requirements of their B2B customers in advanced economies). Elimination of wasted resources has the potential to reduce tremendous costs across the extended global supply chains of modern day businesses. In fact, most early adopters of sustainable development seem to see a very clear relationship between sustainable practices and the direct contribution of such practices towards the achievement of the strategic sustainability goals of the business with respect to Profit, People, and the Planet.

(The views expressed in interviews are personal, not necessarily of the organisations represented)
Vikas Dhawan, is an entrepreneur, futurist, and essentially a technologist, who has developed deep expertise in most of the trending technologies of the last three decades. An alumnus of IIM-Calcutta, with almost 30 years of technology experience, Vikas is also a public speaker on various technical subjects, the most recent talk being at the annual Pune Data Conference (http://punedataconference.com/) where he spoke on the role of Big Data Analytics in Industry 4.0. Vikas is a strong believer in continuous learning, and is currently pursuing his Masters in Business Law from NLSIU (National Law School of India University, Bengaluru).

#April 2020 Magazine Cover Story

Transforming the Industry. Experts debate the factors that are holding back the Indian industry in quest of modernisation, and improved productivity. Digital Transformation is the buzzword for industry in the wake of the Fourth Industrial Revolution or Industry 4.0. Like much of India with various States at different stages of development, the Indian industry too is not a uniform entity in terms of modernisation and technology. The automotive industry is perhaps the most automated and leading on the digital transformation front as well, but many other segments, especially the MSME component that forms the largest chunk, are still at various stages of modernisation. To read the full cover story Please click here