Competing with China or being the China +1 option can only be a short-term sub-strategy. Instead, we must go after skill driven value.
300 years ago, Indian manufacturing dominated the global economy. Today, our policymakers may well look into the past and glean a few valuable lessons.
Historically, the Asian age was marked by thriving cultural and trade interactions with the West. An open exchange of ideas, materials and products backed by strong sponsorship and patronage played a vital role in establishing India’s dominance. The isolationist and protectionist policies that followed led India and China to retreat from the global stage. It is time India used the skills of its people and exercised its political will to reclaim its position globally.
Coming full circle
The industrial revolution in the West triggered the onset of mechanisation. Textile mills in Manchester replaced the weavers of India and prosperity moved westward. You could have any car you wanted – so long as it was black. Assembly line manufacturing and production efficiencies built the western nations into the economic powerhouses of the world. In the last 30 years, the abundant labour of the east and the mass production techniques of the west combined to revitalise the Asian economies and helped them regain manufacturing supremacy. This has been a journey from mass customisation and personalised production to mass production and assembly line manufacturing. But, this evolution may just be coming full circle.
Today, we are at the onset of the third industrial revolution, where technology will again dramatically alter the way manufacturing is done. One of such evolving and promising technology is 3D printing. This is the trigger that will transform production from subtractive manufacturing – where you cut and beat materials into the desired shape – to ‘additive manufacturing’ – where you start with a material and incrementally add layers to create the final product. Leveraging this engineering prototype crafting technology to serve the consumer market is the next frontier in manufacturing.
The 2D printer uses inks of various colours to print designs and pictures. Instead of inks, imagine an assortment of materials – carbon fiber, photopolymers, and lightweight alloys – being ejected in a programmed sequence to build an item based on custom specifications. It sounds like science fiction but it is actually happening today!
Many start-ups are zeroing in on this technology to bring manufacturing closer to the customer. Modern materials and technology intensive 3D printing are enabling smaller enterprises to be low cost, low scale, less labour intensive and more personalised and responsive to customer needs. US and Germany are latching on to this digital revolution to regain the edge they lost in manufacturing.
The new paradigm
How will this story play out for India? Over the last decade, innumerable articles and studies have delved into how India can compete with China or be the China +1 destination for global manufacturing. As in China, manufacturing is also expected to be the magic wand that provides employment to a young and growing population through large-scale job creation. But competing on costs or on the same platform as China is not a reality we can realise. Realistically, it is not the goal we should aim for. India’s core advantage lies in its technical talent and software capabilities and we must leverage these to establish our dominance in the production of high tech, high value products in key strategic sectors.
We need to do more to overcome the challenges to an ecosystem of innovation. These may read as prescriptive and oft-repeated slogans but they are the need of the day:
- Strong intellectual property laws. India is ranked 65th among 130 nations on protection of intellectual property rights. Patent polling in specific practices / industries regulated by strong independent governing bodies could be a potential candidate to address the above as it solves both agility and adoption. This will enable in getting more FDIs in R&D space in India there by pushing the boundaries.
- Celebrating innovation, prioritising educational attainment and building a system that encourages curiosity and experimentation.
- Access to new technology and the ability to source new materials will be critical to establish strength in digital manufacturing. - Robust innovation clusters. Put manufacturing next to educational and research institutions and magic begins to happen. Silicon Valley, Boston, Bangalore are examples of this. Establishing and encouraging SME innovation clusters such as gems cluster in Surat (Gujarat), brassware cluster in Moradabad (UP) and textile cluster at Tirupur (Tamil Nadu) would results in great & quick returns.
The National Policy on Electronics that was recently approved by the Cabinet has rightly set one of its missions to promote research and development of electronics in the country. Further, the government needs to facilitate our path towards prosperity by establishing a stable tax regime, restoring faith in our judicial system and the ability to get things resolved amicably. In the absence of these, critical capital inflows will not materialise.
The future is actually in the past. 300 years ago we had the skills and we have brought them back in full measure with new technology and a new set of practices. Our ability to embrace digital manufacturing will be a key differentiating factor as we move into the next era. We have the capability to build a large, vibrant manufacturing sector based on skills and knowledge rather than labour arbitrage. Let’s go do it.
(The author is President, Dell India)