Economy

India’s employment challenge may worsen as robots snatch away jobs

M Ramesh Chennai | Updated on October 19, 2019 Published on October 18, 2019

With prices falling thanks to China scaling up, mid-sized companies here are now able to afford robots, and they have gradually begun to displace humans on factory shopfloors

 

A decade back, Vienna-based Wienerberger, the world’s largest brick-maker, decided to take its first step into Asia and chose India over China. It spent ₹250 crore in building a factory in Kunigal village, 70 kilometres to the west of Bengaluru, next to a dry lake rich in clay. Today, the plant produces 70,000 blocks of hollow, chocolate-smooth blocks a day, the equivalent of 6 lakh conventional bricks.

Wienerberger India’s building block plant stands out in one aspect — there are very few people working there. The entire operation is completely robotised.

The mid-sized company typifies a soaring mega trend in the Indian manufacturing sector today. Robots used to be the preserve of large companies, such as Hyundai and Maruti, but not any more. The machines are fast making inroads into the MSME sector.

Now, India has an unemployment problem to grapple with; the creeping incursion of cheaper and better robots into factory shopfloors is set to make it worse.

The story so far

The march of robots into factories had until recently been on the back of falling prices. A 2017 McKinsey study says that prices of industrial robots have halved in real terms over the last three decades; another study by ARK Invest in the same year notes that the costs will decline another 65 per cent by 2025.

What triggered this falling trend? The answer, in one word, is: China.

Faced with rising wages, China began to robotise its manufacturing, providing a massive scale effect — just as it did with solar panels. Today, the Chinese market for robots is said to be around 250,000 pieces a year, which is set to quadruple soon. So huge is the Chinese market that Fanuc, the Japanese robot manufacturer, is setting up a plant to make a million robots a year in China, only to service the Chinese market.

With prices falling primarily due to China scaling up, robots slowly began to get within the reach of mid-sized companies in India, such as Wienerberger. Today, an industrial robot capable of picking up to 10 kg sells for ₹25 lakh; it takes as much to install it and typically the investment is paid back in 5-6 years. A mid-sized company, say of ₹100 crore sales, can afford to spend ₹50 lakh on a robot.

The Indian market for robots grew at a compound annual growth rate of 18 per cent between 2012 and 2017. And then came the quantum leap — in 2017, according to the International Federation of Robotics, 3,412 industrial robots were sold in India, 30 per cent more than in the previous year. And the market is now revved up for take-off. Danish robot manufacturer Universal Robots alone expects to have an installed base of 1,000 cobots or 'collaborative robots' in India by the end of next year.

The next chapter

Today, industrial robots are becoming not just cheaper, but also more capable and user-friendly, even without a shot of artificial intelligence. Robotisation of the Indian manufacturing sector is just beginning to take place, so there is a lot of juice coming in. India’s robot density, defined as the number of robots for every 10,000 workers, is 3; the global average is 74 and that of the most robotised country, South Korea, is 631.

Until now, these machines have been used for pick-and-place operations; the next generation ones can do a lot more. Universal Robots' ‘collaborative robots’ can work alongside humans — the moving arm will stop if it touches a human being, and as such, doesn’t need a safety fence.

This, according to Pradeep David, the company’s General Manager in-charge of South Asia, took a lot of research. “We have 65 patents only for this function,” David told BusinessLine. Also, these cobots can be moved around from place to place by a single worker and do not call for great programming skills to change their functions.

The quality aspect

Madurai-based Aurolabs, which manufacturers 2 million intra-ocular lenses a year and exports them to 120 countries, uses Universal’s robots. “We are able to compete with other countries on price and quality,” Aurolab’s Managing Director Emeritus, Dr P Balakrishnan, told BusinessLine. The company sells lenses for prices as low as $2 to $5. Rather than the low price, Balakrishnan stresses on the robots’ ability to deliver quality.

If making robots lightweight and user-friendly is one level of improvement, there is a lot more to come. Over a month ago, Bengaluru-based start-up called CynLr (pronounced ‘Sign-lur’) announced that had raised ₹5.5 crore from a bunch of investors. Founded by Nikhil Ramaswamy and NA Gokul, both former employees of the automation major, National Instruments, the start-up is working to introduce a ‘visual intelligence platform’ into the robots.

This is significant. Today’s robots are designed to pick and place; they can’t identify objects and pick objects randomly placed. With cognitive ability, they would be able to do so — they can, for example, pick a spanner from a tool-box. “To dynamically control the robotic arm to pick a randomly-oriented object,” observes Ramaswamy, “has been the holy grail of the robotics industry.” CynLr, he says, is well on the way to crack the problem.

With such robots, ‘universal factories’ — where a single manufacturing line can make multiple components—could become a reality.

What it means for employment

So, is the fear of robots taking away jobs well-founded? Hasn’t such a fear accompanied every kind of automation, asks Ramaswamy. He believes that robots will lead to job displacement, not loss.

In theory, robots sharpen competitiveness and bring in more business, creating more wealth for the economy, which would result in creating more jobs. But while destruction of jobs is immediate, their creation lags. The disruption in the interim is a cause for concern. Experts such as Erik Brynjolfsson, professor at the MIT Sloan School of Management, have argued that “technology is behind both the healthy growth in productivity and the weak growth in jobs.”

Tax the robot’

The onward march of robots cannot — need not — be stopped, but where does it leave blue-collar workers? Former Revenue Secretary MR Sivaraman suggests that the number of people displaced by a robot be worked out and “tax the robot”. He feels re-skilling of workers to make them ready for services sector jobs — tourism, transportation, healthcare and the like — may be a way forward.

Many researchers have also batted for a social security programme — which is weak in India. According to the World Social Protection Report 2017-19 of the International Labour Organization, the share of workers covered by at least one social security programme in India is 19 per cent, as against 63 per cent in China. Perhaps it is no wonder then, that China was able to robotise its manufacturing industry faster.

Published on October 18, 2019
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