India has a big opportunity in waiting in the manufacturing sector due to the realignment of global supply chains.  “Almost every day we get a call from somewhere in the world asking if they could work with us in India,” says Banmali Agrawala, Senior Adviser, Tata Sons Pvt Ltd. 

India could be an alternative to China, but the biggest hurdle is talent deficit, said Agrawala, who is also Chairman of Tata Electronics, at a function organised in Chennai by the NGO United Way of Chennai. 

The global trade in manufacturing is worth $15 trillion (compared with $7 trillion for services), but India’s share is minuscule at less than 1 per cent, he said. “Why on Earth should we be losing out on this opportunity when we have such strong winds behind us, when the world is telling us ‘please help us because we want to de-risk ourselves from China’?” he said. 

Manufacturing of electronic goods is a $7-trillion opportunity, with smartphones accounting for a huge chunk of this, he said. “The world today wants to come and engage in India and do all these things over here,” he said. 

IT backbone

He said the electronics industry could be divided into electronic manufacturing services (EMS) and semiconductors. On the face of it, EMS may sound trivial, low value-added, but that is not true, he insisted. “If you are making 100,000 mobile phones in a day, the plant can employ 70,000 people. If each of those phones has over 600 dimensions that need to be checked with an accuracy of less than a micron, if  the surface finish of each of those phones has to be such that if seen through a microscope its magnification is more than 60 times, it is not a simple operation,” he said. 

“It requires a lot of diligence. It requires a lot of IT backbone to make sure that all the CNC machines are working,” Agrawala said.  

He also said that the manufacture of mobile phones in India is just assembly with not enough value addition.

Basic education

“There is no dearth of opportunity or capital. The one thing we need is a workforce skilled enough to seize the opportunity,” he said.  

Delving deeper, he said the issue is not about imparting skills to labour. “Skills can be taught fairly quickly. You give me a raw person who’s got basic education, I can skill that person within six months on my shop floor. But having that basic education to be able to learn new things is critical. I would therefore argue that, more than skills, what is important is the basic, foundational education.” 

Vijay Gokhale, former Secretary, Ministry of External Affairs, and a former Indian ambassador to China, who also spoke on the occasion. He recalled that an American Nobel laureate once told him that until 2000 he had a lot of Indians in his class, but after 2000 there were only Chinese; Indian students had disappeared. There is something very wrong with this situation, Gokhale said. 

Gokhale also said that an official of a Taiwanese company that had a factory in India once told him that he couldn’t find enough talent to build a metro line. “What demographic dividend are you talking about,” the Taiwanese had asked Gokhale.