There is a lot of buzz about manufacturing. Many firms plan to ride this sentiment and build up their manufacturing base. However, a question that we need to ask ourselves is: What does manufacturing in India lead to? Is this the competitive advantage that we have been trying to explore? Manufacturing is the backbone of the country and given a good base, it can work wonders for India, but is this it or is there something beyond the realm of manufacturing that we need to look at.

Developing a strong manufacturing base is essential for the economy as it builds self-reliance, provides growth in employment and incomes and a stable economic base for the country. Take the case of the automotive industry in India. In retrospect, the automotive industry has matured since the dawn of the new millennium, when foreign competitors set foot in India with the objective to make in India, for India.

Flourishing auto industry

The auto industry in India has flourished to the point where it can manufacture a vast majority of components except for some of the sophisticated electronics such as sensors, processes and controllers. Today, a large number of global auto companies have set up manufacturing shop in the country and many of them are using it as a base to cater to the domestic as well as export markets. Added to this, a large number of auto-component suppliers have developed mature manufacturing and quality management systems thereby supplying high quality parts at competitive prices.

On the other side, the aerospace industry is heavily dependent on imports. There is virtually no manufacturing that caters to the aerospace sector except for a few players who supply components and spares to the industry. The lack of high-tech and sophisticated manufacturing capability in India is one of the major detrimental factors that works against the development of manufacturing in the aerospace domain. Moreover, lack of capabilities in quality and organisational management as required in the industry is a further deterrent for the aerospace equipment manufacturers to look at India for building a supplier base.

Lack of design capabilities, quality management systems and standard practices across the industry are the key deterrents to the growth of the manufacturing industry. One can develop manufacturing industry through the Build to Print route. However, this model can only lead to the development of India as a manufacturing base as long as there are no competitors to compete on low-cost manufacturing. Manufacturing by itself cannot be sustained unless it is complemented by design and development capabilities in the industry. In order to use manufacturing as a competitive advantage, one needs to supplement it by developing an ecosystem of design, manufacturing, infrastructure, management and quality systems.

Design thrust

Firstly, we need to give a thrust on our design capabilities. Taking cues from the auto industry, which has a mature manufacturing base, most of the product design takes place outside India. Primary design activities such as translating customer requirements into specifications at the system and sub-system level is done in research labs located in Japan, US and Europe. Even homegrown Indian firms rely on technical partnerships in countries that have developed design capabilities. Though a vast majority of secondary design and research activity such as simulations, testing and product development does take place in India, yet that does not lead to building of core competency of designing a product. Design, by virtue of its nature, is a painstaking and detail oriented process that takes years to bear fruits. The gap in the academic curriculum at the collegiate level and the skills required in the industry further exacerbates the problem. Consequently, India has flourished as a service oriented nation that relies on analytical and logical skills of Indians, which has been their strength. A solution to this could be focusing on revamping the higher education to focus on applied research, developing and fostering industry-academia partnerships and attracting foreign investment in building design capability in the country either through mandates such as transfer of technology along with imports or through setting up institutes of excellence. Design as a competitive advantage can position India to against any of the advanced countries. Supplemented by its low-cost manufacturing base, it can position us very strongly on the global footprint.

Product quality

Second, manufacturing has to be complemented with quality and production management systems to ensure that we can compete on axes of product quality. Looking beyond the realm of the industries at the top of the pyramid, one can see the gaps that exist in the Indian manufacturing. Many of the small and medium to low-level industries lack the basic quality systems. Many of the backyard run-of-the-mill setups do not deploy any quality, hazard or waste management systems and make use of inefficient processes and materials. We are still to compete with global players supplying commodities such as steel when it comes to quality. To counter this, we need to develop a system to check such leakages that are impediments to the growth of the manufacturing sector. The government must establish codes of conduct, policies and mechanisms to regulate the manufacturing industries as per globally accepted norms to compete against global players. We need to develop standards for industries across all domains, in terms of quality and production management practice and create nodal agencies with the responsibility to audit the industries with the empowerment to take action against defaulters. Adherence to standards must become the entry criterion for doing business.

We need to develop manufacturing skills that are focused on industries. Agencies like NSDC are pivotal in this agenda imparting the skills as required for a particular industry. A skilled labor force is a boon to the economy for it attracts investment of the level requisite to what can be achieved. Our archaic labour laws must give way to productivity but at the same time should make all efforts to ensure that there is no exploitation.

Right ecosystem

In order to blend all of this together, we also need to look at creating the right ecosystem of infrastructure, policies and support mechanisms for the industry to be propelled on a growth trajectory. For instance, a cluster-based model that has worked well for the auto-industry can be replicated for the aerospace as well as electronics industries. A great initiative that works in favor of the country is in the space of scientific research, where we have a few great institutions that have produced impressive results. However, we may need to tweak the model to provide a piecemeal – focused approach that looks on building capabilities in steps, instead of going whole hog in an industry. Take the case of the aerospace industry. Multiple bodies are working on different dimensions – materials, aircraft design and development, basic component design, sub-assembly design and lot of other areas. We need to focus all the efforts in one direction and work in unison to accelerate the pace of research and development that will bear results that are coherent and easy to adopt and apply.

(Ankur Anand is a student of the PGP Class of 2015, Indian School of Business)

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