Moneycontrol PRO
UPCOMING EVENT:Know how Global Investing can be spread beyond the US markets by joining an engaging webinar on November 30, 11:30 a.m.
you are here: HomeNewsOpinion

Manufacturing | India needs to leapfrog China with intelligent, adaptive robots

Investing in standard automation will not work when China has had a headstart for decades. China’s manufacturing labour productivity is 4-5 times higher than that of India. This is mainly due to their investments in robotics and automation over the years 

October 28, 2021 / 05:34 PM IST
(Image: Reuters)

(Image: Reuters)

In the race to become the world’s manufacturing hub, now is the most opportune time for India to capture the lead. The pandemic exposed the limitations of global companies putting their manufacturing ‘eggs’ in one basket.

This, combined with the ongoing United States-China trade war, is leading corporations to diversify their supply chain through a China ‘Plus One’ strategy. India is well-poised to attract these investments.

However, there are many countries hot on our heels. To become the preferred manufacturing destination in the future, India cannot play catch up. Instead, it needs a different strategy — one that leapfrogs over existing technology, and into the future of automation.

Investing in standard automation will not work when China has had a head start for decades. China’s manufacturing labour productivity is four-to-five times higher than that of India. This is mainly due to their investments in robotics and automation over the years. China has a robot density of 187 robots deployed per 10,000 employees. On the other hand, India has a robot density of only four robots per 10,000 employees. It takes significant time to train and develop a vast pool of semi-skilled labour to work effectively with today’s automation.

However, India has an advantage, albeit temporarily. India’s labour costs are lower than China’s. Due to wage rises, clothing and electronics assembly began to leave China, even before COVID-19. That said, the cost of doing business in India is still much higher. Infrastructure, power, and logistics expenditure may offset our low labour cost advantage. Also, labour costs will, eventually, go up. In the long run, improving manufacturing productivity is the critical metric to become the top global manufacturing hub.

Close

We cannot rely on low-cost labour as our selling point for too long. We are not the only country eyeing the manufacturing spill-over from China. Vietnam, Indonesia, South Korea, and Thailand are priming themselves as attractive, and alternate manufacturing destinations. A study analysed 56 companies that relocated their manufacturing out of China between April 2018 and April 2019: 46 percent chose Vietnam, and only 5 percent chose India.

Indian manufacturing got some relief from the Budget 2021 PLI incentives allocated for the sector. However, for domestic manufacturers to reap the benefit of these incentives, they have to hit or exceed their projected growth targets. How do they scale, and comply with global quality metrics when faced with infrastructure, labour, and other challenges? We could take a page from the history of Indian telecom.

In the 1990s, landline phone connections belonged to an elite few. Many experts believed that access to phones would always be a luxury for urban areas. This was due to the expense, infrastructure-related hurdles, and the level of bureaucratic manoeuvring required to procure one. However, thanks to a visionary few, India did not waste time, and resources trying to catch up to other countries by focusing on more landlines. Instead, India bypassed existing technology, and concentrated on futuristic mobile telephony to increase connectivity. The success of this strategy exceeded all expectations. As a result, a few decades later, India is now a mobile-first country, and ranked second globally for the number of smartphone users.

Similarly, the biggest hurdle facing manufacturers is that the automation of today is inflexible. Investing in capital equipment such as industrial robotics takes upfront costs. Manufacturers want to know that they can use their robots over a long time to gain returns on their investment. However, in the face of greater uncertainty due to changing trade dynamics, shorter product life cycles, and heavy global competition, this can no longer be guaranteed. At least not without flexible robots.

The writing on the factory wall is that robots of today are too rigid. Each robot needs expensive customisation to perform even small tasks. This is why Indian manufacturers continue to rely on manual labour to perform even low-skill, repetitive tasks such as picking items from a bin, and orienting them accurately. Tasks like fastening screws, nuts, bolts, and washers are too complex for these robots but too simple for humans.

The future of robotics is resilience against minor changes to tasks or product designs. Indian manufacturing needs to invest in intelligent industrial robots with advanced machine vision to ‘see’ and ‘think’ like humans. Only then can Indian manufacturing vault over the competition, and into the pole position for the future.

Nikhil Ramaswamy is Co-Founder & CEO, CynLr.

Views are personal and do not represent the stand of this publication.
Nikhil Ramaswamy is Co-Founder & CEO, CynLr.
first published: Oct 28, 2021 05:20 pm

stay updated

Get Daily News on your Browser
Sections
ISO 27001 - BSI Assurance Mark