Post-Covid world: India shows intent to become manufacturing powerhouse, but journey ahead is arduous

August 5, 2020 5:30 AM

Manufacturing with its employment generation opportunities and revenue-generating potential will fulfil India’s aspirations

Covid-19 is predicted to compel corporations with dispersed supply chains to consolidate and localise to avoid recently seen disruptions, where lockdowns caused assembly lines to halt.Covid-19 is predicted to compel corporations with dispersed supply chains to consolidate and localise to avoid recently seen disruptions, where lockdowns caused assembly lines to halt.

By Josh Foulger & Robin Bunker

In these turbulent times, we have all been fed with daily doses of inspiration right from WhatsApp forwards to office meetings over Zoom. Different cultures have claimed their legacy over the much beaten motivational quote on crisis and opportunity. In India, the last real crisis was of the balance of payments, which presented the opportunity to liberalise trade and make the economy more market and service-oriented. It has been largely a fluid ride since then, and hence, there wasn’t a compulsion to tinker with the existing frameworks until the recent announcements of GST, IBC and new corporate tax rates.

Covid-19 caught the world unguarded and has wreaked immense pain wherever the establishments showed arrogance. India wisely chose to be conservative. When it started to become evident that the economy was pushed to the ventilator, booster shots, both in terms of stimulus package and reforms, were administered. There were also some big bang announcements for the electronics manufacturing sector. On April 1, MeitY notified three schemes with a total outlay of Rs 50,000 crore.

This is as ambitious as India can get in declaring its intent to become a manufacturing powerhouse and realign global supply chains with India.

However, the journey forward is quite arduous, and therefore, requires deep resolve to mend our ways of working. Several manufacturing considerations need re-evaluation.

Discipline and order are most fundamental to manufacturing. MNCs generally maintain consistent standards across all their global sites, and there are no exceptions in India. A trained eye may not be able to tell the difference between a Toyota factory in India and Japan. Workers largely imbibe and start relating to values of MNCs that hire them. If such discipline can be diffused, we would not only see collective gains in productivity but also contain the spread of infections.

Large scale production is generally planned around Takt-time, which is the rate of completion of product to meet customer demand. Takt-timed production reduces costs, irons out inefficiencies and optimises the flow of material across shop-floor. Since social distancing is now a norm, timing people flow with Takt-time will bring safety in sync with efficiency.

In manufacturing, scale is everything. The daily struggles of lakhs of workers sustaining large scale operations can be ameliorated if commute and meals are taken care of. By offering full-service in-house dormitories, Indian companies can sustain operations during lockdowns and also bring people from all parts of India to scale up.

Currently, India has a small footprint in the design ecosystem. Lack of design and innovation has shrunk the shares of domestic handset brands from 42% in 2016 to less than 1% in the last quarter of 2019. OEMs outsource some design work to their design centres in India, but Covid-19 has disrupted work-flow, which may delay critical product launches. Developing local design expertise will address any such future eventualities and unleash a spirit of entrepreneurship. India can launch new local brands on a global stage.

The pandemic has raised overall awareness of the public about sanitation and hygiene. Post-Covid, this must continue to find priority. One doesn’t need to boil the ocean to institutionalise “no-touch philosophy”, which calls for minimising bio-trails by the usage of foot-operated door openers, disposable water cups and automatic soap/sanitiser dispensers.

Covid-19 is predicted to compel corporations with dispersed supply chains to consolidate and localise to avoid recently seen disruptions, where lockdowns caused assembly lines to halt. If India aspires to be a manufacturing powerhouse, it would require companies to vertically integrate within its geography. For instance, vertical integration of a mobile phone requires local production of printed circuit boards, active and passive devices, integrated circuits, AV components, sensors, connectors, battery, display, etc.

Covid-19 has been a saga of human sufferings, but now comforting prospects are emerging. Developing nations such as ours showed great character in combating this crisis. It derives strength from its large population, which is young and aspires to see India achieve its full economic potential. Manufacturing with its employment generation opportunities and revenue-generating potential will fulfil those aspirations. However, a tribute to our rich history can be made only by striving to become a 21st-century manufacturing powerhouse.

Authors are Country Head & Strategy Head, respectively, for a leading electronics manufacturer. Views are personal

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