India's Manufacturing Sector: Evolving Skills, Global Influence And Future Outlook

The manufacturing landscape in India is undergoing significant transformations, driven by evolving skill requirements, government policies, technological advancements, and global trends. This article explores the changing skill needs, the impact of international companies, and India's potential to emerge as a major manufacturing force by embracing technological disruptions.

Importance of Manufacturing:

The manufacturing industry plays a crucial role in a country's GDP and employment opportunities. For instance, in 2021, manufacturing contributed approximately 12% to the United States' GDP, while in China, it accounted for around 27%. Moreover, manufacturing sectors create a substantial number of jobs, with the United States supporting over 12 million jobs and China providing employment to millions. Additionally, manufacturing plays a vital role in driving exports. In 2022, the United States emerged as the second-largest exporter globally, with an export value exceeding two trillion U.S. dollars. China dominated the global export market, with exports reaching nearly 3.6 trillion U.S. dollars.

Maruti Suzuki and Automotive Industry's Impact:

The automotive industry, represented by companies like Maruti Suzuki, has played a pivotal role in shaping India's manufacturing landscape. Through the introduction of advanced mass production techniques, local manufacturing, skill development, and cutting-edge technologies, Maruti Suzuki has set new manufacturing standards. These pioneering efforts have transformed India's manufacturing sector, influencing industry practices, and creating numerous employment opportunities.

Importance of Skill Development:

Skill development in manufacturing is crucial for job creation and holds immense significance for the younger generation. Skill development programs empower individuals to excel in the manufacturing sector by acquiring expertise in mechatronics, software engineering, and advanced manufacturing techniques. By prioritising skill development, India can achieve its goal of manufacturing, contributing to 25% of the country's GDP while generating ample job opportunities.

Adoption of "Plus One" Strategy by Multinational Companies:

Many multinational companies have adopted the "Plus One" strategy to diversify their production and supply chain operations, reducing reliance on manufacturing solely in one country or geography. This strategy helps mitigate risks associated with overdependence on a single country, lower labour and production costs, access local markets more effectively, and enhance resilience and agility in response to market dynamics and disruptions. India's manufacturing potential stems from advantages such as a sizable trainable workforce, efficient digital infrastructure, investments in logistics infrastructure, strategic location, and cost advantages in low-cost and frugal manufacturing. These factors make India an attractive destination for manufacturing, fostering innovation and research and development investments.

Investments by Leading Multinational Corporations:

India's manufacturing prowess has attracted investments from leading multinational corporations. General Electric (GE) has invested approximately US$ 3 billion in India, ranging from supplier development programs to new infrastructure projects and manufacturing facilities. Foxconn, a prominent electronics manufacturer, has announced plans to invest $5 billion in a state-of-the-art manufacturing park in Maharashtra. Apple has also expanded its manufacturing operations in India, producing iPhone models locally. These investments reaffirm India's standing as a compelling manufacturing destination.

Future Prospects and Embracing Technological Advancements:

India's manufacturing sector holds vast growth potential due to efficient supply chains, cost-effectiveness, design-oriented approaches, and technological advancements. With its advantageous location, large labour force, and focus on innovation, India is well-positioned to capitalise on emerging global prospects. Embracing digital technologies like the Internet of Things (IoT), artificial intelligence (AI), blockchain, and advanced manufacturing technologies is crucial for optimising operations and efficiency.

The Transformative Power of Disruptive Technologies:

Renowned author Tony Seba emphasises the transformative power of disruptive technologies like AI, robotics, renewable energy, and electric vehicles in manufacturing. These technologies can revolutionise traditional practices, leading to substantial cost reductions, enhanced efficiency, improved accessibility, and sustainable solutions. Seba envisions a future where renewable energy sources dominate energy generation, electric and autonomous transportation becomes pervasive, and traditional industries undergo radical transformations. To remain competitive and stimulate economic growth, businesses and policymakers in the manufacturing sector must embrace these disruptive technologies.

Conclusion:

India's manufacturing sector is experiencing significant changes driven by shifting skill sets, global impacts, and promising prospects. The sector's growth potential lies in its contributions to GDP, employment generation, and export performance. India should prioritise supply chain efficiency, cost-effectiveness, design-led approaches, and technological advancements to seize emerging opportunities. Innovation, fuelled by research and development, skill development, design-led manufacturing, and semiconductor fabrication, are crucial drivers of progress in the sector. By nurturing skills, embracing advanced technologies, and leveraging its strengths, India has the potential to become a manufacturing superpower and shape the future of global manufacturing.

Authored by Nagesh Basavanhalli , VC, Greaves Cotton Limited