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INDIAN MANUFACTURING How local is India yet?

Apr 15, 2021

Ever since India has noticed opportunities in the coronavirus pandemic because of the world turning away from trade with China and also the China-India border conflicts that have come along, the manufacturing industry has been excitedly talking about turning local. We also have Make in India and Aatmanirbhar Bharat to consider, given its push to start manufacturing locally. But how focused has the Indian manufacturing industry been in looking at producing locally and how much of localisation has been made a priority in the country yet? It’s time that India supported local manufacturing with the highest priority and took advantage of the current situation. The Viewpoint finds out how.

We must acquire all the critical technology that goes into the making of complex engineered products - Dr Girish Rao, CEO & Managing Director, HARTING India

The manufacturing industry can become more export-oriented only when we demonstrate consistent quality & become cost-effective by using more local content. We need to invest in technologies & offer incentives to R&D related activities. We must acquire all the critical technology that goes into the making of complex engineered products. Once we do that, we can break free from import-substitution trends. For successful localisation, the government needs to ask all MNCs to improve their manufacturing footprints in India, apart from asking local manufacturers to invest in new manufacturing techniques. The government tenders should stipulate stringent technical qualification in tenders so that local manufacturers can’t get away with inferior quality/cheaper prices. 2021 looks promising as at least a few sectors in the government have started asking for 60% local content in tenders. As for Aatmanirbhar Bharat, it sounds more like wishful thinking. We have a long way to go. We just can’t substitute critical technology currently being imported by the local manufacturing industry. We need to upgrade the local manufacturing level by several notches, and this will not happen overnight. The government must create an ecosystem for world-class manufacturing in India and not find cheaper alternatives.

The pride in making world-class products is something which must be imbibed in organisation cultures - Hemant Watve, CMD, WILO Mather and Platt Pumps

Zero tolerance in product quality and innovative sustainable packaging are two important pillars to be export friendly. Rather than cost, complete cost productivity is the foundation to beat the competition. The involvement and total commitment of ground-level personnel is not only essential but necessary. The pride in making world-class products is something which must be imbibed in organisation cultures. Plus, vocal for local is a parallel need in this globalised economy, understood only during the last year's pandemic crisis. Of course, there are sectors where one needs volume to offset cost effects; however, systematic efforts and creative, supportive infrastructure would take localisation into the next orbit.

The Aatmanirbhar Bharat Abhiyan, too, is a good step forward. However, the governmental machinery is far from understanding the ground realities of industrial difficulty. Till date, the industry is considered a burden to society from a socio-economic perspective. More & more rules are being drafted & forced on industries to make them unviable. This must stop, and someone running an industry should be given equal respect, like farmers or any other societal pillar.

To achieve localisation, we must implement digital transformation at multiple levels - Sunil Mehta, General Manager, Mitsubishi Electric India

As a result of the pandemic, we are in the process of localising various parts and components. At the same time, we should note that the automotive industry was on a downward trend before the pandemic. To achieve localisation, we must implement digital transformation at multiple levels. It also needs to be infused into our shop floors. Using cutting-edge technologies, we need to integrate the manufacturing process and manual operations to ERP/MES. It will instil greater confidence in overseas buyers and enable us to tap into more export opportunities.

As for Aatmanirbhar Bharat, it is, in my opinion, progressing, albeit slowly. We have many brownfield manufacturing installations/facilities, and we should utilise those facilities by way of adopting necessary technologies. Herewith, we have a large base of legacy equipment. We need to bring in the required changes and modernise to make this equipment intelligent enough to be part of smart, futuristic manufacturing. For the vision of Aatmanirbhar Bharat to fructify, there is a need to bring discipline into all our processes.

The government must raise the customs duty - Niraj K Mittal, Specialist with Automotive & Manufacturing Tier 1 and world class companies

India can become more export-oriented in the manufacturing industry by adopting some leverages. For example, localisation of the raw material being produced in India will reduce customs duty on importing raw material, but more focus will come on end-to-end value & job creation.

I am also seeing tremendous change in the approach of Aatmanirbhar Bharat, especially in the defence & aerospace sector. What predominantly is required that sectors like the automotive, consumables, utility, infrastructures, FMCG, power, IT, textiles, steel, telecom and oil & gas must be given the specific targets that they need to reduce imports & work on backward integration. The government must raise the customs duty so that most of the industries are forced to make products in India. Plus, foreign companies setting up manufacturing units in India will help us in job creation as well as building up the technology for Make in India sooner or later.

The Aatmanirbhar Bharat concept needs to be transferred into an outcome - Norbert Wirth, Managing Director, Haver & Boecker India

India is already producing a lot of raw material and finished goods that could be exported globally, but very often, the potential exporters lack international standards in terms of health & environment. The Environmental, Social and Governance (ESG) criteria in Europe and the US, for example, are extremely high. Exporters not meeting these criteria will face problems. India must be able to produce raw materials and goods that meet the highest international standards in terms of technology, adhering to the ESG criteria. This will require strong cooperation with other technology companies worldwide and will take three to five years to see the first significant outcomes. Coming to Aatmanirbhar Bharat, it is a very good concept and should significantly boost India’s industry. However, the concept needs to be transferred into an outcome. Here, India needs to increase its industrial competence on international standards. These often go hand-in-hand with foreign technologies. I see this concept as a mutual benefit rather than isolating India’s industry.

If the market demand is good, then there is a higher motivation for localisation - Deepak Garg, Managing Director, Sany India & South Asia and Vice President, Sany Group

We need to focus more on digitalisation and enhance our operating efficiencies further, which would reduce our throughput time. The Aatmanirbhar Bharat Abhiyan is a very good platform and push by the government. If we want to start making in India, then we need higher skills. One element we need to look at is that our ease of doing business today is limited to setting up the businesses – it has to be more on running the business. 2021 looks very good for localisation. If the market demand is good, then there is a higher motivation for localisation. Plus, there are also some incentives and various supports from the government to see that more companies look at localisation in India. Also, if we look at the auto and other industries, the state governments are doing their bit quite aggressively to position their respective states in order to attract investments.

A long-term strategy is to build on India’s strengths - Parag Satpute, Managing Director, Bridgestone India

The successful management of COVID, a robust legal framework and a big domestic market make India an attractive destination. All India needs is to encash the opportunity with suitable policy measures. The items necessary to emerge as a manufacturing base and export hub must be produced domestically. We must take care not only to focus on import substitution but to use the same judiciously. A long-term strategy is to build on India’s strengths and to overcome its weaknesses. This is a continuous process and 2021 is the beginning of the process. Success depends on how resolute the nation is in reaching the objective. Aatmanirbhar Bharat, too, is rapidly evolving. The aim is to create India as a global manufacturing hub which necessitates inter alia attracting global brands having the best technology and know-how to come & set-up base in India.

The long-term localisation strategy involves working with efficient local vendors - Sagar Bhosale, Managing Director, Schmersal India

The Indian manufacturing industry is bound to become export-oriented because of the packages the Indian government has launched to promote exports. The awareness of dumping & buyer perception of import is slowly but steadily changing and buyers prefer quality over cost. The commitment of being Aatmanirbhar has percolated down to all industries. The push from specific sectors, like transportation & defence, has pushed manufacturers to look inwards locally for high-end technological development, which was earlier being imported.

The long-term localisation strategy involves working with efficient local vendors, stringent quality checks and consistency in supplies quality. The fluctuating currency and unstable global supply chains will accelerate the localisation efforts for sure in a big way. India has a massive workforce, including non-skilled workers and a rich talent pool of skilled workers, making Indian industries even more attractive to alleviate the challenges for successful localisation for 2021.

Image Gallery

  • Dr Girish Rao

    CEO & Managing Director

    HARTING India

  • Hemant Watve

    CMD

    WILO Mather and Platt Pumps

  • Sunil Mehta

    General Manager

    Mitsubishi Electric India

  • Niraj K Mittal

    Specialist with Automotive & Manufacturing Tier 1 and world class companies

  • Norbert Wirth

    Managing Director

    Haver & Boecker India

  • Deepak Garg

    Managing Director, Sany India & South Asia

    Vice President, Sany Group

  • Parag Satpute

    Managing Director

    Bridgestone India

  • Sagar Bhosale

    Managing Director

    Schmersal India

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