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EVOLUTION OF MANUFACTURING INDUSTRY Indian manufacturing: Today and tomorrow

Nov 10, 2022

As human civilisation moves faster towards further milestones in development, the very concept of development itself seems to change. While the wheel of the economy essentially drives development and vice versa, societies too have undergone a massive transformation. The article traces down evolution of the manufacturing industry and talks about the next revolution in the manufacturing era. - Dr Ravindra Utgikar, Vice President – Corporate Marketing & Strategy, Praj Industries

Just as Industry 4.0 is a culmination of industrial evolution, even society has also experienced evolution. Earlier phases in the evolution of society were – the hunting era, the farming era, the industrial era and the information era.

Studies have established a confluence in the evolution of society and industry. We, therefore, should look at them together and not in isolation. The manufacturing sector is regarded as the backbone of both social and economic development. The manufacturing industry in India, today stands at the cusp of unprecedented global opportunities. It must walk a tightrope between leveraging those opportunities and not letting them adversely affect society and the environment in any way.

The emergence of manufacturing

Being one of the most flourished civilisations around the Indus valley, India has been an agrarian economy for centuries. It is no surprise that agriculture constitutes a significant share of India’s GDP even today. Agriculture and industry have been two strong pillars of the deep-rooted economy worldwide. We are now witnessing the service sector make strong inroads into economic growth. Although the industrial revolution around the world started in the 18th century, it was only post-independence that things started rolling for India.

Initially, industrialisation in India was mainly focused on manufacturing finished products from the raw materials provided by the agriculture sector. The manufacturing sector has contributed immensely to modernisation of the farming and agri-processing industries. Subsequently, it has spread wings in tertiary sectors and much beyond in secondary areas. In the process, it has helped minimise dependency on agricultural income by creating jobs and entrepreneurship. However, things have moved ahead rapidly since liberalisation and the emergence of the computer age.

In seven decades of the Indian economy post-independence, the manufacturing sector has emerged as a significant contributor to India’s GDP. India today has a huge manufacturing set-up across the industry segments, both in the public and private sectors. A vibrant MSME sector feeds these giant manufacturers. Technology capabilities in enhancing productivity, a highly skilled workforce, and a relentless focus on quality have helped keep the sector on strong footing.

Thus, the manufacturing ecosystem in India is resilient and often regarded as a powerhouse of employment generators. It is an important cog in the wheel of India’s growth wheel. However, in recent times, share of manufacturing in India’s GDP has not grown and has somewhat contracted for several reasons, both internal as well as external.

India as a global manufacturing hub

As per the famous proverb, ‘Every dark cloud has a silver lining,’ and the post-pandemic scenario has presented one such opportunity to the manufacturing sector. There are conscious and concerted efforts by major economies to reduce their dependency on China, regarded as the factory of the globe. As a result, the China + 1 strategy for outsourced manufacturing is being actively pursued by several global MNCs.

India, with its stable democracy, higher demographic dividend and technical capabilities, has emerged as a front-runner among low-cost countries. Seizing this opportunity Government of India has proactively launched a series of programs to give thrust to the manufacturing sector. ‘Make in India’ and Production Lined Incentive (PLI) are just two flagship programmes that are creating a buzz in the sector. As many as 13 high-potential sectors, including automobiles, renewable energy, pharma, electronics, and telecom, among others are identified to boost India’s manufacturing prowess and make them an integral part of global supply chains.

The world economy is engulfed by inflation because of geopolitical dynamics, namely the prolonged Russia-Ukraine war. The energy and food crisis is deepening, and experts are predicting an economic slowdown. Against this backdrop, India continues to be the fastest-growing economy in the G20, thanks to a robust domestic market. Given the downturn in the Chinese economy, India is presented with an unprecedented opportunity to become a global manufacturing powerhouse.

Energy and environment considerations

Energy is the driving force for the industrial and economic growth of any nation. Although it is gradually changing, fossil resources continue to dominate the energy landscape in India. Energy transitions have emerged as one of the most promising strategies in the fight against climate change. Following the COP 26 climate change summit held in Glasgow last year, an increasing number of nations are joining the ‘Race to Zero’ campaign towards carbon neutrality. Indian and global conglomerates are not left far behind in pronouncing the Net Zero target.

The manufacturing industry is one of the largest consumers of energy and a GHG emitter. There is a dire need to decarbonise the sector as sustainable climate action. The supercritical role of a sustained supply of efficient, affordable, and eco-friendly energy in manufacturing need not be emphasised.

Bio-economy and manufacturing

Adopting a bio-economy is critical for the manufacturing sector to join the fight against climate change. Bio-economy is knowledge-based production and use of biological resources to provide products, processes, and services in all economic sectors. Biofuels, such as bioethanol and compressed biogas (CBG), have emerged as sustainable sources of low-carbon fuel for the manufacturing sector. Renewable chemicals and materials derived from carbohydrate resources are being explored as a sustainable alternative to conventional chemicals and materials derived from hydrocarbons. Harnessing biochemicals facilitates carbon recycling with no or minimal addition of new carbon in the atmosphere.

This is helping the manufacturing sector in curb carbon footprints and decarbonise emissions. Praj Industries, headquartered in Pune, is a key player in accelerating climate action through energy transition in the global bio-economy. Praj provides innovative solutions for producing biofuel by deploying the Bio-MobilityTM technology platform for surface, air, and marine transportation. Praj’s Bio-PrismTM portfolio of technology solutions to produce renewable chemicals and materials are fast developing as an eco-friendly and sustainable alternative.

ESG imperatives

With the changing times, stakeholders are evaluating businesses not just on financial performance but the overall impact they have on the environment and social aspects. Environmental, social and governance (ESG) are lenses through which stakeholders, especially the financial community are assessed organisations. The manufacturing sector has a strong imprint on all three aspects – environment, society, and governance. Being ESG compliant is not an option anymore, but an obligation for the entire manufacturing sector.

By harnessing cleaner greener energy, optimising energy, utilities, water and carbon footprint manufacturing industries can minimise the impact on the environment. By creating employment at the bottom of the pyramid and engaging in causes to uplift the overall standard of living in society manufacturing sector can demonstrate strong commitment. Complying with the statutory government norms with a transparent business reporting industry can portray good governance. Thus, responsible manufacturing sector must comply with ESG norms to be in contention for the global supply chain.

Industry 5.0 and manufacturing

All previous industrial revolutions have greatly contributed to global GDP growth, improving the standard of living, and reducing the mortality rate around the world. However, this has all been achieved at an expense of irrevocable damage to planet earth with a huge compromise on the environment and biodiversity. It has resulted in the loss of human jobs to machines and adversely impacted society with growing physical and mental health issues. Industry 4.0 was conceived in 2011, and even before its capabilities are leveraged to the fullest, we are ushering in the next revolution. Industry 5.0 aims to overcome the drawbacks of earlier revolutions in terms of their evil impacts on the environment and society.

Industry 5.0 will bring the next generation of innovation in productivity and quality with the coexistence of cobots (collaborative robots) and humans. The Industrial 5.0 enhanced version is the next frontier that envisages cobots performing tactical work and transformational work by humans. Integrating the bio-economy would be vital to minimising ill effects on the environment. With this vision, the enhanced version of Industry 5.0 aims to strike a fine balance in people-plant-profit.

Project and process industry perspectives

Organised manufacturing sectors involving, e.g., automobiles, and pharmaceuticals, are early adopters of Industry 4.0 in their assembly line production set-up. However, discrete manufacturing sectors, especially those in the project and process industries have their own set of challenges in harnessing digital advances and are somewhat lagging in this regard. Travel impositions and disrupted supply chains came as big learning for the manufacturing industry as a whole and especially for project businesses. This triggered the need for remote operations and the commissioning of plants. Thus, the power of information technology and digital advancements, e.g., IoT, data analytics, was put to good use in ensuring the smooth functioning of process plants located in distant places.

Case study

Praj Industries, a provider of technology-embedded EPC solutions in the industrial biotech space for the process industry, has effectively put to use digital technology. Praj’s indigenously developed digital tool, i.e., ‘Remote Bridge’ was deployed for the commissioning of domestic as well as international projects during the pandemic. This ensured that essential sectors continued to function in an uninterrupted mode notwithstanding external challenges. This case study is a testament that the discrete manufacturing sector associated with project engineering; capital goods is gearing up fast to leverage the power of the Industry 4.0 revolution.

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  • Industrial revolution journey

  • Dr Ravindra Utgikar

    Vice President – Corporate Marketing & Strategy

    Praj Industries

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