Make in India -Winning the digital manufacturing wave
As C. K. Prahlad stated “There are only two priorities for India – creation of 10-15 million jobs per year at a growth rate of 10-15% per annum”. Manufacturing being the core of “Make in India” vision, necessitates an urgent need to build and sustain competitive advantage through differentiated growth across all sectors leveraging the key exogenous drivers. Hence, it is imperative to lay the foundation for a strategic, futuristic, global, digital, distributed and differentiated manufacturing powered by an innovative, state-of-art supply chain. Make in India will happen only when organizations not only invest in India but form a global strategy that is an integral part of their vision.
In this white paper, we have discussed shifting consumer demands and priorities and identified eight exogenous mega trends and drivers that can revolutionize Indian economy to establish India’s manufacturing footprint in the digitally powered global market place.
Speaking on the 67th Independence Day celebrations this year, India’s Prime Minister announced the launch of a mega national program – “Come, Make in India”. Mr. Modi was inviting all global manufacturing leaders to set up their manufacturing bases in India and supply to the rest of the world. The new national program was launched with far reaching objectives designed for building a best-in-class manufacturing infrastructure within India and a view towards attracting investment, fostering innovation, enhancing the existing skill base while protecting intellectual property. The business community has been assured of significant improvement in the ease of doing business in India and the government is prepared to do all it takes to make India the preferred manufacturing destination of the world.
The world leaders across all classes and levels have stood up and taken note – politicians, business leaders. This initiative can have far reaching effects on the world economy which is still coming to terms with the economic recession. Many see and believe India as a cusp of a big revolution and we already see changing perceptions in the levels of engagement of a future anticipated superpower. The vast resources, demographic advantage and the new found enthusiasm has reflected well on the global perception of India’s impact on global economy.
India has a never before had an opportunity which could catapult ourselves to the years of glory and wealth , something India was known for, for ages and have avoided us in the last few centuries . Make in India will be a paradigm shift for global manufacturing and supply chain since the “China shift “of the last two decades. Make in India will unleash the power of 1.2 Bn. Indian population to make the world a better place for future
As renowned global marketing guru, Philip Kotler recently commented on the Make in India program while addressing top corporate leaders, faculty and students of leading management institutes in Bangalore – Indian experts will need to first zero in on which aspects & category of products we need to see upholding the image of India and work towards it. As seen above, every shift in manufacturing trend takes approximately 12-15 years to build and stabilize. India needs to look into the future and build its manufacturing strategy and capabilities to address these. This involves predicting needs and consumer trends and thereafter creating an environment to get there and establish a strong foothold that is far ahead of the competition. This is the sort of paradigm shift which allowed the US, Japan and subsequently China to become manufacturing superpowers, in-spite of being at a sizable disadvantage.
India needs to win at its own game and not emulate any other story. India will have to learn from success stories while proactively and quickly working on overcoming its weaknesses
China is fast losing its competitive edge. With increasing labour costs over time, China has lost its advantage. It is no longer cheaper to make in China and ship to US compared to making in US for example, leading to many US organization actively considering re-shoring. Not long ago, a confluence of factors combined to see China rise to the top of the manufacturing chain starting from the late 80s when an autocratic Chinese government started to slowly release its stranglehold on the Chinese economy. The most important step taken in this direction was the significant investment in infrastructure capabilities as well as development of natural resources such as captive coal mines and energy sources related to Oil and Natural Gas. Centralized impetus was given to set up manufacturing facilities in several areas which meant that by the time of 1990s, China boasted of well-developed manufacturing facilities backed up with the appropriate infrastructure. At this time a major a paradigm shift occurred, which was the rise in demand for low cost manufactured items within newly emerging and developing economies, especially in South East Asia. Chinese manufactured items were perfectly suited and placed to satisfy this new requirement given that the labour costs were significantly lower than other countries such as the US and Japan and also because of the availability of cheap raw materials required for manufacturing. As a result of these factors China has in less than 20 years, emerged in the top ranks of nations in terms of the production of steel, metal, ships, cards, electronics goods as well as textiles, all of which are items in major demand by developing countries.
In the past despite our large and cheap workforce, close proximity to other developing nations and trade relations, India has not been able to match China’s success in establishing a manufacturing based economy. Indian manufacturing industry, on one hand, has a competitive edge over peers in term of direct cost but when it comes to infrastructure and business environment – ease of doing business, corruption, logistics performance, India performs poorly. As a result, India has been unattractive as compared to competitor in term of preferred manufacturing location.
It’s the right time for ‘India to rise’ capitalizing on its core strengths. Over the past 2 decades, India has been recognized globally as a super power in technology. Indian IT companies have been at the forefront of technological innovations transforming the best of global manufacturers. This spirit of entrepreneurship, skills in arithmetic and logical reasoning, passion for innovation and most importantly the learnings from setting up a “ global delivery model (GDM) “ for IT services can be best leveraged towards a successful and sustainable “Make in India” program which can differentiate the India model for years to come.
