The manufacturing sector has the potential to grow six-fold by 2025 up to $ 1 trillion, creating up to 90 million jobs. At the same time, digitisation has given rise to the phenomenon of smart manufacturing, paving the way to Industry 4.0. According to Ravichandran Purushothaman, President, Danfoss Industries Pvt Ltd, companies will have to ensure that the golden triangle of change - people (who are at the crux), processes (which require human intervention) and technologies (that help perform processes) - is ready to make this transition. In this conversation, he discusses the changing market dynamics and emerging technological needs of the industry.
What is your take on the Indian manufacturing sector?
In India, over 60% of the economy is consumption driven and with the rise in the population, the dependence on the manufacturing sector to cater to the needs of individuals and industries has grown manifold. With our country’s vision for development, the spurt in the rise of newer industries and urbanisation has fueled the need for the manufacturing sector to accommodate the increasing demands for material goods.
Additionally, with the Government promoting the ‘Make in India’ initiative, the sector is sure to discover its potential to emerge as one of the fastest growing sectors as major companies are now striving to improve the localisation levels in their manufacturing hubs. The implementation of GST has also contributed to creating greater transparency in the business chain which in turn, presents an opportunity for the manufacturing sector to grow through means of significant value creation for the Indian economy.
What are key challenges before manufacturers in India?
In spite of efforts by the government and industry players, our county still lacks skilled labour that will ease the process of manufacturing in the country. To address this issue, it is necessary to create avenues for industries to directly engage with academia and build a strong ecosystem for innovation and growth in the sector.
It has also become important to address security breaches as a major concern for companies which highlights the need for healthy competition and a culture of co-creation which will help in industrial progress that will mutually benefit the companies as well as customers.
The most important factor, however, is the lack of understanding and acceptance of digitisation as a norm in spite of its role in increasing the productivity of companies, improving customer experience for the customers and exploring newer business models.
How can India leverage on its strengths to attract global manufacturers?
Unlike other developing countries, India is at an advantageous position given that we are already at the ‘start’ line to fuel the growth of the manufacturing sector. This present us an opportunity to learn from the mistakes of others.
Low-cost labor doubled with India’s demographic dividend is certainly an attractive phenomenon for global manufacturers to set base in India as it ensures the sustained availability of workforce. The government initiative to set up National Investment and Manufacturing Zones (NIMZ) and sector specific parks and industrial corridors aids the process of establishing manufacturing hubs in India. Economic incentives and favorable policies such as investment allowances, tax deductions and R&D incentives also help in making India a preferred station for global manufacturers.
India’s jump in the World Bank ‘ease of doing business’ rankings is a clear indicator of this phenomenon.
Which are the promising sectors, where India can emerge as a major manufacturing powerhouse by 2020?
The food processing sector has the ability to emerge as the sunrise sector in India; in terms of potential and growth, the sector has the ability to become the next IT industry. Post the success of World Food India, I can confidently say that India is all set to emerge as the ‘food factory of the world’ by focussing on integral aspects such as cold chain infrastructure and value addition processes.
At Danfoss, we believe that only 1/3rd of India has been built and that 2/3rd of India is yet to be built. With the rising growth of the infrastructure sector, industries have begun to understand the importance of incorporating energy-efficient solutions that reduces both the monetary and environmental cost.
Furthermore, the Smart Cities initiative of the government is set to create new frontiers for development in the infrastructure sector.
What role do you foresee for SMEs (or Start-ups) in India’s growth story?
The spurt of SMEs/start-ups presents the opportunity for global players to identify and test newer ideas through collaborative efforts that helps in increasing the speed of innovation across industries.
The growing trend for co-creation also presents greater scope for smaller firms to uncover their entrepreneurial potential by partnering with established companies and therefore taking their ideas and products to a global market.
How important is adoption of new manufacturing technologies (such as smart factories, 3D Printing, advanced robotics, etc) for India to emerge as global production hub?
Digitisation across industries has given rise to the phenomenon of smart manufacturing, paving the way to Industry 4.0, where there are flexible business models. This can contribute to reducing wastage of resources and the consumption of energy apart from increased efficiency, faster turnaround, better quality, faster time-to-market, integrated supply chain and better security. In simple terms, one achieves operation excellence with smart manufacturing by addressing the ease of use of a product.
Through these technologies, companies are now able to produce customer-centric solutions which should ideally be the main architecture of our design principles. Industries should also look at incorporating design thinking in their products to ensure that we build them in such a manner that helps our customers connect to various devices and gain maximum value from the products and solutions.
With emerging and advanced technologies like Internet of Things (IoT), 3-D printing, big data & analytics, players are empowered to design, modify and create products & solutions that customers are looking for. This helps companies explore new revenue opportunities.
However, it is important to keep in mind that digitisation can be disruptive. It is fundamental that companies ensure that the golden triangle of change is ready to make the transition - ie people (who are at the crux), processes (which require human intervention) and technologies (that help perform processes).
Outlook for Indian manufacturing industry by 2020
A report by PwC, titled ‘Industry 4.0: Building the digital enterprise’, states that more than 53% of industrial companies use data analytics and 90% expect data to play a significant role in their decision-making process. Furthermore, 27% respondents to this survey have stated that their levels of digitisation is high and this value is set to go up to 65% in the next five years. Keeping this in mind, the manufacturing sector has the potential to grow six-fold by 2025 up to $ 1 trillion, creating up to 90 million jobs.
Complementing the views of various industry leaders and academicians, I believe that, by enhancing our skillset and adopting ‘smart manufacturing’, India can surely be positioned as one of the top three manufacturing destinations by 2020.
About Ravichandran Purushothaman
Ravichandran Purushothaman is the President of Danfoss India, the Indian subsidiary of global major in climate and energy solutions since 2013. With experience spanning over 28 years, Ravi has worked extensively in building businesses in India, Asia pacific and Europe. He has been a key member of the Danfoss Growth strategies in India, Asia Pacific and a key member of the global management teams. He is very closely involved with industry in building technology road maps, building the network for cold chain alliances and skill development in HVAC & R industry. Strong believer in industry-university interaction has been working in building university interaction programs. He is the Chairman of the CII TN State Council and member of CII national council for agriculture. He also currently heads the CII national task force for cold chain development in India where he lays emphasis on development of the cold chain sector in India. He has been a key member in promoting energy efficiency, sustainable technologies and green buildings.