Indian manufacturing industry en route to a shining future

Manufacturing has emerged as one of the high growth sectors in India. Prime Minister, Narendra Modi, had launched the ‘Make in India’ program to place India on the world map as a manufacturing hub and give global recognition to the Indian economy.

India’s ranking among the world’s 10 largest manufacturing countries has improved by three places to sixth position in 2015.

The Government of India has set an ambitious target of increasing the contribution of manufacturing output to 25 per cent of Gross Domestic Product (GDP) by 2025, from 16 per cent currently.

Market Size

India’s manufacturing sector has the potential to touch US$ 1 trillion by 2025. There is potential for the sector to account for 25-30 per cent of the country’s GDP and create up to 90 million domestic jobs by 2025. Business conditions in the Indian manufacturing sector continue to remain positive.

What’s working for us

The country is expected to rank amongst the world’s top three growth economies and amongst the top three manufacturing destinations by 2020 and provide favorable demographic dividends for the next 2-3 decades. Sustained availability of quality workforce, strong consumerism in the domestic market, strong technical and engineering capabilities backed by top-notch scientific and technical institutes should provide a boost to manufacturing in the coming years. The cost of manpower is also relatively low as compared to other countries.

CIO India spoke to tech heads in the country’s leading manufacturing companies on what the road ahead looks like, the impact of GST, and what challenges need to be ironed out as we head into a promising year ahead. Here’s what they had to share:

Manufacturing sector in 2017

Saugata Basu, CIO & VP GROUP IT, Aditya Birla Group:

The ‘Make in India’ campaign will, in itself, provide a fair amount of growth incentive. At the same time, if you see the manufacturing vertical, it is fairly cyclic in nature. The metals, mining, and textile sectors will see major growth in the next three to five years.

Balaji Kulkarni, Global Head – IT, Crompton Greaves:

The second half of the financial year will be critical for the growth of the industry. There’s also a lot of focus on big data and IoT, but the latter still has a lot of road to cover. But our priority is on the integration of technology in our normal operations. We’re using analytics in the procurement process in our organization.

Vipul Anand, Group CIO, Jindal Steel and Power:

Digital transformation is the order of the day. It is important for all of us to be ready for this disruption; to be able to adopt cutting-edge technologies and solutions to leapfrog businesses to the next level, and continuously identify and espouse new products and services.

Major technologies to be focused on in 2017 

Saugata Basu: At Aditya Birla, we’re focusing on two areas: one is utilizing the information we have within our applications. For example, using analytics on the historical data to drive performance optimization for our equipment and processes.

The second area is in using the emerging technologies of IoT, social, and cloud. This is used for machine-to-machine information sharing. We use this to improve uptime, safety and design processes to take actions around the insights derived.

We’re doing two or three large projects in the IoT space, and we’ve conducted some Proof-of-Concepts. In the manufacturing analytics side, we’re doing a broader slew of activities.

Balaji Kulkarni: I believe a bimodal approach is necessary for the IT infrastructure across the industry. Cloud, security, and connectivity are the major focus points.

Vipul Anand: Information Technology function of JSPL is responsible for adoption, implementation, utilization, enhancements and support of technology solutions for the business.

To ensure this, we have a digital roadmap which is being implemented by our young and dynamic in-house IT Centre of Excellence team based out of Raigarh and Sonepat, who are ready to innovate and execute business needs in optimal time

As a CIO, what areas would you primarily be focusing on?

Saugata Basu: Today if you see, the whole technological scene revolves around user experience. I think putting in solutions to automate something, or deliver something faster has gone away.

The focus now is on the user being able to use your solutions easily and efficiently for his day to day operations. The entire focus is now based on customer experience.

Balaji Kulkarni: I believe structuring of the data and implementing the right technological solution is one challenge that we need to work towards.

Vipul Anand: Among our IT initiatives, we are looking at incorporating an integrated voice communication across our domestic locations; an integrated video connect across devices of key business officials; a SAP-based business planning and consolidation

Impact of GST playing out in 2017

Saugata Basu: I think the impact of GST will be more towards the latter part of 2017. While we say the roll-out date is the 1st of July, the real impact will be felt in the month of September. The initial impact of the simplification of tax calculation will definitely help the business.

The real impact, however, will happen once the manufacturing businesses start revisiting their supply chain – that’s leveraging supply chain optimization. This will lie in figuring out where the supply chain should be placed so as to serve the customer better. Now, we can actually see this playing out more in 2018 onward.

So, I would tend to think that the benefits in terms of better sales brought about by GST will be see in 2018.

Balaji Kulkarni: By and large, I don’t think GST will be a challenge to implement. And GST is going to be favorable for the industry.

Our industry, in particular, will definitely benefit from the GST rollout.

Vipul Anand: We’re expecting some positive business following the GST implementation. Overall, for the country, inflation can be controlled. The slabs and rates will be made more uniform now, so that’s good for our economy.

We have also started working on a GST rollout plan across all our business locations.

What challenges do you foresee in 2017, and what can be done to overcome them?

Saugata Basu: In the Indian manufacturing sector, the concept of technology being a differentiator, in terms of growth, is still not well understood. It is still looked at as a cost or support function.

The companies which are really going to grow are the companies which have moved away from this mindset – companies that are re-inventing itself. So, from a manufacturing organization, you become more of a technology platform organization.

This is the big shift manufacturing companies have to make – they have to embrace technology and use that to make a turnaround, and not the other way around.

Another area of concern is that you need different technological mindset now. People like us are from the old school of thought – ERP and large applications. But what’s needed now are mobile applications that can talk to each other in a more robust manner. You need a whole new set of competencies, and that will be a big challenge.

Today if you see, the whole technological scene revolves around user experience. I think putting in solutions to automate something, or deliver something faster has gone away.

The focus now is on the user being able to use your solutions easily and efficiently for his day to day operations. The entire focus is now based on customer experience.

Balaji Kulkarni: I believe structuring of the data and implementing the right technological solution is one challenge that we need to work towards.

In addition to this, change management is also required. And it’s not only the internal IT that needs to be focused on. It also applies to integrating different SLAs to the various services.

So, change management, I believe, is one of the biggest challenges.

Vipul Anand: With customized solutions around hybrid infrastructure, analytics and mobility, we should be ready to drive digital transformation for our organizations. This is one challenge we foresee, and plan to tackle this year.