Indian industry must up its tech ante

Tech surge: The rapid technological changes will make the advantages of cheap labour obsolete   –  iStockphoto

Rapid tech changes are transforming manufacturing processes and India Inc must upgrade to stay competitive

Picture this. In an Indore market many old shops are replaced by new types of stores. These make products on demand using 3D Printers. You enter a shoe store, select design, colour, leather type with the help of a virtual reality simulator. Order a pair. Sip coffee. And lo, your shoes are ready for delivery in 30 minutes. Expect such stores to be everywhere in the next few years. Initially as a novelty and then as an inexpensive option to buy customized quality products.

While most technologies automate factory operations, 3D Printing redefines the concept of the factory itself. A 3D factory can be set up on a table or in a room. The list of products a 3D printer can make is impressive. These include parts of cars, bikes, planes and defence equipment, medical implants, small housing units, furniture, utensils, shoes, clothes, body parts, pizza, etc. Equally impressive is the list of materials that can be used as inputs. These are corn soup, glass, metal, rubber, wood, and concrete. And the list is growing.

No labour advantage

3D Printing is set to replace many large factories that mass produce with small units that would deliver customised goods, even a single piece. This is likely to have a far-reaching impact. A US or EU consumer will prefer to order bespoke shoes made in a nearby facility. Why buy mass-produced goods from China or India? 3D printer will kill the cheap labour advantage of developing countries in many products and reduce their exports. But 3D Printing is just one of many technologies that are changing the way things are produced, transported or consumed. Other vital technologies are the Internet of Things (IOT), robotic manufacturing, artificial intelligence (AI), cloud computing, big data analytics, and block-chain. Together, we know these as Industry 4.0 Technologies. Let us see how these technologies help businesses.

IOT makes machines intelligent by enabling them to talk to each other. A sensor attached to each machine provides a unique internet address to make this possible. Sensors trigger the action required. An example will illuminate this.

Consider a chemical factory where the reactor temperature should not go above zero degree. So when the temperature approaches zero level, the sensor attached to the reactor sends a signal to the refrigeration unit to lower the heat. This action is automatic without human intervention. It helps reduce maintenance cost, increase efficiency, and prevent costly downtime.

Thus IOT essentially integrates machine with IT. No wonder, it is the technology of choice for automating manufacturing, services and logistics industries. Yet, IOT is not a standalone technology. It could become dominant because of advances in AI. AI helps IOT sensors find the most productive way of doing things.

Use of IOT and AI has revived the Robotics industry. New Robots come with superior dexterity and intelligence and at less price. We will soon see their deployment everywhere: factories, shopping malls, hospitals, and homes.

Use of IOT with cloud computing allows tracking and control of factories located across many countries from a single point. During shipping, use of IOT with block-chain enables tracking of the location of food and other goods and ensures against pilferage and contamination. Advances in materials and nanotechnology are no less critical. Super lightweight, high-strength alloys, advanced ceramics are replacing common metal and plastic parts. Nanotechnology creates clothes that can feel warmer or cooler through changes at the atomic level. It has numerous other applications.

Cutting costs

As these technologies cut costs and enhance automation, these are embraced on a large scale. About 20 per cent of large global firms have already started using these and the rest are expected to upgrade by 2025. New technologies are expected to generate an additional $15 trillion or 20 per cent of the world GDP in the next 15 years.

Most countries are aggressively working to integrate new technologies in their industries. The German government launched the “INDUSTRIE 4.0” project in 2010 to increase digitisation and the interconnection of products and, value chains. China started ‘Made in China 2025’ in 2015 to upgrade. It is moving to become a leader in hi-tech industries like robotics, new materials, biotechnology, aerospace, agricultural machinery and new energy vehicles, etc.

What should India do?

Cost competitiveness based on cheap labour will disappear soon. Indian industry needs an urgent upgrade. We will need simultaneous action on three fronts.

One — Create sector specific government-supported and industry-driven programmes for the technology upgrade. But most new technology is not available locally. Indian firms would need to buy these from the firms located in the US, Germany, Japan and South Korea. Or enter into joint ventures to get the required technology. Entering into technology cooperation with countries and pan-national institutions must also be explored.

Two — Prepare for large-scale re-skilling and re-employment of workforce. About half the manufacturing workers in the next 10 years will need both IT and automation skills.

Three — Invest in R&D. Tap the network of over one lakh Indian R&D professionals working on similar subjects for MNCs. They should lead the respective projects. The aim must be to become influential in AI innovation in next five years.

The upgrade will not be an easy task. No country can stop the march of technology as it makes thing cheaper and more accessible. And we may recall how most villages in India have moved from no phones to the mobile phones stage, skipping the landline telephones stage altogether. And in the process saving much investment in copper cables. Quick action may lead to similar happy surprises.

The writer is an Indian Trade Service officer. Views are personal.