Market Insights

India’s Manufacturing Resurgence: From ‘Make in India’ to ‘Digital India’

By 26 March, 2024No Comments

Engineer examining a welding robot

The “Make in India” initiative is a crucial step towards India’s economic development, aiming to transform the country into a global manufacturing powerhouse. This initiative encourages domestic manufacturing, attracts foreign investments, and creates job opportunities, fostering a conducive business environment. It targets 25 significant manufacturing sectors such as automobiles, aviation, biotechnology, defense manufacturing, electrical machinery, food processing, oil & gas, pharmaceuticals, and more, opening a wide array of opportunities for businesses.

India’s manufacturing sector is currently experiencing a profound transformation with the introduction of digital manufacturing. Cutting-edge technologies are revolutionizing conventional manufacturing methods, resulting in a significant boost to productivity and economic growth. As the global digital revolution unfolds, Indian manufacturers are seizing these opportunities, entering a new era of industrial advancement and competitiveness through the adoption of Smart Factory principles.

At the heart of this transformation lies the concept of Industry 4.0, which serves as a catalyst for the emergence of Smart Factories and digital manufacturing in India. This strategic approach integrates advanced technologies such as the Internet of Things (IoT), artificial intelligence (AI), robotics, and data analytics into manufacturing processes. By creating intelligent systems where machines, devices, and human operators seamlessly collaborate within the factory environment, Industry 4.0 facilitates increased automation, enhanced operational efficiency, and optimized production outcomes.  In this article, we’ll examine the crucial role and impact of Smart Factories in the ongoing transformation of India’s manufacturing sector, especially within the framework of the “Make in India” initiative.

What truly is a Smart Factory?

The concept of a Smart Factory signifies a profound departure from traditional automation, evolving into a fully connected and adaptable system that seamlessly integrates the digital and physical domains. This shift not only reshapes manufacturing processes but also revolutionizes supply chains, moving away from linear operations to interconnected, open systems known as digital supply networks. Achieving this evolution requires comprehensive integration across operational systems and throughout the entire value chain.

By harnessing real-time data from interconnected operations, the Smart Factory exhibits the agility to dynamically respond to fluctuating demands, optimizing efficiency and digitalizing operations across the manufacturing network.

Operating as dynamic entities engineered to maximize performance, Smart factories swiftly adapt to evolving circumstances and autonomously manage production processes. Interconnected within a global network of similar production systems and a broader digital supply network, these facilities embark on an ongoing journey toward the development of a flexible learning system. Their true potential lies in their capacity to evolve and expand in tandem with the evolving needs of organizations, enabled by robust computing and analytical capabilities, and enriched by broader ecosystems of smart, interconnected assets.

Table showing traditional and smart manufacturing methodsIn a broad scope, digital manufacturing is poised to enhance efficiency across various manufacturing sectors, spanning from traditional industries such as automotive, coal, and electrical to more intricate fields like miniaturization and printed electronics. A study conducted by the Boston Consulting Group reveals a significant trend: the utilization of robots for tasks across all manufacturing sectors is anticipated to surge from the current global average of 10% to approximately 25% by 2025. This increase in robotics adoption is projected to yield substantial benefits, including a potential 30% enhancement in productivity, a consistent annual performance improvement of 5%, and a reduction in average labor costs within manufacturing operations.

Analyzing the Effects of Embracing Smart Factory

Despite the array of benefits associated with transitioning to smart factories, India must address several significant hurdles on its path towards Industry 4.0 and the widespread adoption of smart manufacturing practices.

Lack of Skilled Workforce

India boasts a vast workforce, but there exists a notable skills gap hindering the seamless adoption of smart factory practices. There is a pressing need for individuals well-versed in establishing and managing smart factories. Every sector requires a new breed of employees capable of overseeing, coding, and sustaining new processes, robotics, and software. However, there often exists reluctance from stakeholders, top executives, and investors to invest in innovative technologies, signaling resistance to departing from traditional manufacturing methods towards digitalization.

Considerable Cost and Time Trade-offs

Implementing smart factory practices demands significant capital and time investments from companies. This poses challenges to organizational adaptability in managing job transitions and shrinking workforces. Businesses must prepare for a rigorous product validation process, including various customer-requested tests. Moreover, substantial investment hurdles loom large, including ensuring compatibility with existing hardware and maintaining data security. Many small and medium-sized manufacturing enterprises hesitate to embrace smart technologies due to the resource-intensive, time-consuming, and costly nature of initiating smart manufacturing projects.

Real Impact of Smart Factory

Despite strides in implementing Smart Factory principles within its manufacturing sector, India grapples with notable deficiencies in its industry. As of 2023, manufacturing only contributes to 13% of India’s GDP, generating $450 billion in revenue, trailing significantly behind China (27%), Japan (20%), and Germany (18%).

Graph showing India's GDP and Contribution of Manufacturing Output on GDP 2015 - 2022

  • Infrastructure Challenges: India grapples with issues such as inadequate power supply, transportation bottlenecks, and poor connectivity across various regions. For smart factories to thrive, a strong infrastructure is essential to support advanced technologies like IoT devices, robotics, and automation.
  • Regulatory Hurdles: Complex regulatory frameworks and bureaucratic procedures can impede the adoption of advanced manufacturing technologies. Simplifying regulations and offering incentives for technology adoption could help overcome these obstacles.
  • Cybersecurity Concerns: The increasing digitization of manufacturing processes raises significant cybersecurity concerns. Many manufacturers, particularly small and medium-sized enterprises (SMEs), may lack the resources or expertise needed to effectively protect their systems from cyber threats. This lack of security measures can hinder the widespread adoption of smart manufacturing technologies.

Despite these challenges, India remains steadfast in its pursuit of a manufacturing resurgence. By fully embracing the principles of Smart Factory and with support from both governmental and private sectors, a substantial transformation within the manufacturing landscape is entirely feasible.

Looking forward

Moving ahead, the “Make in India” initiative marks a pivotal moment in India’s manufacturing landscape, steering towards digital manufacturing and the widespread embrace of smart factories. This evolution promises substantial boosts in efficiency, productivity, and global competitiveness. This transition indeed promises substantial enhancements in efficiency, productivity, and global competitiveness. However, it is accompanied by its own set of challenges, such as a notable skills gap in the workforce and the significant investments of time and resources required for implementation. Overcoming these hurdles requires the formulation of robust policies, strategic investments, and a steadfast commitment to workforce development. Despite these challenges, India’s manufacturing sector, leveraging technology, is poised to make significant strides on the global stage.

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