Make in India’ is tremendously important. It presents a huge opportunity, and along with a sense that this time, we must do things right.
Manufacturing has simply not taken off as it could have in India. India has natural resources, entrepreneurial zeal, and plenty of engineers. We are a country where unemployment is forever at the forefront of talk shows and election campaigns, of domestic discussions and street protests. With our distinct demographics, we are a country with potential demand for virtually any conceivable type of manufactured product. We have seen manufacturing used as a powerful tool in the development narratives of other nations, some close neighbours, some half a world away. Yet we import manufactured goods, losing opportunities for employment and growth.
Make in India serves, therefore, as a long-overdue call to action. The question is how to make in India, because across the world, manufacturing is at crossroads.
The Manufacturing Paradox
Manufacturing is traditionally energy-intensive. The way things stand, this energy has serious environmental consequences. Equally serious are concerns about the absolute quantity of energy supply. Both concerns are especially pressing in India. All the manufacturing infrastructure in the world is of no use without energy to run it; and energy that we pay for with our future is far too costly.
Other aspects of the manufacturing value chain are also environmentally destructive. From the acquisition of raw materials to the disposal of waste, manufacturing has generally burdened, rather than benefited, our environment.
Manufacturing is perceived as a powerful job creator and McKinsey and Company has reported that the sector could create up to 90 million domestic jobs, by 2025. However, automation is accelerating at unprecedented and astonishing rates. The capabilities of computers and robots are increasing at a rate that dwarfs anything seen thus far. Across the world, manufacturing is seeing humans replaced by machines. Going forward, the correlation between manufacturing and employment might just not hold.
Pertinent Questions about the Manufacturing Sector
If we simply accept this state of affairs, we are guilty of a failure of imagination. What if we question existing assumptions?
What if, for example, energy production was decentralised and environmentally friendly, using the sun, wind, and biomass? What if this process of energy generation could, in itself, create jobs on a large scale?
What if some raw materials could be replaced, making way for distributed, abundant, and environmentally friendly sources? What if they could be transported efficiently, benefiting industry as well as the environment?
What if manufacturing facilities themselves used energy more effectively, through intelligent architecture and engineering? What if they recycled and regenerated materials, and minimised waste?
What if manufacturing, despite automation, could create high-quality jobs, in factories and in the surrounding ecosystem?
What if we rethought what to manufacture, emphasizing goods that pave the way towards energy security, environmental stewardship, and social well-being? Improved agricultural pumps, better lighting equipment, components that support next-generation automotive design-these are but a few items that come to mind.
Such outcomes are not utopian dreams. The American Council for an Energy Efficient Economy (ACEEE) has estimated that investments in smart manufacturing could generate cost savings and new revenues that could add $10-15 trillion to global gross domestic product (GDP) over the next 20 years. We believe that concerted actions can move us towards this reality. The first step is acknowledging that our world is changing, and so must we; that a business-as-usual trajectory is not future-proof.
Reimagining the Big Picture
A final point: too often, the manufacturing sector (especially in developing countries) ends up near the bottom of global value chains. Intellectual property and brand value enable the greatest value-addition (and therefore the biggest margins). So, will India leverage manufacturing to realize greater opportunities, or merely become subcontractors to those higher up the value chain? Capturing value requires building an environment of thriving technical and business innovation within India, to work synergistically with the manufacturing sector.
This, then, is the vision: high-value manufacturing that enhances energy security, environmental conditions and employment. But as Voltaire wrote, the best can become the enemy of the good. So long as the big picture isn’t lost, judicious compromises that turn ideas into reality are both necessary and desirable.
Make in India will be closely watched. The direction it takes, and the momentum it gathers along the chosen direction, will both be crucial. I keenly hope that in both aspects, Make in India becomes every bit as revolutionary as it can be.