TALK POINT: What is the future of Make in India in the new era of robots replacing humans in factories?

Maruti Suzuki has one robot for every four factory workers. Firms like Eicher and Bajaj also use robots in a quest for efficiency and cost-cutting. About 100 mln Indians enter the workforce every month. Has India entered the manufacturing race too late? We ask experts Manish Sabharwal, Amitabh Kant, R.C. Bhargava, Archana Prasad and Dilip Chenoy.

Premature to say India give up on manufacturing-led jobs goal because of robotsMANISH SABHARWAL, Chairman, Teamlease Services

The peak of manufacturing employment as percentage of any labour market in the world was in Britain during the World War II – at 45 per cent. America and China peaked at 33 per cent and 28 per cent respectively. India is at 11 per cent and will never reach numbers like 45 per cent 33 per cent or 28 per cent because automation and robots are changing manufacturing.  

Does this mean that India should give up on manufacturing or is Make in India a dream with a birth defect?  

I make the case that it’s very difficult to make predictions about labour markets. The hundreds of reports done by countries and economists trying to predict where jobs will be in the future have the efficacy of palm reading or astrology because human progress is never linear. Of course, India does not have the same global growth, global trade or manufacturing supply chain deconstruction opportunity that China had in 1978.  

But, a) almost all manufacturing goods have a layer of software (the fastest growing operations of Siemens, Bosch and GE in India are software), b) India produces more engineers annually than the US and China combined, and c) India’s domestic consumption opportunity means that Make in India could be Make for India; the 60 per cent increase in Foreign Direct Investment last year is clustered in areas where domestic consumption is reaching critical mass.  

India could raise its manufacturing employment from 11 per cent of the labour force to 20 per cent of our labour force with better infrastructure, lower regulatory cholesterol, a better human capital. Economies need balance and the notion that India should give up on manufacturing because of robots is at best premature, and at worse, nonsense.

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Intelligent Manufacturing and Make in India: There will be no labour or white collar, it will be the knowledge worker — AMITABH KANT, CEO, Niti Aayog

Manufacturing has traditionally been a critical sector to ensure economic growth and job creation. The ongoing technological transformation — Intelligent Manufacturing or Industry 4.0. — creates a new opportunity and challenge.

New technologies like autonomous robots, industrial Internet of things, additive manufacturing, augmented reality, and big data and analytics-enabled sensors, machines and IT systems.

Intelligent manufacturing makes it possible to gather and analyse data across machines and enable faster, more flexible and efficient processes to produce higher quality goods at reduced prices. This will lead to new competitiveness of nations, industries and regions.

Intelligent Manufacturing will impact producers, entire value chains from design to after sales service, as production, distribution, marketing, logistics get integrated real time. This digitisation of the manufacturing process significantly reduces the labour component in production.

Can this new manufacturing revolution enable India to technologically leapfrog?

First: Automation will lead to creation of high skill, high pay jobs in India.  There will be no labour or white collar – it will be the knowledge worker.

Second: Our education and skilling has to be in sync with the new requirements. We have the advantage of IITs, IIITs and engineering colleges – their curriculum must be realigned for the emerging world.

Third: India must shift from simple labour cost arbitrage to total factor productivity.

Fourth: India must produce to global size and scale and penetrate export markets.

Fifth: We must create the best ecosystem for Startups so that they are allowed to thrive and create jobs.

Sixth: The sharing economy is upon us – driverless cars, drone logistics, hospitality accommodation – policy changes must keep pace.

Seventh: States like Gujarat, Maharashtra and Tamil Nadu must embrace and champion intelligent manufacturing.

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Use of robots actually helps growth and employment — R.C. BHARGAVA, Chairman, Maruti Suzuki

Job creation cannot be compartmentalised to activities in specific areas of the economy. A careful and in-depth analysis would reveal that most of the jobs created are directly linked to manufacturing, mining and agriculture. Retailing, marketing and selling are very large creators of jobs and the bulk of the products sold come from these sectors. Repair and maintenance is essentially an offshoot of manufacturing. The bulk of transportation activities are for support of these segments.

Consumer financing largely depends on sale of manufactured goods. Banks depend for viability on these sectors. Investment banking thrives on the manufacturing industry. General insurance does a large part of its business with manufacturing units, or to support manufactured products like cars and commercial vehicles.

Much of infrastructure building and maintenance is to make these three segments grow and become viable.

In India, driving cars and commercial vehicles creates millions of jobs. Employment in all these sectors is classified as being in the services sector. Clearly service sector growth would be faster if these sectors grew faster.

Faster growth would happen if there was continuous improvement of productivity and quality, and lower costs. Globally competitiveness requires this to happen and lead to more manufacturing activity.

The use of robots in car companies leads to consistent quality production. Car sales of Maruti Suzuki, and in India, are growing. Maruti Suzuki is now able to export profitably to Japan and western Europe. The component industry has grown and exports are near $11 billion because of higher volumes. Thus, use of robots is not anti-job creation but actually helps growth and employment.

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Introduction of new technology should be the result of a negotiated process between workers and industrialists – ARCHANA PRASAD, Professor, Centre for Informal Sector and Labour Studies, JNU

The question of introduction of ‘robots’ needs to be considered in the context of at least three crucial issues. First, any introduction of technology should be the result of a negotiated process between workers, industrialists and the state so that the technological transition is shaped in a manner that benefits the greatest number of people.

In India, this is simply not possible because both the state and the industry are at the forefront of ‘labour law reforms’ that are destroying a tripartite system that was a result of hard fought struggles by the working classes. Further, the policy support for labour market flexibility, ease of hiring and firing workers etc., has emboldened the capitalists who are using the state to undertake massive lay-offs and repress workers when they protest as seen in the case of Maruti.

Second, the choice of technology and the purpose of its introduction are important as they will determine the extent and nature of human livelihood displacement. For example, studies show that a technology which replaces hazardous work in operations and does not bring about large-scale displacement of livelihoods has been welcomed by workers. Irresponsible automation has been practised to displace skilled workers. Automation does not necessarily result in cost reduction or quality improvement.

But the end result is jobless growth which is the defining feature of the neo-liberal development path. In our current context, ‘Robots’ will create a reserve army of skilled labour and drive down their wages. Let’s recall that in the case of Japan, cost reduction and quality improvement in automobile sector was achieved through the cooperation of workers and formation of ‘quality circles’.

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India can leapfrog in the manufacturing sector to provide expertise in artificial intelligence – DILIP CHENOY, former CEO, National Skill Development Corporation 

The Make in India campaign has among others two distinct objectives, the first being to encourage the setting up of manufacturing facilities in India. The second is to create job opportunities.

In the 1980s, India had low telecom penetration. The shift from land line technology to mobile made India one of the largest mobile markets. The focus on manufacturing resulted in 24 new mobile manufacturing units being set up. Similarly, in the automotive and other manufacturing sectors, there have been new investments and more are in the pipeline.

Due to automation some jobs will become redundant, new jobs will emerge and others will be transformed. In India, automation is principally being done in areas of repetitive work, precision or hazardous work, not necessarily to replace workers. In many new firms, the number of jobs created for a unit of investment is declining. Yet this is not the complete employment story. In the auto industry, every additional car produced leads to around four additional indirect jobs. The mobile story has also created new types of jobs coupled with entrepreneurial opportunities in the repair space. More importantly workers are gaining new and different skill sets.

Given the nature of the change in manufacturing technology, and the proposed Make in India 2.0, it is distinctly possible that just like India leapfrogged in the telecom sector and earlier became the go-to country for IT professionals, we could similarly leapfrog in the manufacturing space and provide expertise in the new era of automation, artificial intelligence and augmented reality. We need to grab this opportunity. It is never too late to begin.

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