Maintaining Supremacy

Maintaining Supremacy

There will be a greater emphasis on manufacturing as this is the only sector that can bail out the economy.

by Jayashree Mendes & Mitalee Kurdekar

The country has to grow at a much higher rate than the current growth rate of 7.5% and it will not be possible without manufacturing which has to become a key driver of growth, so had said NITI Aayog CEO Amitabh Kant at an event recently.
This statement comes at a time when manufacturing appears to have become a mere blip on the radar from the very same authorities who tom-tomed Make in India for a long time. Instead, there is a renewed focus on building infrastructure, which is also not too bad. But then, again, while infrastructure development is being pushed mainly to attract investments from FIIs, it is manufacturing and only manufacturing that can aid in the economic growth of the country.
On the government’s part, there has been a focus on ease of doing business by dismantling many rules, regulations and procedures and paperwork. They seem to be steps in the right direction of making India more efficient, more performing and a more modern economy, so had said Kant.
Manufacturing Today speaks to various heads of industries to understand what 2018 holds for the industry in terms of contribution from sectors, digitalisation, and the outcome of events that happened in 2017 and will unfold in this new year.
GK Pillai, MD & CEO, Walchandnagar Industries, says, “The Indian manufacturing landscape in 2018 looks like a mixed bag of constraints and opportunities. With the index of industrial production hovering at low levels in the past few quarters and the muted sentiment as far as private sector investment and exports are concerned, there are clearly headwinds for the sector going ahead. However, with the right kind of policies (at least as far as intent goes) the sentiment may soon change. With announcements like indigenisation in defence sector, encouragement to more localisation through Make in India, setting up of indigenous nuclear power plants, thrust on automobile production (even from an exports perspective), importance is being accorded to alternative energy sources. It looks like automobiles, heavy engineering (particularly defence/aerospace) as well as general engineering may put up a better show as compared to last year. Not only do these sectors have the potential to ramp up growth but can also spur large scale employment in contrast to purely process driven industries.”

A FEW RULES FIRST
“With the advent of GST, the era of area based fiscal benefits is behind us. Manufacturing units will have to demonstrate continuous improvements in efficiency and productivity to survive in the new competitive landscape. Use of green technologies which result in lowering carbon footprint, will see an increased adoption. New investments are likely to be in automation and energy efficient devices, says Dr Rakesh Sinha, head, global supply chain, manufacturing and IT, Godrej Consumer Products (GCPL).
India’s manufacturing growth is primarily driven by the private sector. Now with the introduction of policy changes and sizeable tax incentives such as reduction of income tax rate to 25% for MSME companies having turnover up to Rs 50 crore and GST, doing business in India has become relatively easier. These incentives are likely to further reflect onto the sectors growth as we move into 2018. Manish Sharma, president & CEO, Panasonic India and South Asia, says, “With IoT and artificial intelligence beginning to grow prominently, the aspects of Industry 4.0 will continue to thrust themselves within India’s manufacturing landscape in 2018 more vigorously. This means the success of India’s manufacturing segment will depend largely on the traction it gains from the success of the ‘Digital India’ campaign. Corporations now will have to be more upfront in their willingness to adopt to these technologies in order move ahead with changing times.”
SR Mukherjee, CEO, Tata Advanced Materials (TAML), believes that the Indian manufacturing industry is definitely poised to grow in 2018. “The largest growth will come from auto and auto components followed by pharma and then maybe from automation & robotics. Technology sectors like aerospace and defence will also show robust growth given the interest of many overseas manufacturers eyeing India for their growth strategy and a lot more domestic players entering this field. However, it will be heavily dependent upon how quickly we are able to transfer and adapt to the technology available in developed countries and the speed with which they get transferred from there,” he adds.
Ravindra Dayal, executive director, Maruti Suzuki, says that companies are working on automation and digitisation to improve quality and productivity, and ensuring safety. “Over all capacity utilisation will improve. Maruti as such is short of capacities and Suzuki Motors Gujarat is adding another plant of 2.5 lakh/per annum capacity which will come up in 2019. SMG started second shift operations in October this year. The focus in 2018 would be on continuous improvements, stabilisation of Gujarat plant for two shift operations. Many suppliers have already built facilities in Gujarat and more are setting up plants. All the new facilities are state-of-the-art with extensive automation, robots, sensors, and in -built safety features,” he adds.

HEADWINDS FOR EMERGING SECTORS
Most Indians are affirmed in their belief that manufacturing in India is at a point of high growth and is ably supported by government policy. They are convinced that the Make in India is more than just an inspiring slogan. It represents a complete change of processes and policies. It also represents a change of the government’s policy – a shift from issuing authority to business partner, in keeping with PM Modi’s tenet of ‘minimum government, maximum governance’.
Paurush Bhesania, assistant VP, Godrej Aerospace, says, “The outlook of Indian economy and core sector remains upbeat. Overall economic climate is favourable due to government large scale policy reforms. Even though policy decisions like demonetisation and GST created a short term slowdown, economy in the long term looks promising. Quarter ending September 2017 saw GDP growth at 6.3%. Manufacturing sector grew at 7% as compared to 1.2% during the same period last year. The economy is likely to grow at 7.7% in 2018-19.”
He adds that GST and banks recapitalisation, a more formal economy and positive fiscal policy will help see a growth of 7.7%. This can be verified from the data available from CV makers, power and coal demand, and increased order book for construction companies.
For that matter, analysts peg the big theme for India to be manufacturing over the 3-5-7 years. The government has frequently said that it wants to accrue 25% of GDP coming from manufacturing; currently it is at 15% on a $2 trillion economy. To achieve these targets in a five-year timeframe it is only manufacturing that can give this boost. The sectors that seem promising are metals and mining, cement, IT services, construction for building infrastructure and affordable housing, and passenger vehicles.
Ramakant Reddy, MD, LMT Tools India says that he expects growth in all segments and specially in aerospace, medical equipment, and automotive.
In terms of core manufacturing, some of the vistas that most see are in the domain of robotics, additive manufacturing and composite materials. “Robotics is not new, but the trend is that today robots are not just being applied to repetitive operations but also in high-skilled operations where tolerances, accessibility, consistency and time are constraints. One example of this is in highly intricate welding in the heavy engineering industry,” says Pillai. With composites having shown themselves as proven substitutes of traditional materials with better strength to weight ratio, mastering techniques to handle and shape is going to be a big challenge. This is even more so because the application of these materials will only increase – for e.g., today they are being widely used in automobiles, aerospace, precision instruments, and components. Additive Manufacturing with its inherent advantage of optimal usage of raw materials and the ability to create intricate profiles is increasingly finding commercial level applications and is not just restricted to making one-off pieces.
Speaking about defence offset opportunities, Bhesania says, “With the success of BrahMos air version, it has placed orders for 100 sets with a large Indian private sector company for air frame systems. At the same time HAL has begun work on integration of BrahMos missile with Sukhoi. The government too, in October 2017, through MIDC invested towards VC funds for MSMEs/SMEs having strong potential in aerospace and defence manufacturing. The Kerala government is starting Defence Industrial Park for defence components manufacturer.”
On GCPL’s plans for 2018, Dr Sinha says that GST has redefined the entire manufacturing footprint of the country. “We are looking at new technologies within IoT, Artificial Intelligence, data analytics and robotics getting more efficient and affordable for their widespread application across the entire manufacturing landscape,” he adds.
Sharma is sure that with the government revealing its 2030 E – mobility vision this year, There will be an uptake in the contribution from the automobile industry.
While technology revolutions are an ongoing process, the one factor that was a game changer in 2017 is the opening up of Indian private manufacturing sector to opportunities in defence and aerospace. But for the intended targets of the government to be achieved i.e. more than 20% to come from manufacturing, creation of PPP in defence and aerospace is a must. With the government’s continued support to this philosophy, most manufacturers see this trend growing stronger in 2018.

 

Categories: Features