Since 2015, the government has constantly been mounting the Digital India initiative. It improved the programme’s outlay by 23 per cent to Rs 3,958 crores for 2020-21. COVID-19 has been the definitive assessment of all digital systems and infrastructure. And Indian leadership has started to recognise the potential to change India into a real technology frontrunner.
As the world headed in the direction of absolute digitalisation in the post-COVID age, Nirmala Sitharaman, Finance Minister, India, presented a ‘Made in India’ tablet substituting the traditional briefcase before presenting Budget 2021, making it India’s first Digital Budget that targets to support the ambitious Digital India undertaking. In truth, some of the main highlights for furthering tech and digital initiatives in the Union Budget 2021-22 were—India to have the first-ever digital census and the government proposing to build a top-notch fintech hub at GIFT City, Gandhinagar.
With market qualms and reduced cash flows due to the coronavirus pandemic, there were some digitally progressive firms that brought about the true meaning to the Digital India initiative for a healthier 2021. Digitisation has established being an enabler and an opportunity to survive even for those who were not prepared for it.
Interestingly, this shift also coincides with India preparing itself to be a beneficiary of the global decoupling from China. With the ongoing pandemic, the world is experiencing two simultaneous transformations: the building of an alternate supply chain and the creation of a new, cutting-edge industrial process called digital manufacturing.
India’s digital factory
Adoption of analytics is said to be one of the greatest drivers of digital transformation, as businesses seek greater data-driven insights. Data acts as a source of truth that helps teams focus on the critical factors that determine business resilience. Today, businesses are acutely aware that they must become more resilient by using technology.
In a remote part of Odisha, stands one of the world’s most advanced manufacturing plants. Tata Steel in Kalinganagar, is one among 44 global elite facilities on the World Economic Forum’s Lighthouse Network of companies that have successfully combined digitisation with the manufacturing process. This makes Tata Steel India’s only company be ready for the new era of manufacturing that has dawned, largely unnoticed—one that conjoins manufacturing and digitisation to make the industry more agile, creative and efficient.
The multinationals in India, too, are looking for a place on the Lighthouse list, especially the local subsidiaries of companies like Schneider and Siemens whose parent companies are already Lighthouse Network players. For instance, France’s Schneider Electric aims to bring its Bangalore and Hyderabad facilities on to the network. In Hyderabad, it uses automation hardware and software in its industrial operations. This has already saved 30 per cent in annual electricity costs, among other benefits. These processes will soon be upgraded.
The remaking of the manufacturing process could have not come at a better time for India. With very few exceptions, the country has never developed a competitive manufacturing base. Manufacturing adds just 16 per cent of value to India’s GDP and at US$390 billion in revenues. This accounts for just 2 per cent of global manufacturing compared to 18 per cent for the US, 20 per cent for China, 10 per cent for Japan and 7 per cent for Germany.
The ecosystem for digital manufacturing in India is now visible and four elements of this are in place: the digital infrastructure, government schemes, academic learning, and a burst of start-ups.
Progression of domestic infrastructure
To capture this nascent and promising trend, the government has moved swiftly. November 2020 saw a $20 billion incentive scheme for 13 competitive sectors of manufacturing to create domestic self-sufficiency, says a Gateway House research study. In addition, a serious effort is underway to create supporting institutions for manufacturing and for the micro, small and medium enterprises (MSMEs), which comprises over 90 per cent of Indian business. Nitin Gadkari, India’s infrastructure and MSME minister said on December 15, 2020 that he expects MSMEs to create 50 million new jobs over the next five years, and contribute 40 per cent to India’s GDP, up from the present 30 per cent.
To make this happen, new initiatives like Smart Advanced Manufacturing and Rapid Transformation Hub (SAMARTH) by the Ministry of Heavy Industries have begun. One such government initiative in Pune is the Centre for Industry 4.0 (C4i4), which provides a transformation road map for its customers, both MSMEs and MNCs. C4i4 offers coaching and consulting specifically for manufacturing MSMEs that are looking to digitise. During the pandemic, demand for its services has grown by 30 per cent, not just from small businesses but big exporters too.
The government, surprisingly, is ahead of India Inc in this effort. While most start-ups like Chizel are small, self-financed ventures, some have found a generous funder in the many new government programmes like SAMARTH, Startup India and Digital India, as well as through the Department of Science and Technology. The latter has funded several incubation spaces like Mumbai’s Centre for Incubation and Business Acceleration, an affordable, modern workplace for start-ups.
Still awaits definitive efforts
In general, all of these are exemplary efforts and in the right direction, but in practical, they must accelerate. To receive investments and build an advanced industrial base that includes the SME sector, India must develop new skills, processes and products and most importantly, upgrade its academic, research and vocational sectors accordingly. India is already half-way there; its global IT services sector, while currently export-focussed, can use its talents domestically to develop data analytics models—the most difficult part of digital manufacturing—converging machines with digital tools to analyse data.
None of these have been put to work on digital manufacturing, mostly because companies lack an understanding of manufacturing processes and the digital manufacturing domain.
Tata Steel has not used its IT-export affiliate TCS; instead its in-house engineers with varied backgrounds, including mining and electronics—to develop the company’s manufacturing, digital and data analytics. Firms without such in-house bench strength are reaching out to Indian cloud-based tech start-ups like Chizel and Clairviz.
Logistics with digi-hosting capabilities
COVID-19 has accelerated the impact of several trends that are likely to transform how we live and work, compressing years into months. And this transformation shows no signs of stopping.
Brownfield facilities traditionally relied on heavy capital investment for upgrading infrastructure—essential replacement of operational but vintage assets. The existing pandemic has shrunk operating budgets and capital. But industry 4.0 technologies have made it possible to operate disparate factory assets by digitally linking new generation hardware and software systems at a fraction of the cost.
The logistics services required for the emerging e-commerce business models now depend on technology-driven agility and information. Information sharing is the new norm, along with trusted networks of partners.
Modern information systems allied to advanced communications technology are the central nervous systems of supply chains. The explosion in e-commerce will require the capacity of these technology services to grow rapidly. Thanks to the general availability of cloud-based information systems, this is no longer an onerous and expensive proposition. Many of the functional applications (e.g. OMS, IMS, WMS, TMS, etc.) that operated within discrete silos are now being replaced or embedded into systems that can model and monitor operational process flows across a logistics operating network.
Companies are using Industrial Internet of Things (IIoT) to their advantage to securely connect and collect data from diverse remote assets, channelling information to advanced operational applications and closing the loop by feeding key business applications. This helps to enable optimisation, asset management, enhanced analytics and modelling/simulation, thus improving business efficiency.
