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Wednesday, Sep 18, 2019

HTLS column by Pawan Munjal: Focus on manufacture to meet new demands

The India story is today an integral part of the global narrative. With a young population, it is one of the fastest growing economies in the world and indicators suggest this trend to continue in the future

opinion Updated: Dec 01, 2016 00:42 IST

(Illustration: Jayanto, Sudhir Shetty)

The India story is today an integral part of the global narrative. With a young population, it is one of the fastest growing economies in the world and indicators suggest this trend to continue in the future. The country has still huge headroom for GDP growth, and the low contribution of manufacturing in it provides immense scope for driving up the country’s growth in that sector. This will also enable another obvious priority, generating manufacturing jobs for India’s growing employable population.

Not surprising then, that soon after his victory in the 2014 general elections, Prime Minister Narendra Modi launched the Make in India campaign. The aspiration was to expand the share of manufacturing sector in India’s GDP, from the current 15% to 25% by 2022. Subsequently and importantly, the manufacturing sector was tasked to generate 100 million additional jobs, which are critical to fulfil the aspirations of the youth.

Changing context

The focus on boosting the manufacturing sector for accelerating economic growth has been a formula that proved successful for Japan in the 1960s and ‘70s, South Korea in the 1980s and China in the late 1990s and early 2000s.

These countries sustained double-digit GDP growth riding on the vibrant manufacturing sector. However, as India tries to emulate a similar model, three changes in the current socio-economic and political context necessitate a scrutiny of the conventional approach.

First, the tailwinds of manufacturing exports have eluded most of the mature and fast emerging economies of the world in the recent past. Manufacturing exports grew

faster than domestic manufacturing for Japan, Korea and China during their comparable high growth phase. However, with the current economic slowdown, the anti-globalisation sentiments and changing political dynamics, countries are fiercely protecting their local jobs. They are unlikely to welcome a surge of imports from India, even if they are attractive for consumers or business.

In such an environment, the manufacturing growth in India would primarily ride on the domestic demand expansion. Export-led manufacturing expansion, or even service expansion, therefore, is unlikely to happen.

Second, the traditional demand and supply cycles have been disrupted in the recent times by the advent of technology, digitisation and automation. Moreover, increased automation and use of artificial intelligence and smart robots is transforming manufacturing processes. With the widespread adoption of superior technology, the employment is reducing. Manpower is fast being substituted by automation and not just in manufacturing but servicing as well. Consequently, discussion is now revolving around ‘jobless’ growth.

Yet, even as technology nibbles away at the traditional role of employees, it is also enabling the expansion and generation of new services and solutions. In the automotive context, thanks to digitisation and sharing, new mobility solutions such as vehicle aggregators are emerging. These innovative solutions are making mobility more convenient and affordable for the masses, freeing up their time and enabling them to pursue employment, as well as leisure activities, which otherwise was not possible. The emergence of these aggregators has blurred the boundary between the traditional value chain and the solutions around that.

There are many implications of such new trends. The innovation and growth achieved through it would lead to an increasing confluence of traditional manufacturing and service into novel ‘solution’ sectors. Sooner than later, the traditional manufacturing sector in isolation would not be sufficient to generate the requisite employment. There is already a shift in jobs from pure manufacturing to ‘solution’ sectors. Even in the US, the manufacturing belts in Midwest have struggled to generate jobs, while the solution and innovation oriented economies in and around the Silicon Valley continue to do well.

Implications on employment

In this changing context, employees would face new demands. While these demands would vary by staff vs worker, super skilled vs skilled, they would, by and large, impact everyone. Because of technology, changes and emergence of new business models, job content will change much faster than in the past. Ability to learn and adapt would matter more than deep domain expertise. Agility would matter more than experience.

Skilling India agenda

The above changes call for a fundamental orientation of our education and skilling ecosystem — the teachers, students, infrastructure and the orientation. The foundation of learning in our schools should be on building learning curiosity, challenging established norms than rote based learning approach. Vocational trainings should focus on softer skills, ability to work in teams and continuous improvement. A professional should be psychologically and emotionally prepared to undergo 2-3 career transitions over the working life. The entire ecosystem should also be prepared for part time and freelance employment models. The vocational and professional training should be modeled around the latest IT and technology tools. The industry, government and education and training institutions would need to be nimble and work together very closely. Under the overall umbrella of an agile skilling approach, the specific technical and vocational skills would need to be identified early and capacity built quickly. For example, with the advent of aggregators, India requires a vast pool of drivers, who need to be versed not only in driving skills, but also customer service and orientation, use of apps, e-payment solution, etc. Thus, there is a need of massive capacity creation for this blend of skills.

The changes that I have touched upon above and the curative actions need not apply to the entire workforce, at once, as it may hinder smooth functioning of the existing system. However, these would slowly but surely have to start applying to the entire economic value-chain. The skilling agenda is massive. The first step would be to fully acknowledge the fast approaching new reality and an urgent need to prepare for that.

(Author is chairman, MD, and CEO of Hero MotoCorp)

First Published: Dec 01, 2016 00:41 IST