Global Manufacturing and Make in India magic

Too much intrigrued by the brouhaha of Make in India, I have been following the socio-political scenario globally and every political institution be it in the struggling European clusters, labour intensive Asian behemoths or in the uber mature US states, is rightfully allotting significant importance to one critical data to measure the political and economic success of the countries. Employment data. Rightfully so, the need to create jobs has come out as one of the paramount drivers to satiate the public outcry for progress and development.

“In a century, once, the youth gets to choose between respectable competence and ways of tainted wealth. One who is honorable and dedicated, holds the single element of success.”
Leadership of even self-sufficient countries, such as the Saudi Arabia which has been maintaining significant positive balance of payments for eons now has stressed the need to pursue the goal of job creation in right earnest. The creation of job is not only the creation of money and constructive chain of reactions but also a tool for countries such as India and China to keep its teeming youth’s energy constructively challenged in building a nation.

Since the industrial revolution, Countries have looked at manufacturing sector to create jobs through the government investment and mediation. It is the easiest and most plausible sector where the government through its investment can jumpstart the job creation process and see visible results from Day 1. It makes sense for countries like India and China, since they have such a huge demanding population coupled with the cheap manpower to give me the cost competitive edge.

The other side of the scale is also tipped as economic demand theory rules across. As more scope is presented so is the indulgence of the economies. The room for export is increasingly getting crowded and limited as more countries jump into the manufacturing bandwagon. Thus forcing countries to start leveraging their competitive advantage factors to attract investment and increase its product marketability in the global arena.

Russia, Latin American countries such as Ecuador, Argentina, Peru, Brazil and Middle East countries such as Iraq, Saudi Arabia and Israel leverage the wealth from their natural resources such as oil and gas and minerals. Scandinavian and Germans use their highly skilled manpower and some like India and China are using their access to huge demand of consumption and cheap manpower.

However, a special mention goes for countries such as Singapore and Dubai, who have built their prowess of people and propagating their efficient governance as a magnet for investments.

India has been failing miserably in these counts, it has neither been able to leverage its huge pool of intellectual capital nor has it been able to attract investors propagating its huge scope of internal consumption market.

Manufacturing in India has been trending on wrong path with no steering from the government. Indian made products can be only served to the purpose of internal consumption since it has limited scope of exports. India has to first fix the competitive disadvantages such as abysmal power cost, high capital cost, and crippled infrastructure from a governance and utilities standpoint and fill the void of superior technology in manufacturing. India needs to primarily work on making the domestic market lucrative for manufacturing sector, greatly for SMEs in terms of scale, profitability and structured governance.

The irony of the matter is itself evident when India is trying to position itself to the world as one of the largest consumption market to investors to look and invest in India but we are trying to fix the export sector more than developing the internal market dynamics of the country.

India has to first work on plugging its loops in the low quality product standards more so from changing the global perspective as they view Indian made products. From the sheer number which we boast of, the manufacturing sector would hardly require to export if it satiates the internal demand of 1/5 of the world’s population.
The government from a longer term perspective should look at developing co-manufacturing and knowledge sharing agreements with the Germans and the Scandinavian economies at the corporate level so as to develop and enable skill transfer to bring the Indian workforce at par with the global quality standards. It should also initiate educational and curriculum changes at the IITs and NITs and encourage steps and measures such as student transfers and invite lecturers and industry doyens of the advanced economies so as to develop the nubile skills at its germination.

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Indian government should look at developing the sector as a hub for developing homogenous product market, which can leverage the huge manpower to provide scale. Sure it’s a utopian idea, given the kind of fragmented political power centers are emerging at regional level. The idea of uniform taxation, standards of product manufacture, uniform regulations and laws, and inter-state movement across India would take an impossible convincing skills and humungous political will to be implemented.

The next step should be our focus on facilitating innovative technology. India has given birth to the disruptiveness, ‘Jugaad’ but it has failed to come up with new invention of core technology. Since long we have been dependent on the Koreans and the Japanese to bring forth inventions and Indians have been successful in replicating it by tinkering around and customizing it to Indian needs. We have been awfully brilliant in reverse engineering the products and bring forth the cheaper version of everything available in the market but shamefully none as a first except the Nano (being a fan of how it was developed, I had to mention it).

Oh I hear a snigger there, well, it would seem good to add, that a need of an innovative product begins with an understanding of market need. Importantly, the need should be fulfilled by precise delivery of the product, sieved through financial value, albeit, with a pinch of social brand value (Hope, you are happy egomaniacs).

Once the need assessment is set right, the product is a cakewalk. Today, the value emerges is in realizing the product outlay right and tailor it to suit the need to hit the sweet spot, e.g., Apple.

It is evident that judgement plays a crucial part in evolution of innovation and as always failures will form a part of the learning and growth. If we are to encourage innovation, then we also need to embrace failures and even celebrate them. In India culture, we hardly respect failures and we go a step ahead and ridicule them. This typical mindset will have to change to propel manufacturing ahead in India. We should look at encourage the innovation and start looking at valuing intellectual property.