Should we really 'Make in India'? Why & How?
Last month on my flight back to Pune after Diwali Vacations, I happened to read an article on Manufacturing strategy in India. The writer was a former bureaucrat of recently defunct Planning commission. It made me think have we really missed the bus, Are we too late or even if we aren't, Is it a step in right direction. Well if it is, then it should be put forward in the right manner too.
Politically speaking I have been giving cheers and thumbs up to the decisions of our Prime Minister so far. He talks about good governance, employment, growth and development so on and so forth. The article I read in my flight made me ponder on the decision to "Make in India". The motive behind the rhetoric which I think and have explained later is still naïve, is to bring and create more jobs in India, reduce unemployment and to thus solve the major problem of our burgeoning and aspirational young population. I agree that India's policy should mainly focus on creating millions of more jobs in manufacturing for the stability of India's socio-economic and political situation.
Alas! There is a catch.....!!!!
In the present ever changing dynamics of world where new technologies can/are disrupting/replacing old monolithic production systems, It is not yet clear what our new government exactly wants from "Skill Development". Is it to predict how many technicians, mechanics or technicians or even carpenters will be needed in some years to come and precisely what skills are needed and hence how to train those youth early?
Two kinds of technologies have combined together to disrupt the existing old conventional manufacturing monoliths. First one is the next big change which No doubt will change the dynamics of manufacturing processes. Have we heard about 3D printing lately? It is basically manufacturing of a complete product by means of a single, automated machine, right from blueprint, prototype design, assembly and finished item. A 3D printer can make almost anything it may seem to take days, months and large skill force. Example: a complete apparel from raw material, or a complex internal combustion engine, turbine blade or even a machine gun that can fire bullets.. As a result, there are ever increasing fears that with the advent of this technology, what would be the role of human beings at operational levels as the number of jobs in manufacturing will appreciably reduce. No doubt the valuation of machines, patents, factories will reduce as newer invention of disruptive technologies but the risk of human liability is imperative. But doesn't automation kill jobs even though it creates fewer on which companies like ours exist?. No wonder enterprises come to us for (first) Cost Cutting (then) Outsourcing (through) Automation (using) Technologies (end) Blah Blah Blah.... J!
So this 'New world order' is of cutting edge and more importantly Disruptive technology, we have to plan and devise our policy of 'Make in India' keeping this in mind. A world in which everything is done by machines or computers is very much thinkable if not realistic. Let me try to complete my whimsical fantasy as one should also visualize what human beings might be doing in such a world, How will we earn to pay for all the products and services created by machines. A completely mechanized world, in which machines will produce machines. All this might require very few or negligible workforce. Probably the only people who will have money or will be generating it may be a handful of capitalists who own these machines, their financial managers to manage it and increase it further or their lawyers to fight for any property disputes amongst them! This might create a perpetual cycle in which power will entirely be in the hands of capitalists only, and to increase and protect their power they will replace leftover humans with more efficient and 'obedient' machines. While I have contemplated a twist in the script of Hollywood Sci-Fi flick 'Transcendence' which could have brought some more revenues to it. But I surely don't think the idea is far behind.
The second one is the Digital technology connecting widely dispersed suppliers and customers which are creating new disruptive business models in India like abroad such as flipkart, olacabs, bms. Even though things aren't as bad for our own Indian Baniya ? (Brick-mortar retail store) but the combinations of these different technologies are leading to ideation and thus invention of large networks of many small enterprises.
Hence, methods of skill development which are based on the Assembly-line production to ensure mass production through large workforce might not be the correct approach. When it's just not clear how to predict the type of these jobs in coming 5 to 10 years what are we going to teach in the program where youth's career is involved and India's future as well. The government skill development programs should inculcate in youth the ability to learn required and much needed latest technology skills in the enterprises where the jobs are being created rather than through a large system like Skill development institutes that aims for mass production by millions of narrowly skilled and certified people who may not be employable any more when they pass out from these institutes. A similar problem is faced by Indian IT companies for past several years.
Now coming on to the point from where I started the discussion: Is "Make in India" statement incomplete or flawed? India, with its large aspirational youth population must be at the forefront of the creation of new disruptive models of manufacturing. India's policymakers must envisage what shapes these new enterprises to safeguard the interests of youth keeping in mind the new technologies that might come up. The new models can be formulated on these new concepts of production management and technology. Hence we shouldn't create Jobs like old conventional model of say garment manufacturing which may lead to wastage of time, training and effort of youth at the advent of radically disruptive technology. We surely don't want to be world's largest 'towel' manufacturer!
Another challenge for us is to make the "Make in India" financially viable. Unlike China, India may not sustain to be the market place of 'cheap labor'. We have a vibrant democracy which has its roots spread till Worker Unions in each factory. The main aim of Indian policy makers must be improving the livelihoods of all Indian citizens. So can we compete with China's Low cost manufacturing? No! Have we ever wondered about the recent decision by our Communist neighbor to abrogate one-child norm with two-child norm. Why has this been done? Is it because India will soon overtake the dubious distinction of World's most populous country? I think probably not, it's because China's working class which is primarily 'Youth' is diminishing as a percentage of country's total population. China will soon be the place of world's most populous country of old men. Hence to increase the youth's population and sustain in being world's manufacturing hub, they had to change this policy. It is an inexorable certainty.
But we must keep this in mind as well that we just can't merely aim to increase the gross domestic product (GDP). Our aim should also be that the manufacturing strategies lead to growth in jobs and opportunities for better livelihoods, not just increase the share of manufacturing output in overall GDP (which has been stagnant for years)--As that can be easily increased by some large investments in capital-intensive factories which probably the government is doing right now from back end, much to its folly. The Indian economists overriding concern must be the satisfaction of workforce and not the satisfaction of capital. Humanistic values should be core of governance policies of manufacturing enterprises in which the creation of shareholders financial value must not overrun human aspirations. Moreover, centrestage of the growth of employment should be to have it dispersed across the country into many smaller enterprises. This will lead to all round regional growth and prevent mass scale migrations and regional polarization of jobs. No doubt, their network with larger clusters must be facilitated, with which they will get the benefits of a large scale enterprise, purchasing power without losing their innovativeness and entrepreneurship. Therefore the push through policies must be on core strategy of supply chain design which is to drive the creation of more effective supply networks, clusters, hubs, and cooperative enterprises.
Let me offer a polemic to my earlier confabulation: Technology is the only force shaping this 'New world order' today. No doubt the production systems are changing with technology or sometimes even some business processes get re-engineered (Radically change with a need of doing away with what was done earlier to reduce costs , effort and bring efficiency). But Human need may not be completely eliminated. They will be performing new activities in the enterprises which will gradually take new forms. Technology will enabler in shaping new enterprises and may be they will ascertain my earlier concern somehow but we must agree that as more disruptive technologies are developed, human beings will remain at the center of new forms of sustainable and networked manufacturing systems.