According to Business Today:

Arun T. Ramchandani looks out of the window of his sparsely furnished room at L&T’s office in Powai, Mumbai and remembers the early days. He joined the organisation straight from IIT Delhi in 1984 after graduating with a degree in mechanical engineering. “Even then, there was a joy in manufacturing,” he says.

Four decades is a long time and in the context of how technology has evolved to engulf our lives within this time, it suddenly seems even longer. As Executive VP at L&T Defence, Ramchandani is in the midst of a decisive phase of the Indian manufacturing story. The pressure on China is palpable and India—from being a modest challenger a decade ago to becoming a versatile player well on its way to consolidating its position globally—has come a long way. Of course, the long and arduous journey ahead is not going to be easy, and a lot of things need to fall in place, from flawless execution to the correct strategy, to achieve the desired results.

“We never had enablers like 3D CAD (computer-aided design), or advanced CMM (coordinate measuring machine) systems. There used to be a heavy engineering and switchgear factory here, and we had to go to Tata Institute of Fundamental Research to run our programs,” narrates Ramchandani. If that is harking back to a bygone era, he is hugely chuffed about what he sees today. Just in the defence sphere, L&T today has a large spread of product offerings, among which are land-, air- and naval-based weapon systems and communications to name just a few.

Arguably, Indian manufacturing has never had it so good. There is a sense of optimism in the industry that is flush with a talented workforce and backed by the willingness of large global and domestic firms to cut the big cheques. The building blocks of creating a compelling manufacturing tale by 2047 looks good, and it is up to the stakeholders to make the most of the opportunity.

At 14 per cent of India’s GDP, manufacturing, says K.C. Jhanwar, MD of UltraTech Cement, is expected to grow by 9 per cent over the next five years. “This is distinctly much more than many other countries in Asia. We have a huge labour supply with more than half the population under 30; and in terms of cost per hour, India is at about a quarter of China (92 cents here, compared to $3.5 there). More importantly, we have a skilled labour base coupled with the second-largest English-speaking population after the US,” he points out. For international majors looking to make India a global hub, it is a seriously attractive proposition. “Of course, there is also the domestic market with a huge untapped opportunity.”

What enthuses Ramchandani is how the younger lot is looking at manufacturing now. “Some momentum was lost during the IT boom and a lot of qualified manufacturing talent preferred to go to the Middle-east,” he says. But with each phase of growth, the way in which manufacturing is perceived changes. “Now, with Industry 4.0 (the operation of machinery with tech connected through the internet), 5G and other advancements, the next few years will be hugely exciting.”

It is a sentiment shared by all stakeholders remotely linked to manufacturing. A focus on digitisation or tech is not a five- or a seven-year plan. “It needs to take place today. There are clear signals that Industrial Revolution 4.0 or 5.0 will go hand in hand with the digital and tech revolution. We will need to master the disruptions and learn to go into the future with agility and resilience,” says Vyankatesh Kulkarni, Executive Director and Head of Operations at Mercedes-Benz India. For a company that has manufacturing locations around the globe, he is well-positioned to speak on the China-plus one theme that has gained prominence recently. “There are other economies as well that offer opportunities, but India has the potential to emerge as a responsible industrial country and position itself as a competitive alternative. It is important to understand that China-plus one does not mean China-plus India,” says Kulkarni, adding, if many countries around the world have shown cyclic or segment-specific growth, India’s pace has largely remained steady and stable. He attributes the trend to investments in education and skilling, among other areas.

As much as manufacturing has the makings of a robust story, the policy initiatives introduced in recent times—such as the production-linked incentive scheme (PLI)—are just as critical. UltraTech’s Jhanwar refers to the National Logistics Policy 2022 that has a focus on reducing costs by 4 per cent of the GDP. “That will help catalyse both efficiency and scale. Already, with India’s net-zero commitment by 2070, we are seeing a shift with 40 per cent of installed capacity coming from renewable energy. Today, India is one of the global leaders in solar generation capacity,” he says.

It is the scale of ambition that will determine manufacturing in 2047. Globally, the situation is conducive for the country. Europe is in a state of flux while China is dealing with its own issues. India, meanwhile, will need to shift into top gear. Ramchandani, while pointing out the huge strategic advantage available due to our large population and demographics, says a significant improvement in the skilling process is absolutely necessary. Being in the thick of things will be a key factor.

The comparison to China or other Asian markets is inevitable. That said, the approach to India will need to be entirely different due to the range of challenges—from the level to which manufacturing has evolved in India, the complex regulatory structures surrounding land acquisition and the many more peculiar issues that crop up while setting up an enterprise in India. It boils down to how persevering one can be to get the most out of what India has to offer. Sanjeev Sharma, Country Head and MD of engineering major ABB India, who has worked across continents, speaks of some similarities between China and India’s development journey. “I was involved with China from 1994, and those who got into the country early, succeeded. There is that similarity with India and much of the same constraints; but the potential far outweighs everything else,” he says. His company has been in existence for 130 years, and in India for over a century. “We have been manufacturing for 78 years and there is absolutely no doubt that success in India comes only from having a long-term commitment.”

To him, manufacturing, regardless of the stage of development, will always provide a multiplier effect. “In India’s case, we have a low per capita income. Therefore, when you expand, there is a significant re-distribution of wealth that takes place,” says Sharma.

A growing GDP with a higher proportion from manufacturing makes for the most potent combination. “If we look at the past 8-10 years and manufacturing’s contribution to GDP, the aspiration was always to be 25 per cent or more. However, that number has always remained between 15-17 per cent,” says Soumyadeep Ganguly, Partner at McKinsey & Company. To him, the target of 25 per cent in a $5-trillion economy is achievable. For that to take place, some factors—such as strong domestic demand, the need for employment generation, growth in FDI and the export opportunities that will be available with the supply chain transformation currently underway globally, along with India’s ability to attract capital from diverse sources that complement the government’s own capex, and finally, the push for sustainability and new tech emerging thereon—are critical.

Ganguly believes there are sectors such as electronics, capital goods, chemicals and speciality chemicals, textiles and apparel, and auto and auto components that will lead India’s growth in manufacturing. “All these are well poised today. Besides, we have investments coming in here and a lot of supply chain solutions already making the shift to India,” he explains. That said, one also needs to look at the sunrise sectors among which are aerospace and defence, low carbon tech and semiconductors. He says that these upcoming sectors would be large drivers of the Indian manufacturing story. On the supply chain aspect, Jhanwar says the reconfiguration is for greater reliability and resilience.

For their part, firms think that the government’s initiatives such as Make in India and the push for electrification augur well for the country. “We launched our first luxury electric vehicle (EV) in India, which is running successfully,” claims Kulkarni. Over time, the confidence levels of those putting in the money have taken off too. “It is not just OEMs or product makers who are evolving, but India has become a hub for many global Tier I suppliers as well. A mature ecosystem with skilled manpower, cost advantage and digital prowess makes us believe that we can enhance our manufacturing footprint in India,” he says. Speaking of sustainability, his company has set a target of making its new fleet of passenger cars CO2-neutral over the entire life cycle of the vehicle by 2039.

An important aspect of manufacturing is to find ways to grow exports. In defence, for instance, domestic production is around Rs 80,000 crore, with the government wanting to increase that to Rs 1.75 lakh crore by 2025. Compare that to exports in 2014, which amounted to Rs 500 crore, and is now at Rs 15,000 crore. “By itself, that is not a large number and we are a small player with a presence across segments. A defence industrial complex is being created,” says Ramchandani. That said, he expects India to be a larger player in 2047 , and defence to account for “a healthy share of manufacturing”.

In the midst of all this, the government has a role to play too. ABB’s Sharma attempts to highlight a difference between manufacturing and everything else. “If you look at services, the progress has been tremendous, but it was driven by IT infrastructure. That is now at a high stage of maturity and India is well placed,” he explains. However, manufacturing calls for physical infrastructure and that is not something that can be glossed over. Citing cases of nations such as Mexico, Vietnam, Malaysia and, of course China, he elaborates on how the infrastructure was created much before industry came in. “That [infrastructure] could be the existence of vast tracts of land or high-quality ports. It gives industry high levels of comfort when all these are in place,” says Sharma. India will need to adapt to this template, and if that does take place, the resultant progress would be multifold. “Creating an ecosystem means suppliers are locked in, making the whole process of doing business extremely conducive.”

Since 2047 is still a quarter of a century away, there will be many things that will come to fruition along the way. India in the next two decades, Jhanwar predicts, will be a hi-tech and R&D-intensive manufacturing economy. “An extensive adoption of digitalisation, robotics and analytics would provide a multiplier effect or the key ‘productivity to prosperity’ driver,” he says. To him, the multitude of factories and machinery generating copious amounts of data is the foundation to harnessing deeper insights. “In fact, the cascading effects of policy, tech and research-based growth will lead to many SMEs making the transition to manufacturing unicorns. Technology for the future will primarily originate from the start-up ecosystem.”

Think manufacturing and go global is the credo. “We are manufacturing for the world. India is looking to exploit its digital strengths, take that to manufacturing and provide a robust alternative to China,” explains Ramchandani. He says there is little doubt that by 2047, India will have made the transition from relatively small-scale manufacturing to becoming a global manufacturing hub. Digital alone has the ability to ramp up the manufacturing sector. Enabling free-flowing access to information on the digital backbone helps in paving the way for higher productivity and transfer of knowledge. If Industry 4.0 is here, maybe, we could be seeing an Industry 7.0 in 2047. That’s how much of a profound impact digital can have, Ramchandani explains.

Looking into the future, ‘manufacturing next’ is a phrase Jhanwar picks to define an industry resilient to frequent disruptions. “It could be supply chain shocks, technology shifts, volatile energy prices, product obsolescence or innovative business models. India has access to all the key ingredients and a great foundation to become a leading player in manufacturing next,” he says, with a generous dose of hope and confidence. Our place under the manufacturing sun is just around the corner.

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