Markets & Sectors

India – A Manufacturing Powerhouse?

20 Jun , 2016  

The Automation Engineer speaks to Rengan Rajan, Managing Director of Emerson Industrial Automation’s sales office in Chennai, to learn about the automation market in India

India is widely touted as a future manufacturing powerhouse. And manufacturing is a favourite theme of Indian Prime Minister Narendra Modi, who has attracted global media attention to the subject through the Make in India campaign.

The signs for Indian manufacturing are favourable: last year, Bloomberg reported that Taiwanese manufacturing group Foxconn announced its intention to build 12 factories – and create 1 million new jobs – in India by 2020.

But what about the automation market in India?

Earlier this year, the UK’s Financial Times reported that Indian manufacturers are excited by the productivity gains automation can offer, and predicted that the market for industrial robots in India will increase threefold by 2018.

The Automation Engineer spoke to Rengan Rajan, the Managing Director of Emerson Industrial Automation’s sales office in Chennai, to get the real story of the Indian automation market and its prospects.

Rengan Rajan – CV

Position: Managing Director
Department: Emerson Industrial Automation, India
Location: Chennai
Education: MBA, Henley Business School, London, UK; Electrical engineering, Thiagarajar College, Madurai, India
Previous experience: 28 years in industrial automation

 

 

AE: “Tell us about the automation market in India – which industry segments do you see growth coming from today?

RR: “The Indian economy is growing fast – currently it’s growing at about 7.6% according to the Times of India, and this is forecast to continue. I expect to see strong growth in the Indian automation market as a result of this.

“‘Roti, kapda and makaan’ is a common Indian saying that means ‘bread, clothing and housing’. It refers to people’s basic needs. As Indian economic growth accelerates, spending on the basics of life will increase rapidly. This will be great news for the people who will be able to afford the things they need. It will also be great news for the automation industry.

“As consumers become wealthier, they will spend more on processed and packaged foods and beverages. Increased spending on roti (bread) means increased spending on automation equipment for the food and beverage sector. This will mean increased business for packaging and printing automation suppliers, as well as for refrigeration systems.

“Increased spending on clothing (kapda) means a boost for India’s already vibrant textile machinery industry, not to mention associated impacts on the printing and packaging machinery industry. Meanwhile, increased spending on housing (makaan) impacts a myriad of automation intensive sectors such as concrete and steel, not to mention associated infrastructure such as water and roads.

Kathipara Junction, Chennai, is the largest cloverleaf flyover in Asia. Increased spending on housing means increased spending on infrastructure such as roads (Image used under Creative Commons courtesy of Pratik Gupte).

“Currently, only about ten per cent of Indian manufacturers are adopting key automation technologies, such as using variable speed drives to control motors, which means there is huge scope for automation firms to expand.

“Going forward, as the Industrial Internet of Things and Industry 4.0 grows in importance; automation will join hands with the software industry. This is a trend that we already see, with international and Indian software providers such as Accenture, Infosys and KPIT increasingly offering specialised industrial software for manufacturers.”

AE: “What are the main challenges for Indian businesses that are looking to automate?”

RR: “I think one of the main challenges for all Indian businesses, including those who are looking to automate, is domestic consumption, which is far too low. This is making many Indian firms, such as steel firms, over-reliant on exports. Additionally, many automation-heavy manufacturing businesses are energy intensive, and the cost of energy is still too high.”

AE: How does Indian culture react to the idea of automation?”

RR: “I know in many countries there is great fear that automation will destroy jobs. In India, the debate around automation is less vocal. That may be partly because manufacturing, usually a sector that is susceptible to early automation, has never been such a large part of the Indian economy – so its decline has never been such a large part of the national story as in many western countries.

“What I would say about culture though, and I think this is really interesting, is that Japanese and Chinese companies are often more successful in India than western corporations. Many Japanese firms, particularly automotive and process industries have set up where I live in Chennai. As Asian companies, they find it easier to adapt to India’s unique business culture.”

AE: “Labour in India is famously cheap and plentiful in comparison to the West. So why are the prospects for the automation industry so strong?

RR: “I am not sure this belief about cheap Indian labour is as relevant as it once was. For example, it used to be true that a skilled Indian IT engineer was far cheaper than the equivalent person in the west. It’s not true anymore. Many skilled Indian salaries are globally competitive today.

“Regarding unskilled labour, whilst it remains relatively cheap, I still see huge potential for automation in various sectors. And India’s booming car industry, around 40% of which is based in my home town of Chennai, is highly automated.

“In my view, there is plenty of room in the Indian economy for simultaneous growth in automation and in unskilled jobs: successful automation creates growth, and growth creates jobs.”

AE: Media has recently reported that the industrial robot market in India will increase threefold by 2018. What do you think are the prospects for growth in industrial robotics?

RR: “In the long term, I think the prospects for growth in industrial robotics in India are good. Aside from automotive, there are many Indian growth industries, such as chip manufacturing for PCBs, paint finish shops and repair shops, where there is big potential for industrial robots. So this will be a big future growth industry for industrial automation firms in India.”

AE: “What do you think of the ‘Make in India’ campaign – can India become a manufacturing powerhouse like Prime Minister Modi says?

RR: “There is definitely huge domestic potential for those manufacturing sectors where OEMs are increasingly seen as auxiliary units to parent companies, such as automotive, aviation and textiles. There is also strong potential for infrastructure, such as renewables, energy, ports and airports. India’s smart city plan is set to cause big changes in fifteen cities across the country. I see a bright future for Indian manufacturing: it is getting easier to do business here, and the tax system is being realigned. I think the next five years will be a golden age for Indian manufacturers.”

India’s economy is booming and the country is using more electricity than ever before. This image shows the lights of India from space – just a few years ago it would have looked much darker.

AE: “What do you see as the future for the Indian economy?”

RR: “Only this week I have been excited to hear that a group of US firms, including Amazon, Rupert Murdoch’s STAR group, and electronics firm Emerson, has pledged $45bn in investment in India.

“It’s often said that India is ‘the next China’. I don’t think so – we don’t want to be like China – we will follow a different path! India is bypassing the low-value manufacturing that has underpinned China’s economy, and is moving straight into the high-value sectors like aviation, biotechnology, software and automotive. Additionally, agriculture, still close to 55% of the economy, will remain vital and will also benefit from advances in technology. But, for me, the future for the Indian economy is high value (and highly automated) manufacturing, along with high value services.”

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2 Responses

  1. selvakumar says:

    Dear Sir,

    We may provide provision to share in linkedin..

  2. S R Gopinath says:

    Dear Sir,

    It is good to know about India’s Automation Market.

    Regards/Gopi

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Joseph Walker

Joseph Walker