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High-tech growth is driving the manufacturing sector in India

Advanced and emerging technologies such as AI, IoT, robotics, and machine learning are gradually catalysing transformation across industries like healthcare, manufacturing, transportation, and retail.

By Prakash Mallya
Aug 16, 2019
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Motherson Sumi Systems factory in Noida. Image: Sanjay Rawat

The Indian manufacturing sector has reason to be optimistic with finance minister Nirmala Sitharaman’s Budget announcement this year. With a growth-driven vision of achieving a $5-trillion economy by 2024, the Budget focussed on revitalising the manufacturing sector and bringing sunrise and advanced technology industries to India, stepping up the momentum of the ‘Make in India’ vision. Technology manufacturing, especially towards establishing a holistic component ecosystem, can play an important role in accelerating the growth of the sector and helping realise India’s potential as the manufacturing hub for the world.

Today, India has become a strategic market for all—a manufacturing base for enterprises and a hotbed of innovation for technology leaders. Advanced and emerging technologies such as Artificial Intelligence (AI), the Internet of Things (IoT), robotics, machine learning (ML), etc., are gradually catalysing transformation across industry segments such as healthcare, manufacturing, transportation, and retail. This has opened new avenues for Indian manufacturing companies to design products and come up with disruptive solutions that have global potential.

Innovation, opportunities and an integrated ecosystem

To keep pace with the digitisation and adoption of emerging technologies, several industry sectors have undergone a sea change. For instance, some Indian technology manufacturers have created a niche for themselves by leveraging robotics. Through innovative solutions they have not just transformed warehousing but are all set to change other industry segments such as shipping and logistics, automobile and manufacturing units, etc. Similarly, integration of AI and natural language processing in consumer products offer a plethora of opportunities to the electronics industry to devise innovative solutions that address household and enterprise usage. For instance, AI-driven surveillance cameras can be used by civic bodies to curb crime.

Reports by the Everest Group and Nasscom show that more than 7,200 technology startups were founded in India in the last five years. Of these, eight evolved to become unicorns in 2018 and almost half of them are operating in deep-technology areas. The proven technology prowess of India and a burgeoning startup community creates the right environment to drive innovation in the high-tech industry, which will further add to the growth of the technology manufacturing sector.

The government of India has already allocated Rs 400 crore to strengthen the higher education system in the country, which in turn will help address the demand for a skilled workforce. The government’s impetus towards training 10 million youth in industry-relevant skills will further help address the high-tech skills shortage and create a talent pool in advanced technology domains such AI, ML, IoT and robotics. Additionally, incentives offered by the government for sunrise industries in the form of tax relief and policy reform is aimed at attracting global companies to set up mega-manufacturing plants. These sops also encourage domestic manufacturers to explore the advanced technology and sunrise industry landscape.

More importantly, the onus of nurturing, mentoring and launching the tech-based ecosystem doesn’t depend on government initiatives alone but is a collective collaboration between industry, academia, and government. The Indian technology industry is equally committed to nurturing local talent and supporting government initiatives through active collaboration. There are several programmes that have been undertaken by industry leaders in partnership with the government that are providing the right environment to foster innovation, offer technical support, infrastructure and mentorship to help convert prospective business ideas into a profitable business proposition.

The road to realising India’s potential

Fuelled by a burgeoning demand for technological innovations from the growing middle class and rising disposable income, the Indian electronics market is one of the fastest growing in the world. In a written reply to the Rajya Sabha, Minister for Electronics and IT, Ravi Shankar Prasad said that India's domestic electronics production is estimated at Rs 4.58 trillion in 2018-19, which despite accelerated growth in recent years, still represents only 3.3% share of the global market. This suggests a significant demand-supply gap in the electronics market resulting in dependence on imports to meet demand, which ultimately increases the overall cost of the product.

If we consider the case of printed circuits boards (PCBs) that form the core of almost all electronic products, India meets just 30% of the overall demand through domestic PCB manufacturers and imports the rest. There’s a huge unmet demand to expand and create the right component manufacturing ecosystem in India. It will not only address the readily available component requirements for global manufacturers, but also set precedence for high-tech industries to expand their footprint in India.

Similarly, with the intellectual capital available in the country and competitive talent costs, the research ecosystem in India offers a significant opportunity for global companies to establish their research and development (R&D) centres in India, which can ultimately drive domestic manufacturing. Through these R&D centres, the companies can focus on developing innovative and cost-effective solutions for global markets as well as address the local needs of the region.

As immediate next steps, industry and the government must focus on addressing the challenges ranging from inadequate infrastructure, domestic supply chain and logistics, and quality power, to the high cost of doing business and limited design capabilities, R&D efforts and skilled resources. With continued problem-solving and the right impetus, high-tech manufacturing can be the fundamental foundation for a manufacturing-based economy.

Views are personal. The author is vice president and managing director, sales and marketing group, Intel India.

High-tech growth is driving the manufacturing sector in India
 
Make in India is yet to create enough jobs, says L&T chairman

2 min read . Updated: 19 Aug 2019, 07:05 AM IST Tanya Thomas, Deborshi Chaki
  • A.M. Naik says that India is exporting jobs instead of goods
  • More than 10 million young people enter the job market every year in India
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'The mismatch between the right skills and jobs will always be there. But we need at least an economy equivalent to China’s since our population is almost the same,' says Naik (Photo: Reuters)


Mumbai: The government’s Make in India initiative has failed to create enough jobs as companies across sectors still prefer to import goods instead of manufacturing locally, said Larsen and Toubro Ltd chairman A.M. Naik.

“The Prime Minister’s Make In India programme, which is spoken about a lot, has to do a lot more. We are exporting jobs now instead of exporting goods," Naik, who also heads the National Skill Development Corp. (NSDC), a public-private partnership, said in an interview. “We have to find answers as to why most Indian companies are keen to import rather than manufacture here."

The other reason for high imports is because Indian companies do not have enough financing options available, Naik said. “We allow imports because it often comes with credit facility."

India, home to the world’s largest youth population, needs to create enough employment opportunities for the more than 10 million young people who enter the job market every year. The latest jobs report suggests that the country is not creating enough jobs for its massive population.

Economic growth slowed sharply to 5.8% in the three months ended 31 March, on the back of weak consumption and slowing private investment. Growth, according to some estimates, may weaken further in the current fiscal.

Naik said job creation, especially in the manufacturing sector, has failed to keep pace with the supply of skilled labour.

“The mismatch between the right skills and jobs will always be there. But it’s the gravity of the situation that matters the most," Naik said. “We need at least an economy equivalent to China’s since our population is almost the same. Otherwise, there is always going to be a shortage of jobs and unless the economy grows like it did in China, which means at least 12-13% growth every year, this disparity will remain."

“We are not able to create jobs at the pace needed to bridge this gap," he said.

NSDC, set up in 2008 under the Union ministry of skill development and entrepreneurship, implements short-term skill development programmes of the government. According to NSDC’s 2018 annual report, it trained 3.98 million students that year, through 11,035 training centres across 40 skill development programmes. Only about 12% of those who were trained under NSDC programmes found jobs, according to government statistics.

Naik said his focus as chairman of NSDC is on improving the quality of trainers in the system. “We need high-quality staff and teachers for training," he said. “In smaller cities, the situation is quite pathetic and the teachers are very average. L&T is also setting up a training institute in Madh Island near Mumbai, which will offer residential training for teachers in the NSDC system. It will become operational from 1 April and start with five trades. “If this experiment is successful, we will open more such centres," he said.

Citing the ongoing trade war between the US and China as an emerging opportunity, Naik said that while several countries, including Vietnam and Thailand, have benefited from President Donald Trump’s diversification from China to other countries for manufacturing, India has failed to take advantage. “What did India do? If I was implementing this, I would have created a separate ministry on how to bring foreign investment and export-oriented business to India."

“I strongly feel that Prime Minister Narendra Modi needs to bring the Gujarat model to the national level," Naik said, referring to Modi’s tenure as the chief minister of the state before he became the prime minister. Modi is credited with attracting large investments and creating a conducive environment for industry in the state.


Make in India is yet to create enough jobs, says L&T chairman
 
Rupee has lost its trade war winning edge, says JPMorgan

1 min read . Updated: 20 Aug 2019, 12:32 PM IST Bloomberg
  • The weaker outlook for the rupee is linked to waning internal and external growth
  • JPMorgan sees rupee weakening to 73-74 to the dollar in coming months
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The rupee is down 3.9% over the past month, making it the worst performer in Asia. (Photo: iStock)

Mumbai: The Indian rupee’s outperformance against more export-dependent currencies such as the Korean won has likely come to an end, with JPMorgan Chase & Co. seeing risks shifting to the downside.

While JPMorgan had favored the rupee since the US-China trade war took a turn for the worse in May, it now expects the currency to show higher beta to moves in yuan, which it tips to keep falling this year and into the first half of 2020.

The weaker outlook for the rupee is linked to waning internal and external growth, it being overvalued in real effective exchange rate terms, and to an easing in the tailwind of falling US real rates, Jonathan Cavenagh, head of JPMorgan’s foreign-exchange strategy for emerging markets Asia, wrote in a recent note.

The rupee is down 3.9% over the past month, making it the worst performer in Asia.

JPMorgan sees it weakening to 73-74 to the dollar in coming months, from about 71.60 on Tuesday.

This story has been published from a wire agency feed without modifications to the text.

Rupee has lost its trade war winning edge, says JPMorgan
 
SBI Aims to Eliminate Debit Cards to Boost Digital Payment Solutions

SBI Chairman said there are around 90 crore debit cards in the country as against 3 crore credit cards, and pointed out to digital solutions like its own 'Yono' platform as the key for achieving a debit card-less country.

PTI, Updated : August 20, 2019, 10:24 AM IST
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File photo of an SBI ATM. (Reuters)

Mumbai : If the largest lender SBI has its way, it may herald the beginning of the end of the ubiquitous debt cards from the banking system as the bank plans to promote more digital payment solutions and eliminate the plastic cards.

This is despite the huge reliance on debit cards by customers of SBI which services a fifth of the population.

"...it is our wish to eliminate the debit cards, and am sure we can eliminate them," chairman Rajnish Kumar said, speaking at the annual Fibac here Monday.

He said there are around 90 crore debit cards in the country as against 3 crore credit cards, and pointed out to digital solutions like its own 'Yono' platform as the key for achieving a debit card-less country.

Kumar said through the Yono platform, one can withdraw cash at the automated teller machines or pay for purchases at a merchant establishment without having a card at all.

He said the bank has already set up 68,000 'Yono cashpoints' and is in the process of scaling it up massively to over 1 million in the next 18 months, which will make the necessity to have a card even less.

Additionally, the Yono platform can also give credit for buying certain merchandise, making the credit card in the pocket also as a "stand-by", Kumar said.

In the next five years, there will be a limited need to have any plastic cards in your pocket, Kumar said, pointing out that virtual coupons is the future.

He said at present, the QR code is also a very inexpensive way of ensuring payments.

SBI Aims to Eliminate Debit Cards to Boost Digital Payment Solutions
 
Amazon Opens Its Largest Campus in the World in Hyderabad

The new Amazon Hyderabad campus will house over 15,000 employees, out of the company's total 62,000 employees in the country.

By Indo-Asian News Service | Updated: 22 August 2019 09:58 IST
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Photo Credit: Twitter/ Amazon India News

Amazon Hyderabad campus is located in Gachibowli financial district

Global e-commerce giant Amazon opened its largest and first Amazon-owned campus outside the US, in Hyderabad on Wednesday.

The 9.5-acre campus, located in Nanakramguda, will house over 15,000 employees. Amazon has 62,000 employees in India. With 1.8 million square feet office space built over 3 million square feet area, it's Amazon's single largest building in the world in terms of area.

It was inaugurated by Telangana Home Minister Mohammed Mahmood Ali, Amazon Vice-President Global Real Estate and Facilities Director John Schoettler and Amazon-India Senior Vice-President and Country Manager Amit Agarwal.

"Over the last 15 years we have invested significantly in India across 30 office spaces, the AWS APAC region in Mumbai, 50 fulfilment centres in 13 states as well as hundreds of delivery and sorting centres, creating nearly 200,000 jobs," said Agarwal.

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The new campus is Amazon's first self-owned building outside the US, Photo Credit: Twitter/ Amazon India News

The facility will have the largest employee base outside the US.

Schoettler said the campus was built in three years. It has interfaith prayer rooms, mother's room, quiet rooms, showers, helipad and an all-day open cafeteria. It's designed to facilitate inclusion and diversity, he added.

Amazon has its largest India fulfilment centre in Hyderabad. Spread over 400,000 sq ft, it's located near the Rajiv Gandhi International Airport. The company plans to expand it to 580,000 sq ft by next year.

Amazon now has 4 million square feet office space at eight centres in Hyderabad, excluding the fulfilment centre.

Amazon Opens Its Largest Campus in the World in Hyderabad
 
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India’s GDP growth set to slow further to 5.7% in April-Jun quarter: Nomura

PTINew Delhi | Updated on August 21, 2019
GDP


CSO to release GDP figures on August 30

India’s economic growth is set to slow further in the April-June quarter of this year to 5.7 per cent amid contraction in consumption, weak investments and an under-performing service sector, says a Nomura report.

According to the global financial services major, even though growth is set to slow further in April-June quarter the economy is expected to see some recovery in the July-September quarter. “High-frequency indicators continue to show familiar pain points — a deep contraction in consumption, weak investment, a slowing external sector and an under-performing services sector,” Nomura said in a research note.

The report added that some indicators are showing early signs of bottoming out. Data so far for July show that 53 per cent of indicators have improved compared with 31 per cent in June, the report noted.

Nomura’s Composite Leading Index (CLI) for July-September quarter has ticked marginally higher to 99.9 from 99.8 in Q2, led by higher industrial production growth, an improvement in visitor arrivals growth, equity markets and lower policy rates. “While the concurrent state of the economy remains quite concerning, nascent signs of green shoots and positive performance of leading indicators provide some signs that a recovery may be slowly materialising,” the Nomura report said.

India’s economic growth slowed to 6.8 per cent in 2018-19 - the slowest pace since 2014-15. There are ominous signs showing that slowdown may be deep. Consumer confidence is waning, foreign direct investment has plateaued and international trade and currency war is further aggravating the problem.

To take stock of the situation, Finance Minister Nirmala Sitharaman held several meetings with officials and industry leaders who have asked for stimulus measure to boost consumer demand and private investments. Though there are increasing signs of the government taking stock of the slowdown, and possibly announcing some short-term measures to buoy business confidence, Nomura assesses limited fiscal space for any substantive stimulus.

“We currently expect GDP growth in Q2 to slow to 5.7 per cent YoY from 5.8 per cent in Q1, before improving to 6.4 per cent YoY in Q3 and 6.7 per cent in Q4,” it said, adding that it was closely watching for signs of sustainability of the growth turnaround.

The Central Statistics Office (CSO) will come out with the GDP figures for the April-June on August 30.

Meanwhile, the automobile sector is facing its worst crisis in two decades and reports suggest thousands of job losses in the auto and ancillary industry. In the real estate sector, the number of unsold homes has increased, while fast-moving consumer goods companies have reported a decline in volume growth in the first quarter.

India’s GDP growth set to slow further to 5.7% in April-Jun quarter: Nomura
 
India needs to reduce ecommerce restrictions to revive economy: Amazon executive

By Euan Rocha

HYDERABAD (Reuters) - India needs to encourage e-commerce and reduce red tape to help small businesses sell online and export goods to help revive sagging domestic economic growth, a senior Amazon.com executive said on Wednesday.

“There is so much opportunity to just let e-commerce thrive versus trying to define every single guard rail under which it should operate,” Amazon’s India head Amit Agarwal told Reuters, ahead of the launch of Amazon’s biggest campus in the world in the southern Indian city of Hyderabad, on Wednesday.

India revised its ecommerce rules in early 2019, creating hurdles for Amazon and rival Walmart Inc’s ecommerce subsidiary, Flipkart.

“I feel ecommerce can actually accelerate India’s economy in a big way, if it’s just allowed to thrive,” said Agarwal, whose comments come at a time when India’s economic growth has slumped to near five-year lows.

Agarwal said Amazon works with some 500,000 sellers, and has created over 200,000 jobs in India since launching its ecommerce operations in 2013.

He said Amazon’s push to get small and medium businesses in India to export has resulted in more than $1 billion in exports and it expects this to exceed $5 billion in the next three years, but red tape is holding some businesses back.

“Even a seller, who wants to sell out of their state, has to get a tax registration in the new state. How many small business owners would go through the onerous job of doing that?” he said.

“The number of basic paper cut opportunities out there are so many,” he said. “I feel we’re getting lost in the high level debate around ecommerce and data localization.”

India’s revised ecommerce regulations, along with its push to compel multinationals to store data locally, have irked the U.S. government and heightened trade tensions between the two countries. India has argued the rules are aimed at protecting interests of its small traders and also its citizens’ privacy.

INDIA EXPANSION

Amazon’s launch of a new campus in India comes just months after the Seattle-based company scrapped its plans to build a major outpost in New York, blaming opposition from local leaders. It has since picked Arlington, Virginia as the site of its upcoming second headquarters.

India is considered the last major growth market for the e-commerce giant and founder Jeff Bezos has committed investments of more than $5 billion toward Amazon’s expansion in India.

Amazon said the new campus in India, spread over 9.5 acres, cost hundreds of millions of dollars and could house more than 15,000 employees. Amazon has 62,000 employees in India, roughly a third of whom are based in Hyderabad.

Despite weaker economic conditions Amazon has no plans to slow down its expansion in India, said Agarwal, adding that in tougher times “customers want even more value, convenience and selection.”

While declining to give any specific numbers, Agarwal said membership in Amazon’s Prime loyalty program has doubled in the last 18 months in India and the market remains Amazon’s fastest growing for Prime worldwide.

Reporting by Euan Rocha in Hyderabad; Writing by Euan Rocha and Nivedita Bhattacharjee in Bengaluru; Editing by Subhranshu Sahu and Elaine Hardcastle.

India needs to reduce ecommerce restrictions to revive economy: Amazon executive - Reuters
 
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