As a part of an expert committee, I would support both manufacturing and innovation in India because achieving operational efficiency isn’t a strategy — it is a need.
With highly competitive global business scenarios, companies are always looking to reduce their costs. Our success in getting foreign companies to invest in our country through flexible policies and laws doesn’t ensure long-term benefits. It is only through innovation, and by putting in place a culture of innovation, that we can truly become ‘The India of the future’.
But inculcating a mindset of innovation and risk-taking is a lengthy and slow process. We should always start with the resources at hand and effectively use them to gain a competitive advantage. Achieving the ambitious target of 25 per cent contribution to GDP from the manufacturing sector by FY 2025 can only be done by focusing directly on manufacturing alongside innovation.
The steps to transform India into a manufacturing powerhouse should be directed towards resolving the challenges stated in the case study.
~~ Challenge : A lot has been spoken about infrastructure development, such as setting up of five industrial corridors, and 20 smart cities. The requirement for better transportation and telecommunication has also been identified. But no initiative has been taken regarding power generation, which is critical for supporting the manufacturing sector.
Solution : Adopt radical approaches to increase capacity addition. This can by done by players in process industries, by investing in both traditional and non-traditional opportunities: solar energy and oversized captive plants.
~~ Challenge : Labour law reforms.
Solution : Matters related to hiring and firing, trade unions, wages and standards, should not only be addressed but also implemented with utmost circumspection, due to the sensitivity of the issues involved. Employees have to be guaranteed social security measures such as unemployment insurance and re-training facilities, so they are not exploited by their employers.
~~ Challenge : Skill development
Solution : Various programmes launched under Skill India should be implemented and monitored as per their timelines. But to achieve the required growth, those running small businesses and SMEs also require training programmes to support the scaling up of manufacturing.
~~ Promote regional businesses that complement manufacturing locally, such as logistics, processing industries and related services, by providing information and other incentives.
~~ Challenge : Very few measures are under way by either Central or State governments, to ease the process of doing business.
Solution : Only a few places, such as Delhi, Punjab and Maharashtra, have implemented certain initiatives to ease business processes. There is an urgent need for other States to follow suit. Consider single-window clearances, but also ensure strict eligibility criteria to avoid fraud.
Business organisations associations such as Ficci, Assocham, and Nasscom should be included in the process to have a better understanding of the business environment and requirements of the investors. It is necessary to establish a Centre of Excellence (CoE) to promote India on a global front and replicate its success stories in other sectors.
According to Aranca Research, innovation activities fall into four categories: sourcing, manufacturing process, management and technology. CoE should enable businesses to adopt this kind of innovation in their strategic decisions.
~~ In addition to information provided to investors, government should invite academicians and analysts to contribute reports on sub-sectors of manufacturing such as metals and mining sector; automobiles; heavy engineering and construction equipment; and chemicals. By making them available for public discussion and comment, the government can bring more credibility to its efforts.
~~ Innovation in organisations can be propelled if there is more tolerance towards failure/ambiguity. And this requires behavioural changes. People should be more open to ideas and interpretation, rather than evaluation. This can be achieved by a wider acceptance of personal opinions in schools, colleges and work spaces.
~~ Successfully meet the objectives of “Start-up India” and encourage innovation through various programmes at school and college levels. Effectively use “Mann ki Baat” by Prime Minister Narendra Modi to connect to the general public.
(The third runners-up are doing an Integrated Programme in Management at IIM Indore)