As global supply chains are disrupted and 5G is all set to power Smart Manufacturing, a digitally dexterous workforce is a priority
Global value chains (GVCs) are under transition. Wall Street Journal headline screamed recently; “Everywhere You Look, the Global Supply Chain Is a Mess.” Container shortages in China, semiconductor crisis halts automobile production, Suez Canal blockage, geopolitical tensions, extreme weather, and of course the pandemic – things are chaotic. There is another emergency that has just unfolded – global shortage of polyethylene (PE), polypropylene (PP), and mono-ethyleneglycol (MEG) – are leading to factory shutdowns, sharp price increases, and production delays across a range of industries. The last one set off by Hurricane Laura in August 2020 forcing petrochemical factories in Louisiana and Texas to shut down.
The India Opportunity
As global companies adapt their manufacturing and supply chain strategies to build resilience, a window of opportunity has opened for new destinations to emerge as manufacturing locations of choice. India certainly looks attractive as a major player in the new supply chains being created. India has attracted highest ever total FDI inflow of $ 81.72 billion during the financial year 2020-21 and it is 10% higher as compared to the last financial year 2019-20 (US$ 74.39 billion). The new value chain, however, will move from the current product-centric model to consumer-centric data, systems, and services in the new compact ecosystem, where ICT (information-communication-technology) driven by IP will play a dominant role.
India has the potential to capitalize on this opportunity. In its favour are significant domestic demand, the government’s drive to encourage manufacturing and a distinct demographic edge. At the same time, the country is under pressure to catalyse its manufacturing sector to create jobs for a rapidly growing working-age population, distribute economic growth more equitably and contain a burgeoning trade deficit.
By 2030, India is expected to become the world’s most populous nation and the third largest economy. The country’s consumer market is projected to grow by 300% from $1.5 trillion in 2019 to about $6.0 trillion by 2030,with a rising middle class shaping this growth in domestic consumption. Almost 80% of Indian households will be in the middle-income bracket in 2030, up from approximately 50% in early 2019.
- Why India: Globally India has a reputation for respecting intellectual property, and this works in the country’s favour when MNCs consider transferring manufacturing and the enabling technologies which are increasingly IP-based. Modern manufacturing will involve some of the most advanced robotics, automation, and artificial intelligence powered processes.
- The Action Plan: India must work towards a country-wide skill development program, establish a collaborative platform where academia, research institutions and industry stakeholders can partner to work on important industry problems, Revise the curriculum across institutions (including academic institutions as well as agencies such as the National Skills Development Corporation) to ensure personnel are future-ready and relevant for Industry 4.0 needs.
Competitiveness is everything to manufacturers and much-needed gains in efficiency and profitability will have to be achieved through new process innovations. This includes, for example, the continued automation of robots and warehouse transportation and cutting cables to become truly flexible. 5G and IoT will be key to enhancing and enabling these advances in manufacturing. 5G technologies provide the network characteristics essential for manufacturing.
Low latency and high reliability are needed to support critical applications. High bandwidth and connection density secure ubiquitous connectivity. These are requirements that manufacturers currently rely on fixed-line networks. The mobile 5G technology will allow for higher flexibility, lower cost, and shorter lead times for factory floor production reconfiguration, layout changes, and alterations.
The Age of The Digitally Dexterous Workers
India will need to generate more than 100 million new jobs by 2030 to ensure socio-political stability and economic growth. The manufacturing sector, along with construction, is supposed to be key to job creation engine. However, the next wave of manufacturing will be powered by automation, robotics, additive manufacturing, and artificial intelligence – all converging to create the smart factory and 5G will be the foundation technology making it all happen. India must immediately launch a massive reskilling program to create an employable pool of people. Job postings in India with “5G” in their titles doubled during January-March this year as compared to the preceding three months, according to data and analytics company GlobalData.
5G will create nearly 22 million jobs globally by 2035, according to IHS Markit, but these jobs will need digitally dexterous workers. Manufacturing processes will become more efficient as automation of routine tasks ramps up. Manufacturers will use data collected through sensors to plan machine maintenance and identify defects sooner, reducing disruptions due to equipment failure. Plus, 5G-enabled augmented reality will open up opportunities for remote maintenance, allowing factories to get back up and running more quickly. Cisco, which is investing $5 billion (Rs3.6 lakh crore) to fund 5G projects globally, posted over 30% of the 5G job openings in India since January 1, 2020, as per GlobalData. Ericsson accounts for 20% of the newly listed positions in the same period.
The Climate Imperative
Today, the industrial sector is responsible for 32% of global greenhouse gas emissions (GHG), and the demand for industrial goods is only expected to increase by 2030 At the same time, the industrial sector needs to reduce GHG emissions by 50 percent by 2030 if it’s to achieve the objectives of the Paris Climate Agreement. Essentially, big business and industry must change if it’s to thrive over the long term. There are no more excuses. We must have capabilities to implement innovative ICT solutions to increase production efficiency, reduce resource consumption and adopt renewable energy. 5G’s biggest advantage is its lower carbon footprint. 5G applied in areas such as manufacturing, transport and healthcare could save up to 269 megatons of CO2 by 2035.
Per a GSMA research paper, 5G networks offer the potential to transform industrial sectors and deliver significant social and economic benefits in India. Over the period 2023–2040, it is forecast that 5G technologies will make an overall contribution of approximately $450 billion to the Indian economy (0.6% of GDP by 2040). The manufacturing sector is set to benefit the most from 5G applications (accounting for 20% of the total benefit), followed by retail (12%) and ICT (11%). Everything depends on how fast the technology is introduced in the country, and according the highest priority to digital transformation of the workforce.