The Internet of Things technology could provide a significant boost to Indian manufacturing, which has long suffered from a lack of competitiveness.
"Make in India," the slogan of an initiative launched by the government of Prime Minister Narendra Modi to cultivate the manufacturing sector, was highly visible on the streets for about a week in mid-February. Amitabh Kant, secretary of the department of industrial policy and promotion, said in Mumbai recently that rather than relying on foreign capital, Indian companies themselves must tap information technology to employ so-called smart manufacturing.
Many foreign companies are vying for a slice of the massive Indian market of 1.3 billion people. But when thinking beyond just the domestic market, to turning India into an export base for supplying other markets, the country's cost competitiveness will erode gradually, Kant pointed out.
A 2015 Japan External Trade Organization survey of Japanese companies operating in Asia shows that basic wages of manufacturing workers in India are higher than in Vietnam. And paychecks of manufacturing engineers in India are nearly 30% fatter than in Indonesia and the Philippines. Hence, as a way to boost competitiveness in areas other than cost, the Internet of Things technology -- which connects various hardware to the Internet -- is drawing attention.
Companies are already making full-blown efforts. For instance, General Electric of the U.S. announced its IoT partners in late February. The list included many Indian companies, such as Tata Consultancy Services. GE seeks to lead development of IoT-related businesses by having other companies use its own industrial software. Tata Consultancy will pour massive human resources into development of the software, like U.S. rivals Cisco and Intel.
That many Indian conglomerates have manufacturing and IT operations under the same group umbrella is a unique strength of India. Tata Consultancy is a core unit of the Tata group, which includes Tata Motors and Tata Steel. The Mahindra Group has automotive and farming equipment unit Mahindra & Mahindra as well as prominent IT businesses. Indian companies will get an opportunity to flex their muscles amid the rise of IoT, says Chairman Anand Mahindra.
Many IoT startups are also being created.
Development of the manufacturing sector is essential for the country to generate jobs for the growing population. The success of the "Make in India" initiative will hinge on how well the country can ride the IoT wave while also developing infrastructure such as power generation facilities and roads.