India needs to consider bringing out appropriate policies soon to help its companies use their success in Information Technology and Information Technology-enabled Services to take advantage of the growing trend of “servicification” of manufacturing, according to a World Bank official.
Services are now often embodied in goods as part of the manufacturing process, as well as more services such as after-sales support and add-on services are being embedded in goods during post-production, the Bank had said, referring to the process called the “servicification” of manufacturing, in a September 2017 report titled ‘Trouble in the Making? The Future of Manufacturing-Led Development’.
Speaking to The Hindu, Gaurav Nayyar, Economist in the World Bank Group’s Trade and Competitiveness Global Practice and the report’s co-author, said India may not have as many opportunities in the outsourcing industry as it had in the past couple of decades due to increasing competition from countries such as Philippines and owing to the impact of automation on the segment.
Therefore, India would need to swiftly announce suitable policies to help its companies to take advantage of the “opportunities in servicification of manufacturing by leveraging their success in software,” he added.
According to the Bank’s report, “Evidence from… India …shows that this servicification of manufacturing has improved manufacturing productivity.” The report also said the servicification of manufacturing is further enabled by using data that will play an increasingly important role in “smart” manufacturing. It added that interconnected manufacturing --or the Internet of Things (IoT), where networks, machines, and computers are connected to the Internet-- requires the sending and receiving of data across the entire production chain.
Mr. Nayyar said in another 12-15 years, when Industry 4.0 (the trend of data exchange and automation in manufacturing-related technologies) is much more firmly entrenched in Global Value Chains, companies across the world would look for countries with more skilled workers and professionals as well as uninterrupted and quality power supply for technologies such as 3D printing, in addition to a strong Intellectual Property Rights (IPR) regime. Therefore, India will need to undertake reforms in these areas, in addition to more initiatives on ease of doing business and infrastructure development, if it wants to attract more investment, he added.
According to the Indian government, the new ‘future-ready’ Industrial Policy, which is to be announced soon, will incorporate measures to facilitate the use of modern smart technologies such as IoT, artificial intelligence and robotics for advanced manufacturing. “The Industry 4.0 bouquet of technologies has blurred the line between manufacturing and services and is predicted to impact all industries,” the discussion paper on the Policy had said.
Mr. Nayyar backed India’s push in the bilateral, regional and multilateral trade negotiations for relaxing norms on movement of skilled workers and professionals across borders for short-term work. “In the longer term horizon, skills will become more important than anything else… Most firms struggle to get people with good management capabilities as well as knowledge on using modern production processes.. Easier movement of professionals across borders is the key,” he said.
