For Modi's 'Make in India' campaign to work, India Inc should dump jugaad

India cannot develop as a low cost manufacturing base, with rising aspirations and expensive power.

K Yatish Rajawat September 26, 2014 08:38:40 IST
For Modi's 'Make in India' campaign to work, India Inc should dump jugaad

Prime Minister Narendra Modi unveiled what he considers a movement to kick start 'Make in India'. The term 'make' as Mukesh Ambani, chairman of Reliance Industries said, points towards the future. For any movement to get momentum there are some necessary conditions and other sufficient ones and we have to look at this initiative from this perspective.

What is necessary, or as Chairman of Tata Sons Cyrus Mistry politely referred to them, are hygiene factors. (Read my earlier article for more details on these hurdles or hygiene factors that are necessary for manufacturing to take off.)Modi also addressed some of these later on in his speech where he added that the ease of doing business is something that he and his team are committed to. He set a goal post also for bureaucrats, a large number of whom were in the audience at Vigyan Bhawan in Delhi. He said, that government can take India's ranking on the competitiveness index from 135 to 50, and that he has sensitized his whole team to have a positive approach.

Modi also criticized the earlier regime and referred to loss of 'vishwas' or belief among entrepreneurs when it comes to investment. However, he confused the priority of an entrepreneur, saying that he is not only there to make profits but he also wants to ensure that his investment is protected. Protecting the investment is a necessary condition that has to be there, but it is not sufficient in attracting investment. Investment follows profits and sustainable growth of earnings or revenues. Entrepreneurs are risk takers and will follow quick profits too, but established companies that are capable of investment will follow the need for sustainability of growth.

Sustainability will come if the outlook is holistic. At the cost of sounding immodest, I had pointed in my earlier article that smart cities need to be combined with manufacturing cluster, (point number two). It is good to see the announcement of five smart cities Dholera, Shendra-Bidkin, Greater Noida, Ujjain and Gurgaon as a part of this. The choice of these cities is very interesting.

Dholera is a port city in Gujarat, and addresses the export or the outbound market for the whole industrial corridor envisaged under the DMIDC. Shendra-Bidkin in Maharastra in the auto belt of Aurangabad is already earmarked for development. A sum of Rs 6000 crore has already been announced for these two cities.

Then there is surprising entry of Ujjain, a sleepy but holy city in Madhya Pradesh, famous for Mahakaal and heritage buildings that surround the temple. There is almost no industrial development in Ujjain, but it is an old city with water supply and from a logistics point of view is ideal. The city does not have any economic activity except religious tourism. Around two-and-a-half hours by road from Bhopal, Ujjain has the major advantage of being a natural city. An old city, like Varanasi, it has a perennial river for water supply, something that cities like Indore lack. Though Indore has developed as an industrial hub it needs water pumped from 50 kms away. To develop a city like Ujjain as a manufacturing hub and a smart city addresses several sections of the BJP's core audience.

The selection of Gurgaon also comes with the fact that the state of Haryana is going to polls soon. Both Gurgaon and Greater Noida are part of the National Capital Region, but are very differently planned. Noida is planned city that has education, manufacturing and services driving it and is still developing better than Gurgaon. The latter has degenerated into an urban mess thanks to a corrupt government in the state and the builder mafia. Selecting these two cities for the future shows that even populous suburban cities have a chance now.

This is the beginning and just selecting cities is not enough, the announcement does not say how will they be developed.

Similarly the other big factor that is left out from the announcement is how will manufacturing be developed. India cannot develop as a low cost manufacturing base, with rising aspirations and expensive power. Kumar Mangalam Birla hinted at the solution when he mentioned need for quality and six sigma and several quality movements that have helped manufacturing evolve in Japan, Taiwan and even US.

There is a misguided notion that jugaad or frugal engineering will drive India's manufacturing, thanks to Indian academicians in the US who club all manufacturing in Indiaas jugaad. Indian manufacturing has not got the respect or the attention it deserves. Even the media does not understand manufacturing technology. All the financial dailies, barring none, hardly cover manufacturing technology or quality.

As the technology editor for one of the pink papers I had carried out a study of almost 26 shop floors across multiple industries and across cities. The study published as Doing IT Right: Turnaround of Indian Manufacturing was a 150 page study published in 2005. The study taught me important lessons about shop floor dynamics.

One of the reasons the shop floor is not considered as an attractive job is because of the working conditions, and the second because of Indians' aversion to physical labour. Indians do not take pride in working with their hands or building things. A electrical engineer may earn more while working on a site but will still be looked down upon as compared to a software engineer who will be sitting in an air conditioned office tapping out inane code.

This hierarchy is slowly crumbling with salaries of software engineers falling. But the mindset of pride in building something is lacking from the educated. On the other hand a good supervisor or a non-engineer takes pride in job well done. The small innovations, like a perfectly working lathe or even a small innovation that slips a lowly fastener into a box, are just as important.

Indian corporate leaders like Anand Mahindra have started talking about the need for quality and design as a differentiator. It is surprising since Mahindra & Mahindra's initial success in SUVs did not come because of quality, but frugal engineering. Quality and design as a movement is at the core of manufacturing and here the rallying cry has to be sounded by companies, and not the government.

The government has to recognize and enable, industry has to drive. Japanese industrialists made W Edwards Deming a demi-god to build the culture of quality. Maybe we will also inspiration from Vishwakarma to not only bless the tools but the quality that emerges thanks to them.

If quality and design are to be the driving forces then our manpower skills also needs to evolve. While Modi announced a PPP model for taking over ITI institutes will be developed, it is already functional with Suzuki Motor Corp running a few in Gurgaon belt. Even Larsen & Toubro doing the same in Tamil Nadu. This is training youths on basic skills of the shop floor techniques but is not enough. When Chanda Kochchar of ICICI bank boasted about training 5,000 people you realize the gap and the challenge in a country where millions are unemployed. This cannot be bridged by the corporates, Modi needs another initiative here, perhaps titled Design India, that will dovetail into manufacturing.

Industry bodies like CII, have also over the years tried to build a culture of quality. The Quality Council of India that has the 'Quality for Nation's well-being' as its mission does not gets the attention it deserves and needs members who are more attuned to new India. Its 38 members consist of retired consultants and did not get the attention it deserved from the UPA government.

This government may be seen as announcing too many initiatives that have a ring to them. But 'Make in India' should not be equated with Digital India or Swach Bharat and other initiatives, as it has much larger ramifications. It is easy to criticize any initiative especially if you do not have any ideas on how to make it better.

'Make in India' will not deliver tomorrow or even next year, but if Modi is gearing for the next decade, and if this government has the perseverance than it can change the contours of Indian economy over the next 5-7 years.

Yatish Rajawat a senior journalist based in New Delhi and tweets at @yatishrajawat

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