Venue: Hotel LeelaKempinski, Gurgaon

Date: 14/5/15

Attendee: Mr. Aritro Dasgupta

This conference was conducted by the CII to enable a forum for discussion on manufacturing with respect to India. With the government’s rallying cry on ‘Make in India’, manufacturing a taking a whole new turn with lot of fresh interest in the same. This write-up will explore the various sessions which were conducted on this day and will highlight the salient points that emerged out of each of these.

Inaugural Session

This session consisted of 6 panel members. The panel members were as follows:

Rajiv Gandhi

Being in charge of the opening remarks, Mr. Gandhi spoke about the need for conferences like this one and what all this day’s discussions plan to achieve. He introduced the panel members one by one. He then went on to give some points of his own.

The speaker says that in the ‘ease of business’ ranking as last published, India is ranked an abysmal 142^nd in the world. Considering that there are around 200 independent countries in the world, this rank has to improve if India achieves to attain great power status as has been touted several times. In addition, the speaker mentioned how economic growth and to a lesser extent manufacturing success is limited to tier- 1 and tier- 2 cities. Tier- 3 towns though need substantial investment and development. Technology is changing at a rapid pace and manufacturing innovations are often being unable to keep up with this level of change. In earlier times, an innovation would remain unchallenged for years, maybe decades, but now in some product categories, every 6 months there is a seismic shift in customer preferences and tastes. In this kind of an environment, even well flourishing businesses with deep roots, can start floundering after a few bad deals, investments or decisions. Some have even become history.

There is a greater need for a top-down approach towards manufacturing. Sometimes populist demands force manufacturing to be done on the basis of worker demands alone. But for efficient manufacturing, a good strategy from the top is necessary while taking care of worker needs. To ensure this happens, Mr. Gandhi’s firm- Maruti Suzuki- has set up a centre of excellence. Manufacturing and related ideas are brainstormed at this centre before implementation. 

Rajiv Bajaj

Mr. Bajaj began his talk by describing the present times as – VUCA. VUCA stands for- Volatile Uncertain Complex Ambiguous. Indeed today business decisions cannot be made for too much of a long term in perspective. Instead plans are made for only today and tomorrow, not the substantial future. Companies need to start collaborating more as that will provide better ideation. Forums like CII provide perfect setting for ‘rivals’ to start collaborating on new projects together.

Post VUCA, Mr. Bajaj provided us a new term- SMART. By SMART, he includes- Simple, Maintenance- friendly, Affordable, Reliable and Time-to-market. Any manufacturing activity must take into consideration, these 5 tenets to ensure success in the present scenario. Due to the speaker’s experience with a Japanese research firm, he is in perfect position to describe Japanese production models having studied from close range. Japanese OEMs (Original Equipment Manufacturers) study the society in detail before undertaking detailed manufacturing strategy.

The speaker says that the days when machines will communicate with ERP systems and logistics chains is not far off. Robots have already started playing an active role in some manufacturing concerns especially Japanese ones. He then introduced us to the term- CPI. CPI stands for- Cyclical Physical Integration. This system enables a complete integration of all manufacturing processes and systems.

Another positive aspect highlighted by the speaker that has emerged recently is that a number of MNCs are shifting their manufacturing potentials and offices away from Africa to India. Africa is deemed too far off from crucial markets/ business hubs like Japan and Singapore while being more or less equidistant from Europe and the Middle East. These are the geographically strategic advantages India provides. Finally, the speaker highlighted that if India is to become a manufacturing power, then it has to develop its own unique value. Every other major market has some USP or the other. China for example is all about scale. This scale India will never be able to match and must not try to replicate. The USA provides a conducive environment for entrepreneurial and manufacturing innovations unparalleled elsewhere in terms of opportunities. Japan is known for precision and quality. Germany and the rest of Europe is known for its focus on high performance and technology intensive products. India can be called the land of frugal engineering and cost performance. It is a continuation of the age old practice in India of Jugaad that has been well documented.

GaurangPandya

The speaker lamented the fact that Haryana state was once a leader in industrial activities but now lags behind. There is a lot of hope from the new government. Gurgaon is working its way towards being considered a smart city. However, the path will not be easy as it is littered with obstacles, many of its own creation. Overall infrastructure in Haryana is not satisfactory. More ought to be done. Criminal cases were another issue, as the speaker feels that such must only be applied for major crimes and not for insubstantial ones.

VineetGarg

Mr. Garg began his talk by describing the activities of HSIIDC. He then gave the audience the positive news about the proposed Kundli-Manesar-Palwal Expressway has been cleared by the ministry and work will begin anytime soon. This will ease traffic from Gurgaon towards northern Haryana, Rajasthan and U.P. This will also lessen the road traffic pressure for commercial activities on Delhi. The speaker then spoke about special tailor made camps being organized to cater to individual needs of different industrialists’ needs. Common camps instead will be developed for industry, labour and environment purposes. 

Hon’ble Captain Abhimanyu

The honourable minister first began by congratulating CII for organizing such an event and for being able to convene such an august gathering. Then he thanked the speakers before himself. He then spoke about the industrial policy of Haryana state and how the state is a national leader in manufacturing. Certain structural and procedural reforms are currently taking place. The government of India is grading all the states of India on parameters of ease of doing business. Unfortunately in that index, Haryana does not do so well. This is something he wishes to change. In Haryana, presently the focus is on helping outMSMEs.

One of the innovations that have been implemented recently has been the technical testing of rice. Earlier for this simple task, all samples had to go to a facility in south India. But now facility has been established in Panipat thus vastly reducing cost, energy and easing operations. It has been set up under the Public Private Partnership (PPP) mode. As discussed earlier in the session, work on the KMP bypass has indeed begun. Once completed, it will be a massive boost to industry.

The speaker however then warned that vested interests among stakeholders lead to unnecessary obstacles. For example, residents of Haryana have been found to be laggards on possession of Aadhar cards. This is in spite of higher income levels across the state. However, drive has begun and now Haryana leads in growth of UID registration. The speaker is also extremely keen on developing e- governance in the state. He has had lengthy discussion with departments in the state for GIS based data on all parameters. GIS based data is now to be generated for every inch of soil in Haryana and people who stay or even visit the state. E-Registration and e-stamping have also begun on large scale. Gurgaon however is the most challenging circuit. Ideally it should be the most IT savvy but in reality this district is lagging behind.

The honourable Captain Abhimanyu expects the Goods & Services Tax (GST) to be a major boon to the economy of the whole country and not just the state. He sees April 2016 as the date when it will finally be implemented. Haryana has been a supporter of GST right from the beginning. E-Governance has increased revenues by as much as 25% due to the online mode and greater transparency. E-tendering of liquor vents has also been started. The same applies to mining. In fact the speaker wants even HUDA plots to be auctioned online.

Sameer Munjal

This speaker delivered the Vote of Thanks for the panelists. He spoke about how a vision is emerging for the industrialization of the state of Haryana. He then spoke about how CII is organizing a follow-up session in the month of September for the same purpose- manufacturing.

This session was followed by the Networking High Tea. 

Technical Session 1: Making India a Global Manufacturing Hub

This session consisted of 6 panel members. The panel members were as follows:

Suman Bose

The speaker got this session underway. He introduced the theme of the session as well as introduced the panel members. Then he spoke briefly about his own organization – Siemens.

Arun Bhatia

This speaker began his talk by speaking about the aerospace industry which he feels is still disproportionately dominated by Europe and USA. Otis elevators which have become ubiquitous in this country are part of the Carrier group which he was representing here. He then informed us that India is actually the second largest elevator market in the world at present. However, the market penetration is still pretty low at only 4%. Haryana is among the most active states in this regard. It is residential areas which are pushing the penetration higher than before.

He then moved on to speak about Sikorsky which is another group company. It is based in Hyderabad and is among the world’s largest rescue operator producers. Carrier meanwhile is based out of Gurgaon. A matrix has been designed by his form to reduce time wastage as much as possible. Last year alon,e his company saved 13 million man hours due to this matrix.

He feels that manufacturing needs to be more glorified as a line of work. Also more women must enter this line. In some departments at his firm, 255 of the technicians are female. He feels this trend must continue at Carrier group as well as the economy as a whole.

D.L. Sharma

Mr. Sharma began by speaking about the textile cycle. Clothing is a basic human need. He gave us some facts regarding textile industry. Apparently 5% of the GDP and 6.5% of industrial output is occupied by the same. India has the world’s second largest textile industry after China. However, the rank may be misleading as our production is pegged at around 1/6^th of Chinese output in the same. This is in spite of highest cotton fibre production in India. Till the 1980s Indian and Chinese levels were nearly matching but then this disparity developed.

He then spoke about how labour intensive an operation textile manufacturing is. Thus this is a major source of employment in the country. He provided us with some ball park figures. According to his data, 80 farmers were required to produce a certain unit of cotton fibre. A further 10 were required during the ginning stage, 45 while spinning and another 45 during the weaving process. However, a 1000 workers were required at the plant for the manufacturing stage making this the most labour intensive stage. 

Mr. Sharma then gave us the example of Bangladesh’s exports which are now up to US$ 24 billion a year. They are soon to increase till US$ 30 billion. India’s exports however have stagnated at US$ 18 billion. Vietnam is another upcoming power in this. Labour issues continue to plague the Indian manufacturing sector. Then there is the plug and play model which is becoming quite a regular fixture in Indian manufacturing. The speaker feels this is a good idea as investment is then reduced only for productive parts of the process.

Pau Abello

The speaker who hails from Spain says that in 2006 he came to India as part of Parryware which is what Roca was fully termed then. Now Roca is far bigger pegged at Rs. 10,000 crore. There a total of 4000 employees spread across 7 factories in India. 7 factories out of a total of 78 factories worldwide is a fairly impressive count. He has also experienced China and feels that while India is coming up in manufacturing, China has somewhat stagnated. The present government is quite business friendly. The weak and unstable rupee is a bit of a challenge though. He has studied the impact of GST across the world and can’t think of any major economy where it has not succeeded after being implemented. Corruption is another obstacle weighing down upon India. GST will ensure faster movement of trucks and generally smoother supply chain which will be a massive boost.  

PankajDubey

This speaker feels that greater flexibility is needed in the manufacturing sector in India. The one thing where Indians had a major advantage over their Chinese counterparts was the English language. But now Chinese are catching up fast. So we need to step up our efforts.

Sanjay Kakkar

This speaker wants to serve emphasis on ICT technology where he feels a lot more work needs to be and can be done. His firm- Vihaan- is on the infrastructure side of telecom and not the more glamorous services side. Nokia, Alcatel-Lucent, Ericsson, ZTE and Huawei are the other companies on this side. A bottom of the pyramid approach has to be undertaken.

Mr. Kakkar feels that post India’s independence a period emerged where manufacturing was given a lot of importance. However, they got neglected later. In fact post the 1991 reforms, imports started trickling into the country, many of which were actually quite cheap to buy for the final consumer. There has been a 25% growth in demand CAGR but only 20% of that is being met by Indian manufactures now. Domestic players are only witnessing a 5-10% annual growth. Only in tele-density have we really prospered. There is 104% penetration in that in the big cities. 

Technical Session 2: Imbibing Innovation & Quality in the Customer Value Chain

This session consisted of 6 panel members. The panel members were as follows:

NeerajMunjal

This speaker introduced all the members in the panel. He also thanked the delegates for attending this event.

S.G. Mani

This speaker spoke about the innovation called the K – series launched by his company- Maruti Suzuki. This will enable automation for material transfers. Driverless cars are on the horizon and can be expected to hit roads pretty soon.

Soumendra Banerjee

This speaker lamented the fact that around 80% of crude oil used in the country came in the form of imports. More of gasoline and diesel are required and less of fuel oil. However during conversion from crude, we do not always get desired quantities and are often saddled by excess fuel oil. The separation process is fairly complicated.

V. Sridhar

His firm is responsible for some iconic brands like Activa and Unicorn. The company is worth Rs. 20,000 crore presently and employs 17,000 people. A skill map is prepared for each person separately. Mole hitting is one of the ways in which employees are further trained to perform better.

Surabh Mittal

This speaker spoke about Ricoh’s role in manufacturing in India. Recently Ricoh have opened a football stadium in England which is branded under the company name. They have plans to replicate similar stuff in India too.

VinodSood

Mr. Sood spoke about how a particular talent base is required to work in manufacturing. Unfortunately India is lacking that at the moment. Also especially for labour organized, labour exchanges are the need of the hour. This will benefit all stakeholders alike.

This session was followed by the Networking Lunch. 

Technical Session 3: Cluster Development- Strengthening Tier II & Tier III

This session consisted of 6 panel members. The panel members were as follows:

AnoopChaturvedi

Being charged with the opening remarks, Mr. Chaturvedi spoke about the session objectives. He spoke about how the cluster approach was proving to be a solution for a number of SMEs which did not have the funds otherwise to set up expensive facilities. This enabled a sort of co-working sphere. He then introduced all the panel members to the audience.

NishantArya

This speaker spoke about how the cluster development approach has enabled three wheeler manufacturers to scale up. This is why three wheelers are experiencing high level of growth in production. He then suggested two approaches to OEMs. The first one was a plan-do-check-act approach. This was lengthier and more thorough. The other approach has been labeled as MMA or Mass Manufacturing Approval.  

Rajiv Chawla

This speaker spoke about how his firm has inked a Joint Venture (JV) with the Bosch group regarding solar energy generation plant. Besides this he mainly spoke about the small industry cluster that he is president of in Faridabad. He spoke about how the government supports MSMEs and has pledged to enable their handholding for a period of 18 months including financial support of Rs.2.8 lakhs per unit. Lean management is another aspect that has entered into the lexicon of MSME clusters.

Clustering also helps in energy efficiency. There is a 25% subsidiary for units up to Rs. 10 lakhs each. This has been done in collaboration with SIDBI for energy efficient technology. Now the scheme has been launched for the first time by his cluster beyond the confines of Faridabad.

The Steinbeis Foundation based in Germany (Stuttgart), has also inked a JV with his cluster for an initiative known as TodPhodJod. The aim of this initiative is to inculcate an idea of re-engineering. Here manufactured products are dis-assembled and then reworked to fit again. In this way, the participants get to know how a product was produced from scratch practically. The cluster also now has a career guidance and placements cell. A lot of MSMEs do not have proper functioning knowledge of finance. For this an initiative known as Finance Mantra has been developed at the cluster in Faridabad. SMEs now need to be digitized and that is something this cluster is working upon. ERPs developed however, need to be cheaper for SMEs than larger firms. Thus for this they have developed a strategic sourcing centre in Taiwan to help out in all such matters.

AnandPrakashSrivastava

Being from SIDBI, this speaker has worked quite closely with a number of SMEs. He feels they act as nurseries for entrepreneurship. The levels of investment here are very different. The risk concentration is also fairly high. There are certain gaps in the credit and non-credit sectors which are now being tried to close down by various agencies.

T.L. Satyaprakash

The speaker says that among all the ideas that have been proposed to him during his time as a public servant, the most bogus one is the concept of ‘smart cities’. He says that cities can never be ‘smart’ but it is the people who ought to be so. He recounted an example near a factory where workers were protesting. The workers had threatened to damage equipment and infrastructure. Mr. Satyaprakash then neither threatened back nor try to convince the crowd otherwise. Simply a drone was let loose. After a few hours the workers themselves descended down for negotiations. All of this was because of fear of photography which is the power drones give. Thus the speaker feels labour doesn’t want issues but solutions which is what he as a bureaucrat needs to provide.

The speaker then lamented the fact that clusters in India were not functioning in the genuine style but simply as supply chains for bigger, more powerful firms. He feels that Karnal ticks all boxes when it comes to developing an ice cream making cluster. The dairy industry is active, many other raw ingredients are available and a number of local manufacturers are at play. Thus something has to be done to ensure this. 

He then gave another personal example, this one from Yamunanagar in northern Haryana. Due to political unrest in Myanmar, the famous teak from that country stopped arriving. Thus overall cost doubled. The speaker then suggested to them to stop using veneer instead print the same. This suggestion worked and thus costs could be kept low in spite of lower imports. He then stated that consultancy in manufacturing is not very lucrative and so many people have stayed out.

Subhash S Joshi

The speaker started his talk by highlighting his journey from the oldest Hero plant in Dharuhera. He however lamented that majorly assembling practices are dominating many such plants. In addition, in Gurgaon running ACs constantly is a major problem. An agreement has recently been inked with GAIL for sourcing gas to better run ACs at the plant.

The process of greening plants is underway and has made progress. However certain practices are cumbersome. For example, the speaker discussed about the problem of repairing motors. Each time a motor is repaired, it results in a 5% reduction in efficiency which multiplies over a period of time. Thus the speaker feels that instead of continuously repairing, it is actually quite a sound environmental as well as financial practice to simply purchase new motor equipment. Sometimes motors are fun too fast on factory floors. Other times motor size not right. This is not a good practice for the fluid. Rightsizing is extremely important.

The speaker concluded by speaking how consulting is big business in a lot of business areas yet has not caught up in manufacturing. The reason for this is simple. Manufacturing knowledge is very location specific and cannot be transferred from one place to another

This session was followed by a session closing tea/ coffee session. 

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