The industry is undergoing a paradigm shift with new-age technologies such as Artificial Intelligence and Robotics playing a game-changing role.
Historically, it’s explained and understood that exporting manufacturing goods has been the way in driving economic growth for India. However, little is known about that exporting of technology is as significant as exporting goods. Rather, it’s even better. Since gross margins in technology exceeds 50%+ going up to in some cases 80%+ as well, such sunrise sectors can create enormous wealth in the country. Trickle down effect of such sunrise sectors can be massive and a small potential for such an effect was seen in the rise of the knowledge economy in the 2000s, which resulted in technology export that has been happening for the last 25 years now. Indeed, the country’s IT industry has increased its contribution to India’s GDP and as per a report by NASSCOM, the IT industry’s aggregated revenues stood at US$180 billion in 2019, with export revenue clocking in US$99 billion growth. Moreover, this industry is expected to touch $300-350 billion in terms of revenue by 2026. The resulting economy and cash in hands of people and resulting taxation has created the impetus and room for the government to take up inclusive growth projects.
So then which component stands critical – Manufacturing or Technology?
There is no denying that a low-income country became a middle-income country through export. Even the economists, for instance, agree that export is the key in boosting the transformation in order to bring the haves and the have nots to the same position. Having said that, the question is what to export? The obvious answer till date has been exporting of manufacturing goods.
In the case of India, engineering goods, chemicals, textiles as well as gems and jewelry, have been major export items to South Eastern countries, Middle East, China, to name a few. Then looking at the dynamically evolving global markets, the funda was to: think global, that implies Indian manufacturers need to adopt a global mindset. They were pushed to strengthen innovation by leveraging emerging technologies to acquire market access as well as build a global footprint. However, the export of these items alone cannot work in the favour of bridging the gap between the haves and the have nots. Besides, there have been several internal as well as external barriers to export these items.
Now looking at India’s post-liberalization phase, the actual wealth ultimately came from one single export industry that is the IT industry. Yes, this went and earned the dollars and that’s what stimulated everything else.
So at this point, the concern is what should India concentrate on? Manufacturing Exports or Technology. Should India treat its strong point and discard the weak?
To put things into perspective, traditional manufacturing is a laggard for India at the moment. In fact, with the rapid growth of technology, the IT industry encompassing several tech and services, or maybe exporting our outsourcing of IT manpower have built the potential in these years to bring in actual value to the country, with potential for large and small industries to leapfrog into industry 4.0. While India has a strong base in IT, leveraging it for Indian manufacturing to take the transition into industry 4.0 would be a great way forward.
The shift towards AI and Robotics
The industry is undergoing a paradigm shift with new-age technologies such as Artificial Intelligence and Robotics playing a game-changing role. For instance, at least 7-8 years ago, SAAS (software as a service) model was considered a fad. But now, SAAS is mainstream. Similarly, AI and Robotics are today moving out of of R&D of multinational companies and academics into the innovation mainstream. And this shall continue to be in the future as the AI and robots market is expected to grow from USD 3.49 Billion in 2018 to USD 12.36 Billion by 2023, at a CAGR of 28.78%, as per a recent report.
So, if India aspires to become a global superpower, it is time to start off now with the massive talent pool available (8% of global AI talent pool is in India). Such a massive talent pool, which is rapidly growing can allow India to become a global leader in AI & Robotics. Diverse data sets found in India can allow for robust AI & Robotics solutions to be developed for the world out of India. An autonomous car built for Indian roads can work everywhere in the world. Higher margin innovation driven businesses based on creative usage of AI & Robotics will result in a better tax base for the government to improve healthcare and education for all, reducing the rift between haves and havenots.
Source: Business World