The United Nations Industrial Development Organization (UNIDO) released its flagship Industrial Development Report on “Industrializing in the digital age”. The report presents a first of its kind assessment of the development and application of Advanced Digital Production (ADP) technologies—also known as Industry 4.0 technologies—from a developing country perspective.
The assessment found only 10 global frontrunners, including Germany, Japan, Republic of Korea, UK and USA. India is the single lower middle-income country that made it to the second group of leading economies in this field –the followers in production— along with countries like Australia, Canada, Italy, Singapore and Spain. Indian research centers and companies are patenting new innovations in ADP technologies in leading markets such as the EU, Japan and the USA. They are also embedding these technologies in new capital goods (smart machines) that they increasingly export abroad. Besides the manufacturing capacity, India has also a strong position in the knowledge intensive business and ICT services that control and connect these technologies on the shop floor, between supply chain partners and with markets.
The discourse on advanced digital technologies is most current as the COVID19 pandemic illustrated that the digital age is truly upon us. Almost overnight businesses, governments, educational institutions, health care providers and many others went online. And as consumers, all of us got used to high levels of tele-education, tele-health, tele-government and tele-working.
Some digital solutions also affected the physical design, production and delivery of goods and services. Robots are being deployed in patient care; drones are being used to deliver critical supplies, remotely monitor body temperatures and disinfect public places; and 3 D printers are the core of the rapid development and production of new medical equipment, including lower cost ventilators. The boundaries between physical and digital are increasingly blurred in ADP technologies that combine hardware, software and connectivity. This is a transformational opportunity, generally captured as the fourth industrial revolution, or IR4. Applied to manufacturing this results in smart factories.
UNIDO uncovered factual evidence that ADP technologies can foster inclusive and sustainable industrial development. ADP-enabled product and market innovations are abundant and offer superior productivity, quality, market-responsiveness and client customization. On average, ADP-based patents have a higher environmental and resource conservation potential than industrial patents at large. Moreover, factories can save energy and other resources from better monitoring and predictive maintenance. ADP can take over hazardous and physically demanding jobs, improve the work environment and increase diversity in the workplace.
ADP technologies will impact employment. There are likely to be fewer jobs on the shop floor yet more jobs in knowledge-intensive business services that are needed to operate ADP technologies. This workforce transition needs careful consideration, planning and management to achieve positive outcomes. The ‘industrial skills for the future’ will be the game-changer – these cover analytical skills, specific technology-related skills (both on advanced digital and new physical technologies) and soft skills (particularly teamwork and collaboration).
Laudable work is being done across India for example through the Department of Heavy Industry with its Smart Advanced Manufacturing and Rapid Transformation Hub (SAMARTH) – Udyog Bharat 4.0 which supports four centres to popularize and demonstrate practical industry 4.0 solutions. These SAMARTH centres singled-out limited experience with production process planning and design and outdated machinery, typical of 3rd or 2nd industrial revolution, as major bottlenecks for Indian firms. This reflects UNIDO’s global finding that successful uptake of ADP technologies requires industrial capabilities – the capability to operate technology, make investments, and capture the learnings that come from running and optimizing factories.
UNIDO found that ADP technologies are co-created by infusing such industrial capabilities with in-depth knowledge of digital and physical technologies. The Department of Science and Technology is working on deepening technology knowledge through cluster formation around 25 priority digital technology capabilities, including artificial intelligence, machine learning and augmented reality. Marrying this expanding technology competence with industrial needs will be key to leverage off this R&D investment.
Some Indian firms have also started to manufacture using ADP technologies, though these are by far outnumbered by firms that continue to operate with more basic instrumentation and controls. The leading firms operate from a technological island and find it increasingly difficult to acquire parts and intermediaries locally to create benefit for themselves and the country. The widening technology gap limits further diffusion of ADP technologies as well as of the specific industrial capacities for their deployment.
India therefore stands to benefit from a broad-based approach to the promotion of Industry 4.0 applications, serving all firms both leading or lagging, that breaks up these technological islands. Those firms that already have advanced digital capabilities deserve support to create new products for new services and new markets. As an example, Sagar Defense Engineering, a leader in floating drones, combined to create India’s first unmanned vessel to collect floating plastics and other waste from surface waters. Manufacturers operating traditional machines and assembly lines can benefit from customized digital enhancements and partial automation. A practical application are cobots that already work side-by-side with workers in the automotive sector for example at Mahindra and Mahindra and Bajaj. Physical demanding and/or hazardous tasks have been off-loaded from workers resulting in a better work environment and greater diversity in the workplace.
UNIDO’s assessment found that ADP policies are highly contextual. However, three areas are particularly important: developing framework conditions through industrial, technology and digital policies; fostering demand and adoption by improving awareness, readiness and availing appropriate financing; and strengthening of capabilities, particularly human resources and research capabilities. The Government has voiced strong intent to modernize manufacturing sector policy to achieve self-reliant India and move towards a world class $1 trillion manufacturing sector by 2024. The SMARUTH programme is supporting demand creation as do the smart manufacturing initiatives of leading industry bodies, such as NASCOM, CII and FICCI. This can be expanded to demonstrations in the main manufacturing clusters around the country to demystify Industry 4.0 to the majority of firms and indeed seed an innovation ecosystem that is increasingly driven by the manufacturing sector’s design, product and technology needs.
The writer is Representative of the United Nations Industrial Development Organization in India)