China has been dubbed “the factory of the world” for a long time, and there is no doubt that China is the world’s manufacturing superpower. The rise of Chinese manufacturing is largely attributable to the country’s low-cost labour. However, it is unexpected that, while having comparable labor costs, India’s manufacturing has failed to meet global standards.
This is mostly owing to the unorganized nature of India’s manufacturing workforce, and a failure to react to technological innovations has undoubtedly played a significant role. However, With the pandemic, most economies have adopted a China plus one manufacturing approach, outsourcing some of their production to countries such as Vietnam, Thailand, and India.
With the rapidly growing digitization of the economy, it is important that SMEs grow along with that and understand the potential of going digital with their products and catalogs. Initially, the efforts to bring this behavioral change amongst manufacturers seemed like a herculean task. Things changed with the first wave of the pandemic, and there were favorable tailwinds in the direction of digitizing SMEs. Most crucially, SMEs began to see the value of the internet in enhancing commerce when there was no place to sell due to the breakdown of traditional offline distribution tiers.
One interesting insight about many SME manufacturing units during the pandemic is that these units are in areas where there may not be electricity for 24 hours, but the people running these units have smartphones, and use WhatsApp, Instagram, and TikTok. For some manufacturers, WhatsApp is the internet! This is a testament to how underserved this market really is in terms of technological inclusion. To put things into context, there are over 6.3 Crore SMEs in India.
The government aims to make the GDP contribution of manufacturing in India close to USD 1 trillion by 2025. The Indian SME’s will be at the forefront of driving this goal. Now this gives a strong opportunity for technology products serving the SME segment to thrive in India. Be it OEM engineering solutions to improve manufacturing throughputs, SAAS products that can help in better visibility, processes, etc., or marketplaces that can help in creating access to the global markets, technological innovations can only ensure the strengthening of the blooming, post-pandemic manufacturing sector of India.
The primary objective is to tackle the challenge of digitizing the offline stores of creative manufacturing SMEs and creating an ecosystem for these businesses to seamlessly connect with and export to buyers all over the world. It does not just end there – but also includes handholding the SME’s to build their catalogs, digitizing their stores, connecting their stores to relevant buyers outside India, financing their orders, providing design inputs based on the latest trends, performing quality checks, helping with packaging, managing cross border logistics and much more.
With the right approach and innovations, this high-potential manufacturing workforce of India can become export-ready and keep up with the quickly growing global demand, thanks to the growing need for sustainable manufacturing and the post-pandemic, ’China plus one’ strategy. However, the solution can never be a one-size-fits-all kind – especially in a country like India which has so many cultures and languages. Hence, these technological offerings for the SME’s also have to be vernacular in nature. Making them vernacular and localized can only truly ensure that the innovations are accessible to SME’s across India.
We’ve all seen the impact UPI has had on financial inclusion at the grassroots level, as well as how it has aided in the introduction of small businesses to the world of digital payments. The Indian manufacturing industry is primed for technological disruption in a variety of ways, now more than ever, as the pandemic has acted as a spur for SME adoption of these technologies.
They’ve accepted the technologically advanced global need. Furthermore, it is critical to develop vernacular solutions in order to ensure that real technology inclusion occurs in Indian industry. The interaction of these variables – technology breakthroughs made available to local SME’s through vernacular solutions – can ensure that Indian SME’s reach their full manufacturing potential in this decade, and that we become a globally preferred manufacturing hub.
– By Albin Anto Jose, Co-Founder, Lal10