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Growth Of Industrial Automation In Manufacturing Is Propelling Economy And Employability

By 2022 India will likely be a $5 trillion economy and the countries manufacturing sector alone will be substantially larger than the Indian economy was in 2006.

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The size of the industrial automation industry in India is estimated to be $2 billion while its growth rate is approximately 11.6%.  At its estimated rate of growth- which itself is expected to increase after 2023- the size of the industrial automation industry in India will grow to almost $7 billion by 2030. While this may increase productivity, it should be noted that the Indian industrial automation industry is a fraction of the size of the global one. How small a fraction? Today globally, the size of the industrial automation industry is estimated to be $237 billion. So while the introduction of automation in Indian industry is a reason for optimism among some, such optimism should be balanced with the self-reflection that globally India is clearly a midget in the automation space.   

Consider that in the last election the countries citizens gave the government an even stronger mandate then they had in the election five years ago. An explicit goal of the current government is to increase manufacturing’s share in the domestic economy from 16% to 25% by 2022, by which time the Indian economy is expected to grow to $5 trillion. So if India gets it right, the manufacturing sector in India will grow from $480 billion today to $1.25 trillion by 2022. How much of this nearly 3 fold growth of the manufacturing sector will be attributed to the use of industrial automation? Someone answering today would have little choice but to say "very little", yet that doesn't mean it will be negligible, not all at.  

Automation in India Today and Tomorrow  
In the factory of one of the largest automobile manufacturers in India, there is 1 robot for every 4 workers, clear evidence that automation is practical and deploying it makes economic sense. Manufacturers of leading personal protective equipment among others employ industrial automation wherever it makes sense, however automation in different sectors varies by degrees. In some sectors like agriculture, automation is completely absent- notably, the sector presents tremendous opportunities for automation- while more and more large manufacturers are gradually automating processes. 

Despite the adoption of automation in manufacturing, the fact remains in India labour costs still make its widespread adoption a distant reality. In the developed world automation is more widespread and is leading to job losses, eventually, this will happen in India but over a long time horizon. For the time being, labour costs are low while the cost of adopting automation remains high. So large manufacturers who can afford it, have automated many processes, yet even they are decades away from fully automating all their manufacturing processes. However, it’s crucial to note that while they are decades away from automating all their processes, eventually many will.   

The Dream of a Fully Automated Manufacturing Economy
A little over a decade ago Indian leadership believed India could leapfrog the industrialisation stage- which every developing country goes through on the road to becoming a developed country- by becoming a knowledge economy outright. Globally at the time, few leading economic authorities gave credence to this view, possibly even the Indian leaders who posited this view didn’t believe it could really be accomplished. Today however the entire world, whether knowingly or not has adopted this worldview. The widespread use of automation in manufacturing even in developing countries is evidence of this. Manufacturing industries in nearly every country today are leapfrogging the industrialization stage and becoming knowledge-driven industries that rely on automation. The degree at which automation is being adopted varies widely yet its adoption is singularly in one direction.

By 2022 India will likely be a $5 trillion economy and the countries manufacturing sector alone will be substantially larger than the Indian economy was in 2006. This should give pause to consider that industrial automation will be a force in the economy because the manufacturing sector will be so vast, yet automation won’t be an overwhelming force because labour costs even in a $5 trillion dollar economy will be significantly lower than in other parts of the world.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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Sunita Sapra

The author is Chief Operating Officer (COO) at KARAM Industries

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