The 4th Industrial Revolution
India’s role in 4th industrial epoch
By Roopen Roy Apr 28 2015
Hannover has a green ‘forest’ in the middle of the city, the largest in Europe and twice the size of Central Park in New York. But this forest does not have wild animals, not lions for sure. It was, therefore, interesting to see the Indian lion (symbol of Make in India) peering down from billboards all over the German city earlier this month.
At the glittering opening ceremony of the world’s largest trade fair for industrial technology, Hannover Messe, where India was a partner country, there was a three dimensional holographic image of the lion. It leapt on the stage, tiptoed to chancellor Angela Merkel and prime minister Modi and jumped up to shatter a computer-generated glass ceiling. German friends, regular attendees to the fair, conceded they had not witnessed such an extravaganza before, and chancellor Merkel joked that while lions are kept in zoos in Germany, she had permitted the Indian lion to roam free.
In speech after speech — in the presence of prime minister Modi — the Germans talked passionately about Industry 4.0, a national strategy adopted by German industries to usher in the fourth industrial revolution. In essence, it is the marriage of digital technologies and manufacturing ushering in an era of smart production.
The federal ministry of education and research describes Industry 4.0 as follows: “Industry is on the threshold of the fourth industrial revolution. Driven by the internet, the real and virtual worlds are growing closer and closer to form the Internet of Things (IoT). The industrial production of the future will be characterised by the strong individualisation of products under the conditions of highly flexible (large series) production, the extensive integration of customers and business partners in business and value-added processes and linking of production and high-quality services leading to so-called hybrid products. German industry now has the opportunity to actively shape the fourth industrial revolution. We want to support this process with the Industry 4.0 forward-looking project.”
Already, large and medium sized manufacturers in Germany are embedding digital technologies in their production processes. They are combining offerings and creating new, uncontested market spaces. Our delegation was taken to a logistics company in Hamburg, an aircraft manufacturer and an automobile producer. The enhanced use of IT and mechanisation was clearly visible.
Germany, like Japan (although to a lesser extent) is an aging society. While Japan has resisted immigration as a solution for manpower shortages, Germany has allowed it in a limited way. To cope with adverse demographics, both countries are developing labour-saving techniques like robotics and 3-D manufacturing to increase productivity and quality. Germany, Japan and much of the western world have demographic trends that are almost the reverse of India. The real dilemma of India is this: if we copy first world solutions, then will we land up with a jobless growth? Even in IT services, a high degree of automation will soon make entry-level coding staff redundant.
While Indian politicians like to crow about our young population and demographic dividend, the size of the challenge is gigantic. We have to provide employment to 10 million new people who are coming into the labour market every year. As technologies change and Industry 4.0 gathers momentum, the strategy of being a sweatshop of the world that worked for East Asia and China in the 1990s and early 2000 will not work anymore. We must create more jobs in infrastructure, textiles, agro-processing, labour-intensive manufacturing and BPOs.
But can we afford not to participate in the feast of the future, that is Industry 4.0? For instance, the entire automotive industry is automating and using robotics in a big way. In Tesla Motors, Ford, Honda, GM, Nissan and Toyota, workers are learning to co-exist with their robot colleagues. They now know these robots are preservers and destroyers of their jobs in a fiercely competitive global market.
Robotics, like computers, started as labour-saving devices. But they are now doing tasks that require precision, accuracy and consistency — way beyond human capability. In India, with large unemployment, the Luddite argument is extremely tempting. The city of Kolkata bears testimony to the dilemma of this temptation. It was one of the first cities in India to acquire a Russian computer in Jadavpur University and an IBM mainframe in Dunlop. Yet, when the banks led by Grindlays tried to bring in computers to automate banking processes, all hell broke loose as they were seen as machines that were designed to destroy clerical jobs.
A similar incident was narrated by a former CMD of State Bank of India (known earlier as the Imperial Bank). The Imperial Bank employed punkha-pullers in Calcutta to reduce the effects of heat on British employees in summer. When electricity was introduced around 1902, the punkha-pullers were made redundant leading to a minor revolution in the bank. Because of this attitude, Kolkata was a late entrant in the IT services revolution. Two decades after it swept the nation, the then Communist state government wooed IT companies to set up units to generate employment.
While Make in India is a great slogan to attract FDI and generate employment, it is important that we do not push ourselves to the bottom of the pyramid by choosing to pick only labour-intensive and low-tech industries. We have the right and capability to sit at the head table of high technology and, therefore, should have the aspiration of being an active participant in the fourth industrial revolution. Let us be careful of what we wish for!
(The writer is managing director of Deloitte