Courtesy: KPMG

 The fact that manufacturers in India are highly focused on innovation is not surprising. As domestic competition increases and prices start to come under pressure, many in India recognise that they will need to innovate in order to protect their margins and attract premium prices for their products. This, in turn, is driving India's manufacturers to quickly start embracing high-tech and advanced manufacturing technologies.

Fifty percent of Indian respondents say they have spent between 4 and 5 percent of their revenues on innovation/R&D in the last two years and additional 19 percent say their spend was greater than 6 percent. Looking ahead, Indian respondents plan to spend even more. Thirty-one percent say they will spend between 4 and 5 percent of their revenues on invocation/R&D and 61 percent say greater than 6 percent in the next two years.

However, it is clear that - in India and in the rest of the world - manufacturers could be gaining much more value from data and analytics (D&A), particularly on the supply chain side. Indeed, we believe that those manufacturers able to leverage their customer-facing D&A experience and capabilities to improve their supply chain operations will ultimately win in the marketplace.

The vast majority of Indian respondents and their global peers estimate they are only using D&A tools 1 to 10 percent of time across many functions including important areas that can support company growth, reduce costs and minimise risks such as financial reporting, product costs and profitability and customer insights.

India is clearly changing. And new consumer pressures, new market reforms, new competitors and new innovations are starting to help elevate the market from being a ‘low-cost' manufacturing destination into a ‘high-value' and ‘high-quality' destination instead.

While this will clearly provide significant dividends for India's manufacturing ecosystem, it will also mean that manufacturers will need to keep a close eye on their costs if they hope to remain competitive in one of the world's fastest-growing marketplaces.

About the authors: Jeff Dobbs is KPMG's Global Head of Industrial Manufacturing and S.V. Sukumar is Head of Strategy and Operations, KPMG in India
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