‚ÄúCollaboration between automotive and IT sectors is needed to localise Indian software solutions‚ÄĚ

India is a developing economy and is a promising hub for new age industries and sectors. At the time of independence, the Indian economy was marked by a weak industrial base and underdeveloped infrastructure. The structure of ownership was highly concentrated, and the manufacturing industry was highly dependent on imports. The industry was also marred by a short supply of technical and managerial skills. The development of India into a modern industrialised country was a slow and continuing process, made possible due to great vision, resilience, evolution, and unyielding potential.

From the inception of India's manufacturing landscape to the current times, the nation has been a strong symbol of growth and has carved a niche as a strong contender in the global market.

Manufacturing industry scenario

During the post-independence period, manufacturing became the foundation of India's development. It was the basis for textiles, iron, steel, and automotive, leading to an era of self-sufficiency and economic growth. Over the years, manufacturing has witnessed a massive transformation with industrial diversification and technological improvements.

Currently, India is a fast-emerging manufacturing powerhouse, with sectors like automotive, healthcare, pharma, electronics, and aerospace surging ahead. The evolution of the ecosystem, thanks to the integration of innovation and modernisation, has ensured steady growth and global attention for the country. The Indian manufacturing sector is all set to boost the world economy by more than 500 billion dollars a year by 2030.

When it comes to the Ease of Doing Business index, India's rank has been improving gradually. According to the World Bank's Ease of Doing Business Ranking 2020, India is ranked in the 63rd position, whereas in 2014, it was at 142. This has attracted many top global companies to set up their manufacturing and R&D centres in the country.

The challenges

Notably, though, Indian manufacturing is not without its set of challenges. There are significant cost disparities when comparing India with other manufacturing hubs like Vietnam and China, particularly in electronics production. There is a 7.5 per cent to 9.8 per cent cost differential that India has with Vietnam and a shocking 17.3 per cent to 19.0 per cent when it comes to China. There is still a struggle to capitalise on this growth for automotive electronics, even though India has a flourishing nonautomotive electronics manufacturing sector. India still has a considerable gap between software development and its utilisation in automotive electronics, and despite its expertise in software solutions, the country is still in its nascent stage when it comes to application. It is not surprising, therefore, why automotive electronics imports are still preferred in India even though they are being manufactured locally. This also results in a maze of multiple HSNs that makes an inclusive assessment of imports ambiguous and more complex, thus adversely impacting a clearer strategic approach in the sector.

Overcoming the challenges

Only a strategic approach can help overcome the challenges existing in India's manufacturing sector. One way is to focus on manufacturing just 20 products that have either high market potential or are easy to manufacture. This will help in leveraging market potential by restructuring the manufacturing processes. There must also be seamless collaboration between India's automotive and information technology sectors to facilitate the localisation of software solutions. Special clusters can be created to counter the increasing costs of manufacturing automotive electronics. This will provide much-needed support for competitiveness and make the sector more effective. Also, creating both technical and academic linkages can develop the skills that are necessary for automotive electronics. Furthermore, start-ups can be created in automotive electronics via mentorship programmes with new R&D centres. This can boost innovation, help in product and technology development, and advance the Indian automotive electronics industry to greater heights.

India also has some huge advantages when it comes to evolving as a global manufacturing hub.


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