Are SME’s in India ready for Industry 4.0?

The SME’s in India always want to play safe as they have a restricted mindset of using traditional tools and methods, which always gives them a certain level of productivity. For increasing their production, they prefer to increase their manpower rather than upgrading their equipment. They continue to be low value/high volume, focusing on commodity products and utilising low cost and low skilled labour. Small scales and margins have discouraged investments in technology which leads to boost in productivity and improve manufacturing quality.

The question arises that “are we ready to accept the changes through industry 4.0?” There will be some challenges for the manufacturing sector to adopt the disruptive technologies such as the IoT, cyber-physical systems or cloud-based manufacturing. Hence, it is very crucial to evaluate the Industry 4.0 readiness of industrial enterprises.

To overcome the challenges, SME’s require visionary decision-makers who can not only improve the skillset of the existing manpower but also educate them on the benefits of investing in digital equipment and services. SME’s need to bring in the culture of Data Processing, Data gathering, and Data Analytics in their organisation to grow faster and smarter. Adopting this culture will support SME’S to develop strategies that will help them face the complex challenges in this ever-changing world of technological growth.

According to the India Brand Equity Foundation (IBEF), the Government of India has set an ambitious target of increasing the contribution of manufacturing output from 16 percent to 25 percent of Gross Domestic Product (GDP) by 2025.  According to IBEF forecast, the IoT market in India is projected to grow at a CAGR of more than 28 percent during 2015-2020. The government of India has taken initiatives such as Green Corridors and ‘Make in India’ to promote growth in the manufacturing sector.

A foundation for Mechanical engineering, Plant Engineering, and Information Technology of German Engineering Federation (VDMA) has coined a six-dimensional model to assess the readiness of the enterprises, wherein VDMA experts and some industry representatives served in an advisory capacity in the development of the study.

As per the current understanding of Industry 4.0, the readiness of the enterprises can be assessed on the below mentioned six dimensions: Six Dimensional Model

1
Six Dimensions Model
                                     
According to a research by World Economic Forum (WEF), Table 1, denotes the adoption of Networked Readiness Model by various countries. WEF investigated different countries and scored them on a seven-point scale. The key countries harnessing information technology are as follows:

Network Readiness Index 2016
Global rank
Singapore
1
Finland
2
Sweden
3
Norway
4
United States
5
Netherlands
6
Switzerland
7
United Kingdom
8
Luxembourg
9
Japan
10
Hong Kong SAR
12
Korea, Rep.
13
Canada
14
Germany
15
Malaysia
31
China
59
Thailand
62
Sri Lanka
63
India
91
Pakistan
110
                                  Table 1
Source: World Economic Forum, Global information technology report


Networked Readiness Index is a key indicator of how countries are performing in the digital world. It depends on whether a country possesses the drivers necessary for digital technologies to meet their potential, and whether these technologies are having an impact on the economy and society. The digital revolution may change the nature of innovation, which is increasingly based on digital technologies and on the new business models it allows.

The 2016 Index has highlighted several key issues such as:

• Increasing pressure to innovate
• The need for rapidly growing businesses that rely on digital technologies
• Developing new types of behaviour for adopting new technologies
• Need for leadership and governance mechanisms that support digitalisation etc.

India’s rank on the Network Readiness Index in 2013 was 61. In 2016, India ranked 91 out of 139 countries. Placed at 91st rank in the Network Readiness Index of 2016, India was ahead of Pakistan (110) and Bangladesh (112), but behind Sri Lanka (63), Malaysia (31), and China (59). Singapore topped the rankings for the second year in a row. The US was placed at 5th position. According to this index report, it is visible that there is a huge gap between developed nations and developing ones.


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