What’s Next for MSME

Adopting Industry 4.0 in MSMEs – The Way Forward in Post Pandemic World

On May 12, the Prime Minister of India, Shri Narendra Modi, in his COVID lockdown address asked the nation to be self-reliant. PM Modi was heard saying ‘be vocal for the local’ to emphasise the need for using indigenous products which would not only reduce our massive import bill but sustain our industrial sector especially Micro, Small and Medium Enterprises (MSMEs). He announced a ₹20 lakh crore economic package which included a major stimulus to the post pandemic industrial world. Soon after, the Ministry of Finance announced details of the economic package in which out of the 15 relief measures, six were aimed to rejuvenate the lockdown-hit India’s enormous MSME sector.

MSME has stayed far from being the focal point of Indian industries, except for the textile brands and cottage industry, but it is the backbone of Indian economy. Going by statistics MSME units across the country employ more than 100 million people in the country and contribute close to 30% of India’s GDP and 50% of export revenue. It is not very difficult to forecast that India’s goal of a multi-trillion dollar economy cannot be achieved without further strengthening this sector. But amid the current COVID lockdown, MSMEs have been the worst hit. Even with the end of lockdown, staggered attendance policy to ensure social distancing would restrict MSME to start production in full strength. Availability of capital is another challenge. While the economic package announced by the Finance Minister would be addressing the capital issue but a technical perspective needs to be explored to address production issues. 

Sustaining MSMEs in Post Pandemic World

Prof. Surjya K Pal who is heading the Centre of Excellence in Advanced Manufacturing Technology at IIT Kharagpur points out at Industry 4.0 as a pertinent solution for MSMEs under the current situation and the way ahead.

“We can observe a clear change in demand and supply dynamics due to the pandemic situation. It has driven people towards panic buying of pharma and personal care products while demand for most other industrial products have witnessed a dramatic drop. This has been coupled with migration of the workforce to their respective home locations which would have a long-term effect. There are speculations regarding their return due to the uncertainty of their employment, travel and stay at the cities of work. Even when they return, deployment of the full workforce on the shop floor would not be a possibility because of social distancing as being suggested by experts,” he remarked.

To overcome the situation, new concepts befitting the post COVID world would be necessary. But despite the economic package, MSMEs would face constraints to avail skilled manpower, undertake R&D to develop new technologies to adopt new product lines and business models. 

“This continued dependence on legacy machines would fall short in meeting the new market demands. They would need upgrades through Industry 4.0 solutions along with a skilled manpower,” opined Prof. Pal.

What is Industry 4.0?

Industry 4.0 is an umbrella of several digital tools such as cloud computing, big data, augmented reality, virtual reality, artificial intelligence, deep learning, robotics, additive manufacturing etc. These have high potential for use in different industrial sectors and various phases of manufacturing to make headway into the process of automation, reduce production time and accelerate the return to normal business operations. Further this process transformation would also create more resilient business operations. 

Prof. Pal terms Industry 4.0 as the new mandate for the entire industrial world and not only MSMEs.

“With social distancing and limited workforce, automation is the obvious avenue to meet production targets. Industries need to come up with strategies for such advanced manufacturing and how to apply them across various product lines to avoid facing COVID-like challenges in future. Such strategies are a global reality and in India we need to move ahead of concept mode and adopt them in practicality. However, we need to also consider the economic viability of the strategies for our industries, particularly the MSME sector,” he added.

But who is going to help the MSMEs to take this giant leap especially under the current socio-economic situation? 

The Ministry of Finance has announced a  ₹50,000 crore as equity funding into MSME sector aimed towards capacity expansion and for the purpose of market-listing. However, while MSMEs can bid on this opportunity, there would still remain the need for upskilling the workforce and developing technical solutions. To achieve the goals of self-reliance and import substitution as set by the Prime Minister of India, strategic infrastructure and policy development is required for enhancing human capability and R&D.

Role of Technical Institutions:

In a recent interview, Prof. Virendra Tewari, Director, IIT Kharagpur emphasised on the role of technical institutions in rejuvenating MSMEs through capitalizing on the R&D infrastructure and expertise and provision of training. [Read Full Interview]

Explaining this further Prof. Pal said, “academic institutes like IITs have to provide specific low-cost solutions for automation to the MSME sector to sustain their business as we pass through various phases of COVID pandemic. This could be retrofitting existing machineries to meet requirements of upgraded production and precision of process, quality of products and potential of the manufacturing setup to be used for dynamic production facilities. In addition, training of the workforce would help MSMEs adapt to digital tools of Industry 4.0.”

He further pointed out the spillover effect of such upgradation towards reduction in cost of production and making products more affordable for end users, impact demand supply dynamics and also creating avenues for new product development.

Centre of Excellence for Advanced Manufacturing Technologies – taking the lead

IIT Kharagpur took a lead in achieving the aforesaid goals by setting up the Centre of Excellence for Advanced Manufacturing Technologies supported by Dept. of Heavy Industries, Ministry of Heavy Industries and Public Enterprises, Govt. of India and an industrial consortium comprising six large scale capital goods manufacturers and a startup. The Centre has been designed to provide technological solutions, R&D facility in digital tools, new materials, additive manufacturing, automation, training of human resources engaged in production. The  interdisciplinary Centre has been conducting training programmes on Computer Numerical Control and has also developed a training module for industrial robotics and other short-term courses and training programmes. 

Talking about the activities at the Centre, Prof. Pal said, “The reliance on robotic industrial solutions in the post pandemic world will only increase. So will increase the need for new products and processes. For example, there would be the need for real-time and cost-effective assessment of product quality. We have developed an affordable solution to carry out this function by amalgamating basic products with deep learning and creating industry 4.0 solutions. We will also work towards ensuring accuracy of such products and processes.” 

Automation induced directional change in employment

Reassuring the smooth continuation of industrial manufacturing through automation, Prof. Pal also dispelled the speculations of a distressed employment situation. MSMEs employ more than 75% of the workforce in the manufacturing sector. While automation would lead to downsizing the manpower requirement, through upskilling and re-skilling the workforce can be deployed in the new industrial environment. 

His optimism echoed in his statement, “automation would lead to human resource requirements for maintenance of machineries with knowledge of digital functions of the machines. Further ancillary industries would evolve which would need skilled workforce.”