Prevalent anti-China moods after the pandemic have all the possibilities to boost India’s emergence as the next global manufacturing hub. But this can be possible with India taking adequate steps, be it creating an investment-friendly atmosphere, ease of doing business, upgrade its skills, and existing industries embrace the latest technologies. Looking forward India will not face saturation of growth in the next three to four decades.
Amidst the subdued forecast of growth across industries in the aftermath of the COVID19 pandemic, there is a silver lining for some. The automation sector, for instance, eyes the cascading effect of COVID19 to open up more opportunities in the post COVID19 business environment than ever before and India should focus on upping its ante in automation to appear as the next big giant in the world of manufacturing.
In a conversation with Machine Maker Laxman Raghu Katrat, Managing Director of Gujarat based Katlax Enterprise Private Limited, discussed why he feels the automation sector has the potential for unprecedented growth and how India has some natural advantages over other economies.
Impact and Outlook
He feels that even before the COVID-19 outbreak spread there were already prevalent anti-China moods in the global business circle, partly because there is a split of the geopolitical system and China is a big threat to the world economy for its monopolizing nature, and partly because of its rising labour cost. India hence will be getting many more opportunities because of the ongoing trade war as much as it is for the COVID-19 impact.
If we see America and Japan wanted their companies to relocate their manufacturing bases from China to other places and the trend could be followed by the European companies as well. India could be on the top of their list as the new manufacturing base. As for his company, Katrat feels that being a player in the field of automation, his company is all set to capitalize on the emerging opportunities. “Katlax is very aggressive and by six to eight months we will be in a position to regain normalcy. Katlax will have manifold growth in terms of market share and revenue”, he says.
“From 2013 we decided to implement some new business and marketing strategies, and in 2017 we implemented the first stage of that and from last two years, we have been generating 35% of our total revenue from exports. In FY2020-21, we were expecting at least three-fold growth. But maybe because of this corona it might go off the current FY year to the next year but definitely, we will see the growth in revenue and export penetration”, he affirms.
India’s Emergence
But overall, India is definitely in a better position than other countries to regain normalcy. It is also poised to grow better than other economies not because of some corona related edge but that the country has a natural advantage.
China is gradually losing its ground to India as China’s labour cost is rising than India’s and companies are heading for India as it is a compulsion for them economically. So, while there are opportunities for India to upscale its automation skillset and efficiency and provide service and workforce to global companies, the companies can access low-cost labour and a burgeoning market in India.
There are natural forces that want India to come to the centre stage of supply of manpower and as the next global investment destination as well as the best consumer market after China. So, irrespective of what happens in the short term India will not have any saturation for the next 20-25 years.
Transformation in the Global Scenario
Mr Katrat presents a view that in the last twenty years there has been a disparity of demand and supply management when companies have used many tricks and countries that have safeguarded their markets through trade barriers and protocols. Just like the First World War and the Second World War changed the landscape of the earth and politics, there will be a new economic landscape after this COVID-19 pandemic. There will be a stabilizing of the supply and demand management, in the post corona world.
However, he believes, there could be larger implications of the COVID-19 outbreak than just the mortality and immediate pressure on the economy as the outbreak could be far from a natural source and that it could be a ploy to manipulate larger economic interests. He strongly backs the emerging arguments from many global quarters that there might be some economic cold war at play as the world is bi-polar currently with a China vs. the rest of the world and ongoing trade war and trade barriers.
According to him, there is a pattern that suggests the developed countries have a higher mortality rate than developing countries. This is however not as much to say as the developing countries are very well placed than the developed countries like the US and European countries but given the lack of medical facilities and higher population density, it would have spread with cascading effect in Africa and South America and Asian countries such India more than it currently has.
Prospect in Automation
Mr Katrat is of the view that except for the IT sector India is still 20-25 years behind Europe and China in the field of technology and automation. “IT is a tool to enhance the automation and ironically we have developed the tool but we have not yet developed the adequate infrastructure for automation”, he says. “Global companies will move to India but unless there is strong automation infrastructure that is not possible”, he adds.
Considering the social distancing norms put in place, automation could be the only way to maintain or even maximize productivity during the time such as this as automation eliminates chances of human transmission of the virus. Hence, automation will be a crucial factor for consideration in factories of tomorrow.
There is certainly pressure on the Indian economy as Indian economy and manufacturing are not insulated from the rest of the world but, he feels, 2-3 years down the line India will be in a much better growth trajectory than other economies. Not only that; he feels India is going to be the next game-changer in the next 30 to 40 years. Based in Gandhinagar, Gujarat Katlax Enterprise is a manufacturer and supplier of sensors and automation components to various industries in India and abroad.
