November 03, 2016      

As robotics transforms the global economy, the technology provides Indian industry an opportunity to become a role model. Or, robotics could make India irrelevant. How will government or business leadership make a difference?

As his predecessors have done for 70 years, Prime Minister Narendra Modi addressed the nation on its Independence Day, Aug. 15. But such speeches have rarely had a lasting effect. People have little time for politicians when millions are still struggling to survive.

Indian industry now faces another challenge: robots.

Research institutions and multinational enterprises are already aware of innovations, ranging from genomics and nanotechnology to materials science and energy. Robotics, however, is one area that could cause the most immediate upheaval.

Beyond manufacturing, hardware and software robots are already starting to affect service jobs, healthcare, and geopolitics. Unfortunately, India has yet to articulate its vision for how it will uniquely develop and apply robotics, artificial intelligence, and related technologies.

Indian industry pursues productivity with robots

Without a clear vision, robotics could soon become an anathema for India and its people.

For example, if India’s economy grows consistently at 7 percent, it would take India until 2029 just to achieve the same share of the global trade that China achieved in 2005.

But if India were to add, say, 10 percent of GDP growth year over year for several years, it would get to the Chinese level (a historic target, for sure) a lot faster.

According to India Ratings & Research, to achieve a double-digit growth of 10 percent, Indian productivity would also need to improve drastically to 8.3 percent. Its actual labor productivity was 4.2 percent in fiscal year 2014-’15.

Of course, robots are the best way to increase efficiency and productivity.

Universal Robots A/S is very enthusiastic about Indian industry. The Odense, Denmark-based company claims that its collaborative robot arms can improve a company’s productivity by 85 percent.

It’s no-brainer, then, who India Inc. will hire going forward.

Not the desired robot revolution

What happens when tens of millions of people start losing jobs to automation and an equal number is unable to find work because of a lack of skills? The whole country could be in flames.

If you are shaking your head in disbelief, consider this: India needs to create 12.5 million jobs every year to keep up with labor growth. Yet, it created only 376,000 jobs in 2014 and a mere 135,000 jobs in 2015 — a paltry 2 percent of what was needed over the past two years.

The Indian industry likely to be most affected by automation is outsourcing.

And this during a period when India attracted more foreign investment than China in 2015. The displacements from Indian industrial automation haven’t even gone mainstream yet. There is also the question of whether Modi’s “Make in India” goal is simply following China’s manufacturing model rather than what India really needs for global trade.

More specifically, the IT outsourcing sector employs almost 3.1 million people in India. A recent survey found that India’s outsourcing sector alone could lose up to 640,000 jobs — about 21 percent of its IT labor force — to automation by 2021.

Naturally, outsourced services firm KPMG India disagrees with that grim forecast, but it is exploring automation itself.

Concentrating or spreading prosperity?

Robotics will not just affect jobs and cause social turmoil. Another economic scenario is the transformation of existing industries and building new wealth models.

Indian industry, including agriculture, faces significant displacements from automation.

Nearly half of India’s workforce is still involved in agriculture.

For instance, agriculture makes up 17.9 percent of India’s GDP and employs 49 percent of its labor force. These statistics don’t summarize how poor the irrigation system is, how many workers are “informal labor” (migrant, seasonal, or children), or how feudal landlords still control the land and output.

How will automation and globalization affect Indian farming? Sure, production needs to become more efficient to scale up to feed a growing population, but the government hasn’t devised a real strategy to guide the adoption of hardware and software robotics by sector.

More on Indian Industry and Robotics:

Potential must be realized or else

If the world has become increasingly volatile in the past 15 years, Indian industry will have to respond to even more unexpected changes in the next 15 years.

Everybody talks of India for its potential, but that’s not enough.

Indian industry has to show to the world that it can make innovative robotic products and build new profit models with, and in, robotics.

For example, India’s healthcare and aerospace industries are already using 3D printing, helping grant them competitive advantage. The country has also done a good job of attracting robotics startup investment.

But without clear adoption goals and a jobs plan, the fight to put food on the table could get so intense that India may be forced to put brakes on robots, and what happens then?