It’s time for Industry 4.0

Relevance: Modernization of Indian MSME’s

Synopsis: MSMEs are significant to India. India can leverage multiple benefits by integrating ‘Industry 4.0’ features in Indian MSMEs.

What is ‘Industry 4.0’?

The term ‘Industry 4.0’ was coined by the German government in 2011. Additive manufacturing, Internet of Things, Cyber Physical Systems, Augmented Reality/Virtual Reality and data analytics are some technologies associated with Industry 4.0.

With the help of these technologies, the manufacturing industry will be able to make data-driven decisions. The reduced costs of electronics like sensors, transmitters, and cloud have allowed us to capture the data produced during operational activities. With the availability of advanced algorithms, this captured data can be analysed for decision-making in real time.

Thus, Industry 4.0 integrated ‘data’ with manufacturing and Information Technology.

Significance of MSMEs to India

• MSMEs form more than 95% of the industries in India, produce more than 45% of the total manufacturing output and employ more than 40% of the workforce.
• According to the Economic Survey 2020-21, over 6 crore MSMEs employ more than 11 crore people and contribute roughly 30% to the GDP and half of the country’s export.
• MSMEs are also ancillaries to larger enterprises, leading to a seamless supply chain integration. As a result, making MSMEs more efficient will be advantageous for the whole economy.

Challenges in adoption of Industry 4.0 by MSMEs

1. Lack of awareness: First, they lack awareness regarding Industry 4.0 and its benefits. They consider such technologies disruptive and having the potential to demolish their existing system. However, Industry 4.0 improves the existing system. Sensors and WiFi networks being integrated with old machines like lathes and mills will improve their performance.
2. Major financial investments: Second, MSMEs will need to make major financial investments to adopt Industry 4.0. Investing in the right set of technologies will need experts and consultants as well.
3. Lack of assistance: Thirdly, the framework and steps that can assist MSMEs in adopting Industry 4.0 technologies have been missing. In this regard, MSMEs need to understand the data they are producing from all their operational activities. Based on such data, their readiness can be evaluated.
4. Lack of vision: Finally, MSMEs should develop their own vision of Industry 4.0 technologies that they want to adopt and identify the relevant tools and practices they need for such a tailored vision.

Benefits to MSMEs

• The adoption of Industry 4.0 technologies by MSMEs will make them more competitive as they will be able to offer world-class quality products to customers.
• Additionally, delivery timings and the flexibility to meet different needs will improve.

Way forward

Proper sensitization of the Government of India, higher education institutions, practitioners, entrepreneurs, industrial associations, trade unions, venture capitalists, consultants and research agencies would help to speed up this task.