Rather than competing with China's mega-manufacturing, India should focus on becoming the world's leading source of indigenously researched affordable manufacturing technologies. This will lead to 'Making in India' and perhaps, would turn China into a profitable customer

 

Accounting for a combined world population of 36.3 percent, India and China are literally two of the biggest competing nations today. Though the race against each other is close, china clearly has an edge. The International Monetary Fund, in February 2015, ranked China as the number one economic superpower in the world. It calculated that China produced 17 percent of the world's Gross Domestic Product in 2014, while the United States produced 16 percent of the global GDP.

 

China's ascent as an economic power is largely based on its massive manufacturing capacity. The availability of affordable funds, government support and world-class infrastructure have helped sustain the country's manufacturing growth. Sadly, these are the parameters on which India has lagged behind.

 

Despite matching China in human capital quantity, India considerably lags behind China's manufacturing muscle. In fact, with China having to increase its minimum wages, the cost of labour is actually now more affordable in India. Yet, our struggle with basic infrastructure and low ease of doing business negate all cost advantage. Lack of sufficient electricity, water, transport networks and other essentials make our pillars of manufacturing more than a little shaky. To add to that, restrictive labour laws and reams of bureaucratic red tape further make the manufacturing dream a nightmare.

 

It's true that India's current 'Make in India' campaign promises to radically change the manufacturing scenario by reducing bureaucratic intervention and strengthening infrastructure, but, even if somehow the playing field between china and India were levelled in terms of infrastructure and policies, India would still be unlikely to jump ahead, at least in the short term. The situation would instead lead to a war of attrition. The two countries would lower their labour costs to compete with one another to make products for the developed world, and get involved in a vicious economic downward spiral - clearly not the best scenario for either country.

 

How then can India compete with China to make its mark globally? Maybe the path to take is the one less travelled. Rather than putting all our resources and energy into battering heads in the manufacturing arena, which is clearly China's forte, perhaps India should focus on honing and strengthening its own muscle.

 

India and China match each other in population. But India clearly trumps its neighbour with its knowledge base. India is host to an almost 500 million-strong labour force, a large number of which comprises English-speaking scientists, researchers and engineers. If India turns its focus on this incredible knowledge capital, it can leverage its huge potential for cost-effective research and development.

 

The trick lies in gracefully changing track and grasping the hidden opportunity. Rather than competing with China's mega manufacturing, India can become the world's leading source of indigenously researched affordable manufacturing technologies. In turn, china would then transform from being a rival to a very profitable customer.

 

For example, at ALOK, we have plenty experience in developing specialised chemistries for our Chinese customers. They, in turn, have fed those chemistries into their manufacturing cycle and have churned out better products for their expansive customer base. It has led to a win-win for both India and China. Keeping in mind that India has a purchasing power parity of USD 5,707 (as per World Bank 2014 data), we cannot afford exotic technologies.

 

Our strength is in our numbers. If we successfully develop affordable technologies for a captive market of more than a billion people by capitalising on our research and development competence, we can fuel India's existing manufacturing capabilities. This will give the population a better quality of life and access to safer, affordable and sustainable products.

 

On paper, investing in research and development efforts sounds great. However, it isn't as simple a decision since this kind of investment takes a long time to pay off well. At the same time, India has still some ground to cover in empowering its engineering graduates beyond theoretical knowledge. In such a scenario, should one invest in research and development in hope of creating something unique or should one play safe and pour funds into the existing portfolio? It is a catch 22 situation.

 

The decision may be tough, but the logic to fuelling frugal innovation is simple. There may be risk in leaving the path well-trodden, but the returns in form of reach and market expanse commensurate the risk undertaken. Consider Theranos. This company, incorporated by a Stanford graduate - Elizabeth Holmes, has changed the face of blood testing. Elizabeth innovated and patenteda way to run 30 common lab tests on blood obtained via a fingerstick using microfluidics or "lab-on-a-chip" technology - a  much faster and cheaper method than traditional lab testing techniques. Today, the company is already valued at USD 9 bn+, while cost per user is minimal.

 

To support innovations, we at ALOK, have launched ATIC - ALOK Technology Incubation Research Centre. ATIC is a state-of-the-art centre, which produces innovative solutions for our customers' most pressing needs. We work with some of the leading academic institutions and invite engineering students to come to explore the infinite possibilities of the chemical world. To read more about ATIC, click here

 

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