Source: GLAS-8/CC BY-NC-ND 2.

AI INDUSTRIAL REVOLUTION

The manufacturing sector being the main sector which offers the best job opportunities
for skilled and unskilled workers, the NDA government is currently ‘rebooting’ the
national manufacturing policy. Taking stock of the manufacturing sector and reviewing
the previous UPA government’s manufacturing policy (2011) is perhaps due on account
of new schemes introduced under the Modi government like ‘Make in India’ and ‘Digital
India’. However, the focus on increasing the share of manufacturing in the GDP to at
least 25 percent from the current 18 percent is likely to remain the same.

Problems in the manufacturing sector are indeed difficult to solve because the UPA
government did make big pronouncements of increasing the share of manufacturing
without a clear road map for it. Many National Investment and Manufacturing Zones
were created without thought to their viability and nearness to ports and facilities for
other modes of transports. If the NDA government can correct such wrong designing, it
would help in creating a more competitive manufacturing base.

Recently, Commerce Minister Nirmala Sitharaman emphasised the need to take into
account the dynamics of the Fourth Industrial Revolution that is taking place in the world
today and which began in late Twentieth century. Perhaps, the mechanics of the Fourth
Industrial Revolution are difficult to understand for the lay person because it is about the
increasing use of robots, big data and artificial intelligence in manufacturing industries to
increase productivity manifold.

The First Industrial Revolution took place in the late eighteenth century after the
invention of the steam engine and important inventions in the textile industry in England.
It brought about a massive wave of unemployment causing huge social change. It was
missed in India because of historical reasons. The Second Industrial Revolution happened
on US soil, that was ushered in by Henry Ford in the 1920s with his assembly line
manufacturing and mass production. This was also missed by India. The Third Industrial
Revolution, supposedly taking place in the 1970s, was also not all pervasive in India
though it has managed to catch up on IT and digital technology rapidly, especially in
large scale production processes in recent times. But we have not gone extensively for the
latest technological innovations like 3D printing, a manifestation of the Third Industrial
Revolution.

The Fourth Industrial Revolution is possible in India, according to official sources and
industrialists like Mukesh Ambani, because of the huge increase in data usage and the
Digital India campaign. India is the second biggest user of mobile phones in the world.
But it is much more complicated than that and is marked by a fusion of technologies that
straddle the physical, digital and biological worlds. The speed of change will be
unprecedented and it will lead to transformation of entire systems of production,
management and governance.

In India, are we prepared for the Fourth Industrial Revolution, when in fact 90 per cent of
the manufacturing units are still working in the informal and small and medium
enterprises (MSMEs) which contribute 46 per cent of India’s exports and 8 per cent of the
GDP? They also contribute to 45 per cent of total industrial employment.

The Commerce Minister has rightly pointed out that the MSME sector is very important
and should be focussed upon. Many large scale organised sector manufacturing units are
using the latest robotics and digitalisation and are already heavily into capital intensive
production processes, as a result of which India has witnessed jobless growth in the past.
But the problem will arise when more and more people are rendered jobless as the latest
technology will replace human labour extensively. Where will the displaced labour find
jobs? Providing jobs to about 1 million people entering the labour force is going to be the
main problem that India will have to face in the future.

Small scale manufacturing faces deep infrastructural problems and many have inadequate
power and water supply as well as inadequate access to credit. It is difficult to imagine
the MSMEs going for nano technology and capital intensive investments any time soon.
They will still remain open to the youth looking for jobs. But they can adopt SMAC —
Social, Mobile, Analytic and Cloud technology and can leverage it to increase their
productivity as many Start-Ups seem to be doing. The ongoing ‘Skill India’ campaign
will also be producing lakhs of skilled people who will have to ultimately find jobs in
MSMEs. Many will remain low paid. Thus, the Fourth Industrial Revolution, if it takes
place in India in a big way, will produce more inequality of income. The highly educated
and technically skilled people will command huge salaries in large manufacturing
enterprises using robotics and artificial intelligence and there will also be a vast pool of
workers available for absorption in MSMEs.

Unfortunately, the manufacturing industries in developed countries are also undergoing

change and are adopting ultra high technological innovations which will render many
jobless. In countries that use a lot of immigrant labour from India, such latest tech
operations will force the emigres to return. They will create additional problems for the
manufacturing industries in India.
The MIT Sloan School of Management economists have already warned that the fourth
revolution, using extensive artificial intelligence, will affect India and other developing
countries by cutting into their cheap labour advantage. They have also reiterated that
inequalities will rise. Increasing inequality is already visible in Digital India and will be
accentuated in the future which will increase social tensions. India’s large number of low
skilled youth will also face major challenges in big industries as well as MSMEs because
product cycles will become very short and this will lead to a lot of uncertainty and
unpredictability.

India has to gear itself to the future challenges and make the infrastructure for MSMEs
stronger so that the trained and unskilled youth find jobs in them. The Fourth Industrial
Revolution may enable a small number of big companies to become world class and they
will seek the highest paid CEOs with special qualifications and abilities. Already, Infosys
CEO’s total remuneration (ET Intelligence Group 2015-16 Annual report of top 500 Nifty
companies) is Rs 48.7 crore which is 935 times the median of the rest of the company’s
employees’ salaries. Such disparities will be more visible in the future with all its
accompanying social problems.

CYBER AND TECHNOLOGY DEVELOPMENT AND SOCIETY

ECONOMY AND GROWTH INDIAN ECONOMY

The views expressed above belong to the author(s).