The Daily Fix

The Daily Fix: Modi’s efforts to improve India’s ease of doing business rankings are paying off

Everything you need to know for the day (and a little more).

The Big Story: Easier

Soon after Prime Minister Narendra Modi took charge, his government made it clear that it wanted to move up the World Bank’s Ease of Doing Business index. The list examines the relative business regulation regimes of various countries and ranks them according to how simple it is to conduct commerce. This list is based on metrics such as how many licences are needed when starting a new company and how hard it is to shut one down. The report is based on quantitative data gathered in each of the countries it surveys, although because of the scale of the effort, the details tend to come from just the larger cities in each nation.

On Tuesday, when the most recent World Bank report was released, it was evident that Modi’s effort to move up on the list has paid off. India registered its largest jump on the index, moving from 130 up to 100 in just a year. But the great leap is vindication for the government, which has pushed through a number of changes in the hopes of altering India’s image of being a difficult market for foreign investors to enter.

On a number of metrics, India has seen a significant rise. The new insolvency law, for example, has helped India move up more than 30 places on that section of the list. On paying taxes, India has moved up from 172 on the list to 119, without the impact of the Goods and Services Tax changes being factored in. India remains one of the best in the world in protecting minority investors, moving up from 13 on the list to 4. Getting credit seems to have become easier, with the list saying India has gone from 44 to 29.

There are still some areas where India’s performance leaves much to be desired. In terms of starting a business, India is still one of the most difficult places in the world to do so, coming in at 156 on the list, one worse than the previous year. The index also saw India dropping on its property registration metric, down to 154 from 138 last year. On trading across borders as well as getting an electricity connection, India regressed.

Modi’s government is frequently accused of focusing on PR and managing headlines rather than improving the situation on the ground. But in matters like this, India’s image is about as important as the underlying factors. Since the list is built on what is supposed to be quantitative data, many believe that it is a reliable signifier of what it is supposed to be measuring.

Even if the findings are limited to doing business in Mumbai and Delhi, that is a huge positive, considering those cities are home to a signficiant portion of India’s economic activity. Even more promising is the fact that since GST was only implemented midway through this year, it hasn’t been factored in. This could push India even further up the list next year.

It is crucial for the government to capitalise on this momentum. The insolvency law, for example, is now being tested in real-life situations and the government must watch closely to ensure that it is serving the purpose for which it was framed. Self-goals like demonetisation and the chaotic manner in which GST was rolled out do not inspire confidence about the government’s ability to manage the economy – even if the signals to the outside world suggest India has become a better place to do business in. But overall the big jump in India’s ranking suggests this is one of those rare instances where the government’s promises to improve things are actually bearing fruit. This should set the stage for even more business environment reforms.

Subscribe to “The Daily Fix” by either downloading Scroll’s Android app or opting for it to be delivered to your mailbox. For the rest of the day’s headlines do click here.

If you have any concerns about our coverage of particular issues, please write to the Readers’ Editor at readerseditor@scroll.in

Punditry

  1. “At present the rise of intolerance is alarming,” writes Soli J Sorabjee in the Indian Express. “Even a moderate expression of a different point of view is viewed with resentment and hostility and there are vociferous demands for bans.”
  2. Newly appointed interlocutor for dialogue on Kashmir Dineshwar Sharma speaks to Vijaita Singh of The Hindu on the Centre’s intention behind the talks and how Pakistan features in the larger conversation.
  3. “The recent issue of recapitalisation bonds by the government is a step in the right direction,” write C Venkat Nageswar and Soumya Kanti Ghosh in Mint. “Recapitalisation is a tried and tested tactic and has been successfully replicated in many countries, including India, in the past.”

Giggle

Don’t miss

Nayantara Narayanan brings you four charts that explain how climate change is hurting India.

“The most obvious direct impact of climate change on health is the exposure to rising temperatures, especially heat waves. The report estimates that 125 million more people were exposed to heat waves between 2000 and 2016 than in previous years. A record 175 million people around the world were exposed to heat waves in 2015 alone.

India has been disproportionately affected by heat waves, the report finds. Between 2000 and 2016, 125 million in India have been exposed to potentially fatal heat waves.

People over 65 are among the most vulnerable to heat and millions more people over 65 are being exposed to heat waves every year. Between 2000 and 2016, 31 million more people in India above the age of 65 have been exposed to heat waves than between 1986 and 2008.

The heat waves became considerably worse in 2014 when the average number of people over 65 exposed to heatwaves was 150 million more than in 1986-2008.”

Support our journalism by subscribing to Scroll+ here. We welcome your comments at letters@scroll.in.
Sponsored Content BY 

The next Industrial Revolution is here – driven by the digitalization of manufacturing processes

Technologies such as Industry 4.0, IoT, robotics and Big Data analytics are transforming the manufacturing industry in a big way.

The manufacturing industry across the world is seeing major changes, driven by globalization and increasing consumer demand. As per a report by the World Economic Forum and Deloitte Touche Tohmatsu Ltd on the future of manufacturing, the ability to innovate at a quicker pace will be the major differentiating factor in the success of companies and countries.

This is substantiated by a PWC research which shows that across industries, the most innovative companies in the manufacturing sector grew 38% (2013 - 2016), about 11% year on year, while the least innovative manufacturers posted only a 10% growth over the same period.

Along with innovation in products, the transformation of manufacturing processes will also be essential for companies to remain competitive and maintain their profitability. This is where digital technologies can act as a potential game changer.

The digitalization of the manufacturing industry involves the integration of digital technologies in manufacturing processes across the value chain. Also referred to as Industry 4.0, digitalization is poised to reshape all aspects of the manufacturing industry and is being hailed as the next Industrial Revolution. Integral to Industry 4.0 is the ‘smart factory’, where devices are inter-connected, and processes are streamlined, thus ensuring greater productivity across the value chain, from design and development, to engineering and manufacturing and finally to service and logistics.

Internet of Things (IoT), robotics, artificial intelligence and Big Data analytics are some of the key technologies powering Industry 4.0. According to a report, Industry 4.0 will prompt manufacturers globally to invest $267 billion in technologies like IoT by 2020. Investments in digitalization can lead to excellent returns. Companies that have implemented digitalization solutions have almost halved their manufacturing cycle time through more efficient use of their production lines. With a single line now able to produce more than double the number of product variants as three lines in the conventional model, end to end digitalization has led to an almost 20% jump in productivity.

Digitalization and the Indian manufacturing industry

The Make in India program aims to increase the contribution of the manufacturing industry to the country’s GDP from 16% to 25% by 2022. India’s manufacturing sector could also potentially touch $1 trillion by 2025. However, to achieve these goals and for the industry to reach its potential, it must overcome the several internal and external obstacles that impede its growth. These include competition from other Asian countries, infrastructural deficiencies and lack of skilled manpower.

There is a common sentiment across big manufacturers that India lacks the eco-system for making sophisticated components. According to FICCI’s report on the readiness of Indian manufacturing to adopt advanced manufacturing trends, only 10% of companies have adopted new technologies for manufacturing, while 80% plan to adopt the same by 2020. This indicates a significant gap between the potential and the reality of India’s manufacturing industry.

The ‘Make in India’ vision of positioning India as a global manufacturing hub requires the industry to adopt innovative technologies. Digitalization can give the Indian industry an impetus to deliver products and services that match global standards, thereby getting access to global markets.

The policy, thus far, has received a favourable response as global tech giants have either set up or are in the process of setting up hi-tech manufacturing plants in India. Siemens, for instance, is helping companies in India gain a competitive advantage by integrating industry-specific software applications that optimise performance across the entire value chain.

The Digital Enterprise is Siemens’ solution portfolio for the digitalization of industries. It comprises of powerful software and future-proof automation solutions for industries and companies of all sizes. For the discrete industries, the Digital Enterprise Suite offers software and hardware solutions to seamlessly integrate and digitalize their entire value chain – including suppliers – from product design to service, all based on one data model. The result of this is a perfect digital copy of the value chain: the digital twin. This enables companies to perform simulation, testing, and optimization in a completely virtual environment.

The process industries benefit from Integrated Engineering to Integrated Operations by utilizing a continuous data model of the entire lifecycle of a plant that helps to increase flexibility and efficiency. Both offerings can be easily customized to meet the individual requirements of each sector and company, like specific simulation software for machines or entire plants.

Siemens has identified projects across industries and plans to upgrade these industries by connecting hardware, software and data. This seamless integration of state-of-the-art digital technologies to provide sustainable growth that benefits everyone is what Siemens calls ‘Ingenuity for Life’.

Case studies for technology-led changes

An example of the implementation of digitalization solutions from Siemens can be seen in the case of pharma major Cipla Ltd’s Kurkumbh factory.

Cipla needed a robust and flexible distributed control system to dispense and manage solvents for the manufacture of its APIs (active pharmaceutical ingredients used in many medicines). As part of the project, Siemens partnered with Cipla to install the DCS-SIMATIC PCS 7 control system and migrate from batch manufacturing to continuous manufacturing. By establishing the first ever flow Chemistry based API production system in India, Siemens has helped Cipla in significantly lowering floor space, time, wastage, energy and utility costs. This has also improved safety and product quality.

In yet another example, technology provided by Siemens helped a cement plant maximise its production capacity. Wonder Cement, a greenfield project set up by RK Marbles in Rajasthan, needed an automated system to improve productivity. Siemens’ solution called CEMAT used actual plant data to make precise predictions for quality parameters which were previously manually entered by operators. As a result, production efficiency was increased and operators were also freed up to work on other critical tasks. Additionally, emissions and energy consumption were lowered – a significant achievement for a typically energy intensive cement plant.

In the case of automobile major, Mahindra & Mahindra, Siemens’ involvement involved digitalizing the whole product development system. Siemens has partnered with the manufacturer to provide a holistic solution across the entire value chain, from design and planning to engineering and execution. This includes design and software solutions for Product Lifecycle Management, Siemens Technology for Powertrain (STP) and Integrated Automation. For Powertrain, the solutions include SINUMERIK, SINAMICS, SIMOTICS and SIMATIC controls and drives, besides CNC and PLC-controlled machines linked via the Profinet interface.

The above solutions helped the company puts its entire product lifecycle on a digital platform. This has led to multi-fold benefits – better time optimization, higher productivity, improved vehicle performance and quicker response to market requirements.

Siemens is using its global expertise to guide Indian industries through their digital transformation. With the right technologies in place, India can see a significant improvement in design and engineering, cutting product development time by as much as 30%. Besides, digital technologies driven by ‘Ingenuity for Life’ can help Indian manufacturers achieve energy efficiency and ensure variety and flexibility in their product offerings while maintaining quality.

Play

The above examples of successful implementation of digitalization are just some of the examples of ‘Ingenuity for Life’ in action. To learn more about Siemens’ push to digitalize India’s manufacturing sector, see here.

This article was produced on behalf of Siemens by the Scroll.in marketing team and not by the Scroll.in editorial staff.