Industry 4.0 can be described as the fourth industrial revolution, a mega‑Trend that affects every company around the world. A recent Input-Paper published by the Bertelsmann Stiftung and carried out by the Fraunhofer Institute analyses the potentials and challenges for collaboration between India and Germany in this field.
Why does Industry 4.0 make for an excellent platform for industrial collaboration between India and Germany?
The answers lie in economic as well as social factors. Both countries have strengths and weakness and strategic collaboration using the principles of Industry 4.0 can help both increase their industrial output, GDP and make optimal use of human resources.
As a global heavy weight in manufacturing and machine export, Germany has a leading position in the development and deployment of Industry 4.0 concepts and technology. However, its IT sector, formed by a labor force of 800,000 employees, is not enough. It needs more professionals to reach its full potential. India, on the other hand, is a global leader in IT and business process outsourcing. But its manufacturing industry needs to grow significantly and compete globally.
These realities clearly show the need for Industry 4.0-based collaboration between Germany and India.
So how does Industry 4.0 work?
In a first step, we look at the technical perspective – the vertical and horizontal integration of Industry 4.0 principles in enterprises. Vertical integration refers to operations within Smart Factories and horizontal integration to Smart Supply Chains across businesses. In the second step, we look at manufacturing, chemical industry and the IT sector as potential targets for collaboration between the two countries. We use case studies to illustrate the benefits of the deployment of Industry 4.0. Potential collaboration patterns are discussed along different forms of value chains and along companies’ ability to achieve Industry 4.0 status.
Social Impact of Industry 4.0 on India and Germany
We analyse the social impact of Industry 4.0 on India and Germany and find that it works very well in the coming years. Germany with its dwindling labor force might be compensated through the automation. This will ensure continued high productivity levels and rise in GDP.
India, on the other hand has a burgeoning labor market, with 10 million workers annually entering the job market. Given that the manufacturing sector will be at par with Europe in efficiency and costs by 2023, pressure on India’s labor force will increase even more. Even its robust IT sector will suffer fewer hires because of increased automation. Rapid development of technologies makes skilling and reskilling of the labor force critical for augmenting smart manufacturing.
India and Germany have been collaborating at three levels relevant to Industry 4.0 – industry, government and academics. How can these be taken forward?
The two countries have a long history of trade. The Indo-German Chamber of Commerce (IGCC) is the largest such chamber in India and the largest German chamber worldwide. VDMA (Verband Deutscher Maschinen- und Anlagenbau, Mechanical Engineering Industry Association), the largest industry association in Europe, maintains offices in India. Indian key players in IT, in turn, have subsidiaries in Germany and cooperate with German companies in the area of Industry 4.0.
Collaboration is also supported on governmental level. As government initiatives go, India has launched the “Make in India” initiative and the “Make in India Mittelstand! (MIIM)” programme as a part of it.
The Indian Government is also supporting “smart manufacturing” initiatives in a major way. Centers of Excellence driven by the industry and academic bodies are being set up.
Germany and India have a long tradition of research collaboration as well. Germany is the second scientific collaborator of India and Indian students form the third largest group of foreign students in Germany. German institutions like the German Academic Exchange Service (DAAD) or the German House for Research and Innovation (DWIH) are working to strengthen ties between the scientific communities of the two countries, and between their academia and industry.
What prevents Industry 4.0 from becoming a more widely used technology?
Recent surveys in Germany and India show that awareness about Industry 4.0 is still low, especially among small and medium manufacturing enterprises. IT companies, on the other hand, are better prepared. There is a broad demand for support, regarding customtailored solutions, information on case studies and the willingness to participate in Industry 4.0 pilot projects and to engage in its platform and networking activities.
Both countries should strengthen their efforts to create awareness for Industry 4.0, especially among small and medium enterprises. Germany should also put more emphasis on making their Industry 4.0 technology known to the Indian market. India’s IT giants, on the other hand, should make their Industry 4.0 offers more visible to the German market.
The governments should support the establishing of joint Industry 4.0 collaboration platforms, centers of excellence and incubators to ease the dissemination of knowledge and technology.
On academic level, joint research programs and exchange programs should be set up to foster the skilling of labor force in the deployment of Industry 4.0 methods and technologies.