Overview of the Manufacturing Sector

Today with digital revolution, industrial manufacturers need to adapt and develop operations and supplier collaboration ecosystem. This involves the requirement of developing smart products, originating platforms for collaboration which helps in reducing the costs and raises service capability. Further, with evolving complexities in the buyers' behaviour and competitive pressure, it becomes imperative for industrial manufacturing companies to look into opportunities of incremental revenue enhancement.

This differs from traditional interaction with customers which happens only at the point of sale and service and relates to a consistent customer experience over the whole buyer lifecycle bringing forth customer discovery, evaluation and loyalty.

Key Inclusions under Manufacturing Sector

The manufacturing sector includes the following:

• Agriculture, forestry and fishing;
• Aerospace;
• Basic metal and fabricated metal products;
• Chemical products and fibres;
• Construction;
• Electric supply;
• Food beverages and tobacco;
• Leather and leather products;
• Machinery equipment;
• Non-metallic mineral products;
• Pharmaceuticals;
• Mining;
• Wholesale and retail trade;
• Rubber and plastic products;
• Textile and textile products;
• Automotive;
• Electrical equipment.

Market size of the Manufacturing Sector

According to the provisional estimates of GDP for the first quarter of 2021-22, the Indian GDP at current prices stood at 51.23 lakh crore rupees. The manufacturing gross value added (GVA) at current prices was estimated at 97.41 billion USD in the first quarter of FY 2022.

India can become a global manufacturing hub by 2030 and it can also add over 500 billion USD annually to the global economy. According to a survey carried out by the FICCI, the capacity utilization in the Indian manufacturing sector stood at 72% in the second quarter of FY 2022. This indicates a significant recovery in the sector. As of July 2021, the total index stood at 134 owing to the growth in production in natural gas, steel cement, fertilizers, coal, refinery products etc.

In 2021, the natural gas output was raised by 18.9%, coal (18.7%), petroleum refinery production (6.7%), steel (9.3%), cement (21.8%) and electricity (9%). Export of merchandise from select industries stood at 151.9 billion USD between April 2021 and October 2021.  The overall index stood at 126.7 as of September 2021 and this rise was supported by growth in the production of coal, natural gas, refinery products, fertilizers, steel cement etc.

In September 2021, outputs hiked for natural gas by 27.5%, coal (8.1%), steel (3.0%), cement (10.8%), electricity (0.3%) and fertilizers (0.02%) however output for crude oil witnessed decline by 1.7%.

Digital Transformation in Manufacturing Sector

Cut throat competition in the manufacturing industry has put pressure on companies to reduce costs, improve customer experience and maximize profitability. Those Organizations that are laced with digital forces are disrupting business models with new value propositions. This disruption may pose a challenge for manufacturing organizations, but it can be a chance to adopt digital themselves.

Use of Advanced Technologies in Manufacturing Sector

The Advanced manufacturing companies are using new technologies such as Artificial Intelligence (AI), Internet of Things (IoT), Data and Analytics to boost growth and profitability. However, in order to ensure more tremendous success, there is a need to go beyond the hype of new technologies and develop future-ready strategies to manage change and make the most of the opportunities.

Use of Big Data Analytics in Manufacturing

Big data solutions have provided great assistance in the manufacturing space as it is challenging to cater to volatile customer demands and then to continuously minimize costs, optimize the use of resources and still maintain high product quality in all. There is a need to sync orders, purchases, production and then meet customer service expectations.

Benefits of using Big Data Analytics-

• Better product accuracy, quality, and production;
• Quick integration of IT in manufacturing and operational systems;
• Improved forecasts on requirement of product and production;
• Constant improvement across framework with advanced manufacturing analytics like Big Data;
• Good visibility in quality levels and improved accuracy level in predicting supplier performance;
• Compliance measurement;
• Strategic services contributing to customer objectives by monitoring products;
• Marking and selling of profitable customized products that have less impact on production.

How can manufacturers benefit from this?

• With big data, manufacturers can save money by reducing the costs of material and system capacity recovery.
• With big data, resources can be better equipped to know and remove the causes of product risk.
• Manufacturing analytics can remove overlap costs.
• It gives macro view of information which helps in closing the gap in management and resources.
• In manufacturing, big data has allowed organizations to go beyond revenue generation and focus on the actual business.

Blockchain in Manufacturing

Blockchain is the technology that is being used by cryptocurrencies. In case of blockchain technology, transactions are recorded on a public, distributed ledger. It is deemed to be more safer and faster and it is now being tested for many industry use cases including finance, health records etc.

It has practical use cases and various new applications of the technology are continuously being introduced. As per a prediction, 10% of the GDP would be contained in the blockchain after 2027. This technology has found its attention in finance industry, but the interest in blockchain technology in the manufacturing industry is gathering steam across countries. There are many start-ups that have started analyzing the use of this technology for supply chain management and auditing. There are various practical use cases that are tested for joining blockchain with IoT and 3D printing to ensure smarter manufacturing processes.

Way Forward

In the manufacturing sector India has become an attractive hub for foreign investments. Various brands have been looking to establish their manufacturing bases in the country and it is expected that there will be a significant hike in the number of entities in the manufacturing sector. India can make giant leaps in manufacturing in the coming years by integrating, monitoring and developing a conducive environment for the industrial development.

Regulations Applicable to Manufacturing Sector

Manufacturing has emerged as one of the high growth sectors in India however it has been subjected to various regulations such as follows:

• Factories Act 1948;
• Industrial Disputes Act, 1947;
• Trade Unions Act, 1926;
• Employees' Compensation Act, 1923;
• Employees' Pf and Miscellaneous Provisions Act, 1952;
• Minimum Wages Act, 1948;
• Payment of Bonus Act, 1965;
• Apprentices Act, 1961;
• Maternity Benefit Act, 1961;
• Payment of Gratuity Act, 1972;
• Child Labour (Prohibition And Regulation) Act, 1986;
• Shop and Establishment Act;
• Equal Remuneration Act 1976.

Apart from the labour and employment regulations applicable to manufacturing sector as specified above, environmental regulations need to be consciously adhered to as well. Some of the comprehensive list of legislations that is applicable are as follows:

• Water (Prevention and Control of Pollution) Act, 1974 (Water Act);
• Air (Prevention and Control of Pollution) Act, 1981 (Air Act);
• Environment (Protection) Act, 1986;
• Wild Life (Protection) Act, 1972;
• Forest (Conservation) Act, 1980;
• Public Liability Insurance Act, 1991;
• Biological Diversity Act, 2002;
• National Green Tribunal Act, 2010.

Licenses applicable to the Manufacturing Sector

The type of licenses applicable to the manufacturing sector may vary as per the type of activity to be carried out. Therefore if you run a business under the manufacturing sector, your obligations may vary depending on the goods you produce. There are different clearances that has to be obtained from different authorities of the respective state where the manufacturing activity will be carried out.

Broadly you will require the following licenses/registrations:

• Factory License;
• Environmental Clearance and NOC;
• GST Registration;
• MSME Registration;
• IEC License;
• Shop Act License.

Statutory Compliances for Manufacturing Sector

Statutory compliances should be adhered to by entities under Manufacturing Sector. As manufacturing sector involves large number of workers, employees etc. hence it needs to comply with various regulations and requirements as mandated by the authority.

In the manufacturing sector, the entity must comply with various labour law legislations as specified above and file various types of returns in compliance to the regulations. Further they must also obtain all the necessary environmental permits in order to set up an entity under manufacturing sector in India.

Some other forms of statutory compliances includes the following:

• Internal and management audits;
• Enterprise risk management;
• Preparation of Standard operations Manuals;
• Preparation and filing of commercial documentation;
• Reporting to the regulatory authority;
• Company law compliance.

We assist industrial manufacturing companies to navigate through the present dynamic landscape and deploy advanced solutions which offer innovation and ensure profitability. Through our digital consulting and analytics, we deliver solutions that helps manufacturers to provide value to their customers.

We offer industry specific solutions and services to our industrial manufacturing clients which helps them to get improved visibility in their traditional supply chains and optimize processes. This ultimately leads to reduced costs, improved productivity process transformation and more remarkable customer experience. With our expertise in the digital technologies, customers stay ahead in today's competitive marketplace.