MSMEs need to be made part of our resolve to overcome barriers to adopt Industry 4.0

As we shift towards automation in a rapid pace, micro, small, and medium enterprises (MSMEs) need to be made part of this transition to ensure more inclusive growth and faster poverty alleviation.

The Coronavirus outbreak caught digitally unschooled companies on the back foot. In the aftermath of the pandemic, industrial automation has seen an acceleration across sectors as it had a visible impact on operations in factories due to the fear of infections. Conversely, digital natives managed to keep operations ticking from the outset as they were conversant with the remote working model.

Indeed, digitally savvy companies have been part of the ongoing Industry 4.0 paradigm from its early days introducing automation in their traditional manufacturing and industrial activities by deploying smart technologies. Besides automation, smart business and manufacturing practices comprise big data capabilities the Internet of Things, artificial intelligence, machine learning and more.

Thank God, the pandemic only accelerated this transition as more corporates quickly realised the advantages of remotely managing industry operations backed by the right levels of cyber security. As a result, these companies kept their BCPs (business continuity plans) going notwithstanding lockdown restrictions and minimal access to their physical units.

Learning from how the digitally connected entities better-managed supply chain disruptions, some of the digital latecomers have been fast-tracking digital and automation programmes. Supported by 24×7 connectivity, automation, advanced analytics, and smart manufacturing practices, ‘acceleration’ is the buzzword in adopting norms of Industry 4.0 or the Fourth Industrial Revolution. Additionally, automation and AI-enabled tools are especially beneficial for sectors grappling with a severe shortage of workers. Some of the latter migrated to their native towns due to the closure of manufacturing units during the nationwide lockdown.

Despite multiple advantages of Industry 4.0, one crucial segment is missing the digital journey and that is the MSMEs. Significantly, they play a pivotal role in India’s economic development by driving employment, exports and inclusive growth opportunities. A silent pillar of India’s socio-economic progress with about 60 million players, the segment contributes to 45 per cent of the total industrial production and 40 per cent of its total exports. As per a report by the SME Chamber of India, MSMEs, manufacturing segment accounts for 7.9 per cent of GDP while its total contribution to GDP is 37.54 per cent and it also contributes to 30.50 per cent of services.

Most MSMEs face major barriers in adopting Industry 4.0 practices continuing with their old-world business practices and technologies based on Industry 3.0 or Industry 2.0 environments. This can be addressed by the adoption of a known standard IEC 61499 which allows for interoperability which is recommended for this segment. By eliminating much of the hard work involved with adopting automation technologies, IEC 61499 makes automation potentially universal (ensuring interoperability and portability) able to streamline processes from raw material handling to machine maintenance to finished goods and services.

Not just India, MSMEs are crucial for the global economy too where they have made sizeable contributions over the decades. In the era of automation, however, these smaller players are steadily ceding ground to larger companies because of technology, the adoption of which will help them scale up and stay competitive.

Given their role in promoting inclusive development, if MSMEs miss the global automation journey, it will exacerbate economic inequality. In addressing this issue, MSMEs need to leverage the support that the government and industry ecosystem offers to work for the common cause in overcoming these challenges.