Manufacturing: A flurry of goodwill and deficit of will

Reinventing the business model is the mantra to usher in neo-industrialisation in regions looking to become more competitive and trendsetting.

Business history is replete with instances of  companies vanishing, and industrial hubs dissolving into nothingness even as new companies and the hubs which nurture them use the benefits of technocracy to flourish. 

Great industrial hubs are built on the positive intersection of big capital and inspiring labour, not to mention a latent sense of purpose -- not just the template of job creation, but to survive, thrive, and ultimately, lead the pack.

Years of labour unrest have taken the toll on manufacturing industry in Karnataka, and the crown jewel has been tarnished to an extent.

The only saving grace is the strong manpower and talent pool willing to relocate to Bengaluru no matter what the city’s drawbacks are. 

For decades, Bengaluru’s battered roads, clogged drains and choked roads have only fuelled the determination of a harassed populace and the companies employing them to grin and bear it, toil on, even as the manufacturing rainbow never really recedes, or approaches. But it has been a dream worth chasing.
 Karnataka’s faith in Bengaluru, which many argue is misplaced, has not been matched by the latter’s faith in the rest of the state.

The list of miffed companies who have decided to leave Bengaluru or might be planning to — Parle, Hero MotoCorp, Vedanta, Bosch — does not contemplate relocating to other locations in Karnataka.

Instead, neighbouring Andhra Pradesh led by pragmatic corporate ‘raider’ N Chandrababu Naidu, not to mention a host of others, are welcoming these companies with open arms. 

A UK businessman visiting Bengaluru a few months ago noted that the lack of co-ordinated programming for traffic lights to match varying traffic densities will worsen the big choke afflicting Bengaluru’s highways. 

Choked roads and highways are not a new reality for the city populace, who fondly refer to themselves as ‘Bangaloreans’.

For long, the world knew of the city’s existence from former New York Times journalist Thomas Friedman’s coinage “Bangalored” — a reference to jobs being outsourced at cheaper rates to the South Indian city from companies situated as far apart as Tokyo, San Francisco and Paris. 

“Highways?” scoffed the UK visitor.

 “I would call them low-ways. You can’t get anywhere in a hurry. You keep buying new cars, but don’t ask if you have good roads to drive them on,” he shrugged.

Now, what?

For long India’s Silicon Valley, and aspiring Silicon Valley of the world by 2020, the city had concluded Bangalore ITE.Biz, India's flagship ICT event, in association with CeBIT India week.

As a barometer for investor interest, not to mention, perceptions of manufacturing companies, things didn’t look too rosy. 

The waning enthusiasm and depleting footfalls at Bangalore ITE.biz was barely compensated through some well-timed piggybacking on the concurrent CeBIT show.

Critics say that it is high time Bengaluru IT companies, along with the state and central governments, undergoes an introspection to plug loopholes and initiate proactive civic management to place the city on an aggressive growth trajectory.

It is clear that harping on outsourced IT muscle and job creation magic effected by a smattering of SMEs and auto component companies, not to mention, global reach and cost arbitrage, alone will not take the city to the next level of innovation. 

State officials do agree that services alone can’t call the shots in any industry, leave alone having a clear gameplan to achieve the dream of manufacturing facilities studding the Karnataka landscape.

Nobody has a clear idea yet on how equitable and even growth of manufacturing industries across the state can be achieved, though the dozens of talkathons on a weekly basis by industry bodies leave no stone unturned on good intentions.

Ditto, any reference to equitable growth of industry has officials citing the government’s latest brainchildren — a new industrial policy and an IT policy christened ‘i-4’ announced a few months ago, which still haven’t found their delicate feet in the soil of implementation.
Silicon Valley?

Insiders at Silicon Valley, famous for its startups regularly sold for billions, and a high-visibility showcase of American innovation, are jittery that the ideas machine is slowing down. 

But the unique US business model where universities incubate the business ventures of smart students before they write their final exams, or second their best graduates to top research jobs with companies, is set to always keep Silicon Valley’s brains trust intact.

Locations like Bengaluru or even Chinese manufacturing hubs like Guangzhou, Tianjin and Shanghai have fewer advantages.

And, Bengaluru can’t hold a candle to the technical chutzpah and much maligned, but rarely surpassed productivity indices which the Chinese workforces are capable of.

With the emergence of other IT centres around the globe and the IT business model morphing down the years from services to products development, cloud computing, mobility, Internet of Things (IoT) and Big Data, there is no other way for Bengaluru but to reinvent its industrial and innovational foci on multiple fronts.

Understandably, the politician’s perennial cavilling about inheriting the ills of previous governments is absent here.

“The success story of multinational companies operating in Bengaluru goes to indicate the tremendous confidence that the industry has in the government and the people of the state,” says Karnataka Chief Minister Siddaramaiah.

Siddaramaiah reassures the IT industry that the state government will not lag in providing necessary infrastructure for their growth and expansion. 

The state government and the Karnataka Industrial Areas Development Board has assured entrepreneurs that completion of the first phase of land acquisition for a 2,072 acres Information Technology Investment Region (ITIR) is imminent.

“The ITIR, when completed, is expected to bring in investments of over $20 billion, create 1.2 million direct jobs and 2.8 million indirect jobs. The annual revenue generation is expected to be over $40 billion as per estimates made through a consultant study,” says Siddaramaiah.

In other more cynical circumstances, government officials advocate the need to look “beyond Bengaluru”. A secretary level bureaucrat points at the pathetic power situation which will necessitate parallel migration to Tier 2 and Tier 3 cities.

Has invention become the mother of necessity for a change? “No. It’s the only way to equitable growth,” he says, as he deftly evades queries on the numerous power cuts Bengaluru endures on a daily basis.

Captive power facilities

Ask Infosys which threatened to pull out of an IT Park project in exurban Jalahalli last month on the plea of adequate infrastructure not being provided by the government.

Government sources respond, “We wanted them to have captive power facilities and make their own arrangements for transport. They could well afford it. How much hand-holding should the government do, besides facilitating quick clearances and prompt availability of land. We did both and they wanted more. And, we buckled.”

Are Infosys, Hero MotoCorp and the likes of Bosch voting with their body language?

No, says Karnataka IT Secretary Srivatsa Krishna as he questions the media’s motives in what he calls “speculation” on the IT industry in Karnataka planning to migrate to neighbouring states.

“If the IT industry was going away would CeBIT be coming all the way from Germany and settling in Bengaluru? They could have gone to Delhi, or Mumbai, they could have gone to Hyderabad, yet they choose to come here,” he said.

Comparing IT exports, investments and job creation figures of Karnataka with Andhra Pradesh, Telangana and Tamil Nadu, Krishna said “.... our competition is only with Silicon Valley of United States”.

Well said, responds industry, but when can we get the manufacturing engine going?

Kris Gopalakrishnan who chairs Karnataka Vision Group on IT, a newly minted body to take industrial policy forward, says the momentum should not be lost. 

“We need to continue to maintain the momentum, this is not the job of the government only, but also of industry, academia..., we must sustain this leadership,” he said.

“We know 50 per cent of jobs around the globe are created by companies up to 5 years old. But in Bengaluru, we have the problem of the IT industry not involving itself in long gestation research projects which have larger impact on society,” Gopalakrishnan said.

Even so, Bengaluru’s innovation potential rests on a bedrock of research and development centres and well-run PSU companies. 

The city has slowly moved towards manufacturing with the setting up of new automotive, aerospace, pharma and engineering companies. 

Yet, the question remains if it can spin that model to further the development of Bengaluru as a manufacturing hub.

The ball is in the court of the bright scientists in corporate and government R&D establishments, PSUs and corporates.

The government must play the role of a honest broker.