Sustainable Industrial Growth Paper YPC-1

8/3/2019 Sustainable Industrial Growth Paper YPC-1

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Sustainable Industrial Development for Inclusive Growth Challenges ahead

YP Chawla Hd. Energy Sector & Skill Enhancement Initiative - Apollo Tyres- Apollo Industrial Education Centre

Abstract: Two decades ago (1991) Economic reforms process was launched andIndia now stands transformed to a great extent. The Sustainable IndustrialDevelopment reconciled with Greener technologies and the Inclusive Growth arethe big Challenge. These are on the top of new wish list- the Indian Core Industryfaces today. The Current Turbulent Global Economic Environment In India,coupled with shortage of Skill Sets for the enhanced capacities, renovation of thePlant and Machinery with newer technologies, current low level of Automation

levels in the Industry, and the low Technology levels of Medium, Small & Micro scale (MSME) Industrywhich provide inputs to the Core Industry, are in turn are arresting the Growth Sustainability of the CoreIndustry.

Todays Environment, has set in the fears of a global recession sparked after downgraded Japans &

USs credit rating coming on the heels of a debt crisis in several European economies, civil strife in WestAsia and North Africa, with Indian youth getting restless due to Corruption. In addition to these, India isalso struggling to control inflation by tightening monetary policy, which potentially is hurting the growth.Expansion of Core Industry in India requiring Absence of healthy Land acquisition procedures by Industryand the Govt. with new land acquisition policy likely now for Inclusive Growth has made it morechallenging.

It depends on how quickly or how dragged out the whole process is; the more dragging out the Industrydoes, the worse it is going to be. The World today being a Global Village, the net effect in terms ofoutcome for individual Industry, depends on how the Industry handles it and makes a best of it. Theenhancement of Skill Sets updating the Technology, Renovating the Plant and Machinery , makingproduction most cost effective by adding automation, uplifting Productivity, and, making the environment

surrounding the core Industry for Inclusive Growth when it comes to developing the MSME supporting theIndustry or People around the Industrial Land.

Tags: Sustainable Industrial Development, Inclusive Growth.

.Analysis of the Industrys Growth,(having one of the core Sector onthe canvas) with in the parametersof the improvement of businessprocesses & efficiency of theorganization has been considered

for sustainability with outdestabilizing the GlobesEnvironment balanced with InclusiveGrowth. The Holistic approach of thecomplete value chain has been brought out for consideration by theCorporate and the Govt. followed by the Macro Economic Parametersbackdrop; we are in today, including enabling policy covering landacquisition and the environment.

And we need one more push, to take our giant economy further,after the 2 decades of 1991 Economic reforms, when the IndianIndustry Captains are on the thresh hold to make Industry Sustainable and help inclusive growth.


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Energy Sector One of the most important core sector and the back bone of Industrial Growth facesadministrative, technical and economic inefficiencies, transcending the entire value chain - from Coalmining to Power generation to Trained Human Resource , are slowly and steadily eroding thesustainability of the Indian Energy Sector. Given Indias objective to increase coal based generationcapacity from about 80 GW today to about 300 GW by 2032 is facing coal shortages and theirreversibility of the loss of coal resources that cannot be recovered is to be minimized wherever

possible to ensure long term sustainability of the Coal Linkage and availability of the Power Plant. Anoveremphasis of open cast mining since the nationalization of the Indian coal industry has meant thatIndia has rendered some of its coal resources un-recoverable. Ideally a ratio of 30:70 or not muchvariance from 40:60 ratio of underground to opencast coal production must be maintained for fullyutilizing available coal resources against the a deplorable rate of 10:90 as being practiced now. This10:90 is a by-product of a policy that prioritized economic growth and electrification over sustainabledevelopment of Indias coal resources.

The lack of efficiency incentives in the sector promotes inefficient use of the non-renewable coalresources of India.Further, the Energy sale pricing, because of Political Compulsions (Voters Switch) forces Power Sector

to loose an avg. of 0.78 paisa (2008-09) that State Discom has to bear and still a deficit of 0.33 Paisa.This non sustainable situation is forcing State Govt. & State Utilities together loose Rs.68,000 Crs. (2010-11) to Rs.116,000 Crs. ( 2014-15).Now, the International market dynamics is forcing Coal Mine Owners and Suppliers of 80% of the totalCoal being imported into India , to hike the Prices.Power Sector, has no option ,but to further improve on Specific Fuel Consumption, efficiency, automateitself, Renovate and what all, to make it sustainable in the current compulsions.

Similarly Steel Sector is facing Challenges of Poor Gd. Iron ore in India, high costCoals and Older Steel Plants needing Renovation.

The road / rail Infrastructure to connect the Power Plant & Steel Plant toDomestic Mines orPorts to connect the

overseas Coal mines.The IndustrialDevelopment to beEconomic, Viable &Bearable CostConsideration, Taking

care of the Employment - SkillEnhancement taking

care of Social aspects,Technology Up-gradation, Renovations

are the options to reduceCapacity Enhancement Costs and be efficient to meet the EnvironmentConsiderations. Thus the Challenge for Sustainable Development is to takea holistic approach for the complete value chain in the current EconomicEnvironment.

The inefficient tax erodes the competitiveness of Indias manufacturingindustry which in turn negatively impacts Indias growth prospects.

The Economic Environment: Development and Growth of Core Industry normally follows the GDP

trend line with some exceptions of importance a specific sector receives, at any given time. The GDP

trend line is on the dip. Recent Projections of Indian GDP have been projected as per the graph.

Steel Sector might be enjoying a cozier trend as of now because of Japans rebuilding after theearthquake, is generating extra demand for import of construction-related cement and steel thus making


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our Eastern ports turn busier. The US economy is softening even as Europe continues to struggle with itssovereign debt crisis and Asian manufacturing growth is cooling off because of tighter monetary policiesby regional central banks that are fighting high inflation. Japan is tightening its belt to improve financialfundamentals .In India, RBI's last monetary policy statement compared the current rates of core inflationwith the average non-food manufactured product inflation of 4% over the last six years. Core inflation islikely to stay well above that 4% rate.

The metrics could go lower next quarter, said an expert. The indication is that a slow-down is gettingvisible. The demand in interest-rate sensitive sectors will be hampered going forward. The next quartermay be worse. experts feel. Even though , revenues of Indian firms continued to grow in the first quarterof fiscal 2011-12 (April-June for most Indian firms), but high interest costs and commodity prices , rawmaterial prices, pushed down profit earned per rupee worth of goods sold, to the lowest in at least 24quarters, although trend of Raw Prices has already beginning to reverse. Accordingly, Analysts predict abetter showing by the companies towards the end of this fiscal year, only if nothing else goes wrong.

In this Economic Scenario the IndustrialDevelopment: needed for alleviating poverty byfostering productivity and growth -key elements increating productive employment and generatingvalue added income and making a significantcontribution to the eradication of poverty is anAgenda that any Government will have on its anvil.It is a combination of factors--including persistentlyhigh inflation; higher cost of capital, cut in the ratioof fiscal spending to GDP, weak global capitalmarkets environment and slow pace of investment-may cause a slowdown in growth.

To make the Industrial Development Sustainablemeans using resources no faster than these can beregenerated it and releasing Pollutants to no

greater extent than Natural Resources can assimilate them. Vision 2050 Sustainable Development (SD)focuses on setting a new agenda for business; i) Green Economy :ii) a transformation to address climatechange and multiple crises; and iii) Conserving Water - the new challenge for the 21st century.

Sustenance in Consumption leading to Greener Technologies: There is an increasing pressure on non-renewable resources (coal, petroleum, copper, etc.), and increased challenges on sinks (ozonedepletion, deforestation, dumping of solid wastes, etc.). It is argued that the Throughput of the worldeconomy has reached the global biophysical limits (eaten away by Developed World). Yet, it is neitherethical nor efficient from an environmental point of view to expect the developing countries to cut or arresttheir industrial growth, which has the potential to absorb a large and growing population. In the future,however, more growth for the poor of the developing world has to be balanced by negative throughputgrowth for the rich thus balancing the economic, social and environmental aspects of sustainabledevelopment.

Continuing on the path of Greener Technologies, the Customers now prefer Green Products: Industry isnow following a path Consumer Product track having a concern for Environment. Accordingly, GlobalReporting Initiative (GRI) has been initiated. GRI helps moving the Industrial Product Industry on theGreener Technology Path .GRI now at G3.1 version (launched on 23 March 2011) includes expandedguidance for reporting even on Human Rights, Local Community Impacts (Inclusive Growth), andGender. The Global Reporting Initiative (GRI) - a Multi Stakeholder network-based Global organization(UNEP, OECD etc.) produces a comprehensive sustainability reporting framework that is widely usedaround the world. GRIs core goals include the mainstream of disclosures on environmental, social andgovernance performance covers People (Social), Planet (Environment) & Profits (EconomicPerformance) thus moving to Global Environment Sustainability. GRI has three minimum reporting Levels


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A, B & C at 49, 22 & 10 out of a total 79 indicators. GoI having also committed on the World Forum to cutdown Co2 emissions and is putting pressure on the Core Sector to go to greener operations. Industryseeks Government Backing to De-Carbonize existing Economy.

Renovation / Up gradation of Technology in Development and Growth Path: The experience ofleading industrialized economies shows that innovation and technological up-gradation, plant renovations

and changes are key elements in the industrialization process at lower costs and hence countrysdevelopment. Updating the technology is one of the paths to an Industrial Development, realizing largerproductivity gains from the adoption of updated technology. A pre-requisite for the successful use ofupdated technology, and the learning processes associated with it, is Research and Development. This iscoupled with the know-how transfer to the Plant Professionals. India - a Technological follower is mayhave to concentrate on the adoption, adaptation and utilization of industrial-technological knowledgepicked up after satisfying the clear traits of the same in the International arena where the same hasshown its results. The Technology updating offers a foundation on which India can base its technologicaladvances and include, albeit limited, innovative activity so far.

Innovation a Path to Industrys growth & hence the Development: An unreasonable manchallenges the logical answer, Why should you write with only a white chalk? Why not with blue or black

or red or green? and comes up with the brilliant idea of the white board which is suited for writing withany color.

An optimist invented an Aero Plane, while a pessimist (read: dissident) helped put a parachute there.Had there been no dissidents, there would not have been any safety devices, no security departments,no defense services, no emergency lights, no standby arrangements and no what not?

Challenging accepted things has been going on ever since the history of mankind. However, it has beenhappening occasionally just like that. Now it is time that Industry consciously does it and even,accelerates the process. Innovative Business Process including Lateral Thinking - a creative, freshapproach to problem solving and to thinking in general by approaching problems indirectly at multiple,diverse and unorthodox angles instead of concentrating on one approach at length. Trying harder in the

same direction using the same approach is less useful as changing the direction and /or the approachneeds to be adoptive.Steering Industrial Development alonga Sustainable Path: Investments(so areFDIs) play an important role in Industrysdevelopment in Core Sector. FDI intoIndia have contracted by 31% in 2010 to$24.6 billion, even as inflows intodeveloping countries rose by 12%,according to the 2011 World InvestmentReport of UNCTAD. Consequently, India'sglobal ranking fell to 14th from 8th a year

ago. The report cited macroeconomicconcerns such as a high current accountdeficit and inflation as well as delays inapproving large FDI projects as contributing to the decline.

Outward FDI from India has also contracted by 8% during 2010. This is a concern of the GoI.

GDPs Growth by Industry is as per the chart shown.

Governments Role in Steering Sustained Development: is to formulate a National vision with theinvolvement of Professional Groups like IIPE (having no profit agenda), Industry leaders, to achieve aconsensus and unite the key stakeholders of society behind such a vision, as well as, eventually, to

create the conditions for unleashing the dynamism of the Private sector in achieving that vision andmaking the enabling Industrial Policy In development.thinking,


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The Government Institutions, Professional Groups & the Private Sector are required to work jointly, if thegoal is to promote and sustain Industrialization and growth effectively. In areas where markets failpredictably, public policy has to step in. Prominent among such areas, where public intervention isexpected to enhance welfare, are those to do with the creation as well as the diffusion of knowledge andinformation. It is the public-goods characteristics of all kinds of knowledge that are at the roots of market

failure and thus provide a rationale for policies to correct it. Another broad field for policy-making is that ofbuilding institutions required for and conducive to sustaining and accelerating the development ofindustry.

Indian Industrial Policy is expected to aim at sharp cranking up its manufacturing base to help providejobs to 100 million young people who will join the workforce by 2025. The Enabling Policy also takes careof:

Rationalization and simplification of business regulations to promote investor friendly environment. Creation of world class infrastructure to assimilate technology i.e. green technology. Cleaner and Lean Manufacturing. Capacity building and training (CBT), skill up gradations. Creation of simple and expeditious exit mechanism for closure of sick units to comfort FDIs. Incentives for equity partnerships or venture capitalist in manufacturing hub to attract Capital.

The new policy will have special emphasis to make India the workshop of the world, especially in theemerging green industries such as solar power

Re-look Requested to Govt.: Effective Policy & Regulatory Environment Legislations, regulations, Clearances, Incentives need a

re-look at the Govt. level in terms of Ash utilization by Power Generators, Power Lost inTransmission.

Matching the Mined resources like Coal, Iron Ore, Copper etc. needimprovement in Mine Automation, Safety , Productivity Improvement,thus improving FuelSources for PowerGeneration, In additionhelping Industry buy upCoal , Iron Ore

Resources abroad etc. Road and Shipping Infrastructure Improvement for timely

delivery of large equipment.

Smarter Grids Policy & Regulatory Interventions,

Renovation Technologies , Accelerated powerdevelopment and reforms Program Measures for greater efficiency

With the emergence of New Process technologies thatreduce the length of process chains, the possibilities of efficiency in resource use are enormous inrespect of improvements in the efficiency of resource use already achieved in industrialized countries,and by adapting them to local conditions could not only reduce environmental costs but also "stretch" theresource base.

Challenges & Opportunities for Industrys Growth in Current Economic Regime: The last Economicdownturn (2008-09) had a dramatic effect on the global GDP growth rate. Some of the globalcorporations had an even gloomier experience, with their average top line growth nose-diving, Corporate

growth hitting harder than GDP growth, somewhere, because government spending increased,dampening the effects of falling private investment and consumption on GDP.


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Amid the gloom and doom, the Industry outperformers worked on two or more of the three

drivers of growthPortfolio Momentum, M&A, and Market share gain-stood out as relative winners. Inany developing country, which is hungry for construction, infrastructure and industrialization, the Coresector is possibly the most crucial, Steel & Cement needing a lot of Energy. Indeed, when the recentdisappointing industrial growth figures are decomposed, we discover that only steel is propping up the

IIP. Without steel, growth would have been lower even than it was. Yet the industry is suffering massivesupply side constraints. Given the Corporate commitment, the Challenges become Opportunities.

Challenges of Energy Sector for Sustained Development: Transition involving the billions of peopleworldwide with no access to it, the level of energy poverty in the developing world and its importance asan input to the Core Sector requires focused global action. The development of a sustainable, long-termsolution to meeting the worlds energy needs is a defining issue of our time.

Energy is linked with key global challenges in the world such as poverty alleviation, climate change, andglobal, environmental and food security. Worldwide, 2.6 billion people rely on traditional biomass forcooking and 1.6 billion people about a quarter of the human race do not have access to electricity toanswer our concern for Inclusive Growth. The goal is to find an answer to a number of constraints

affecting the performance of small and medium enterprises (SMEs).

In turn, it needs to focus the areas to help address technology, quality or environmental issues, through acomprehensive package of services; from energy efficiency and water conservation to cleaner productionand lean manufacturing etc.

Facilitating Sustainable Industrial Development by providing a Platform where business and industryleaders, professionals, Managers, Engineers and Entrepreneurs learn, share and challenge each other,by working together collaboratively, utilizing integrity, intelligence and innovation is one way forward ,which is being met on a forum like this.

Core Sectors Collaborative Approach: UN in its Millennium Goal refers Global Co-operation for

development. Let it start as integration in the Industrial hubs like Korba, to build industrial capacities canbe mutually offered through technical cooperation between these sectors or with the support of SkillEnhancement Organizations. Such Cooperation can take many forms, covering areas ranging frominvestment and technology promotion to Productivity, and Skill Enhancement in various fields including inthe Industrial Automation and so on.

Inclusive Growth is a Pull up (not a passive), not Trickle-down, Strategy for Removing Poverty, and canbe covered through added Revenues (GDP) to Support Anti-Poverty and Social Agenda. High ElectronicConnectivity today has made the Peoples Power more than the Govt. as demonstrated by Annasagitation in India & Peoples Power in Middle East & North Africa.

Poor People in Rich Lands covering mining area. With acquisition of rich mine areas the population

surrounding these places are getting exploited and in turn become Naxalites. Immense challenges facethe mining sector in India of how to ensure ecological security together with inclusive growth. The Govt.


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Policy & the Industry needs to address this issue appropriately. Economic gain vs. social andenvironmental loss: these are diametrically opposing aspects. They necessitate a serious rethink of thepolicies that govern mining in India today. Mining is a temporary land use and economic activity, but thereis nothing temporary or small-scale about its impacts. The sector exercises long-lasting environmentalimpacts throughout its lifecycle during prospecting and exploration, while opening and operating themines, while transporting minerals and ores, during closure of mines, and even after the closure. Unless

it is meticulously planned and thoughtfully executed, mining can destroy land and all the resources that itholds, and degrade the quality of life of people who work and live in the area. Rethinking Globalizationbased on the Economics of Indonesian Economic Development has set every one re-thinking.

Skill Enhancement: The Industry can sustain the Sustainablegrowth for a long term. The Agriculture sector has to be mademore effective and in turn the human assets in Agriculture sectorneed Skill Enhancement to be shifted to high growth IndustrySector. Forthcoming Industrial Policy is also emphasizing higherGDP contribution from Industry. There is less to fear fromoutside competition then from inside inefficiency, miscalculation,lack of knowledge. The Industry needs to beat competitors with

the knowledge edge, so have to enhance the Skill Sets of thestaff! A person who graduated yesterday and stopsstudying today is uneducated for tomorrows technology.Incidentally Skill shortage is becoming a Global

Phenomenon.

Skill Gaps in our Engineers from Campus need a smooth transition through Skill Set improvement andtake on the challenges to handle todays technology and not the conventional technology still beingtaught in our number of Colleges.

There is an increasing risk of India becoming Old than becoming richer. However, there has beendelayed realization to this effect, in India to properly educate its workforce when more than half of the

population is under the age of 25. If India does fail in this area, will it then be left with a large, potentiallyrestive pool of unemployable youth?

Interestingly, people in the age group of 55-64 are still interested to work. The Ma Foi Randstad WorkMonitor 2011, which reviewed the readiness of employees to change jobs, found that about 80 per centemployees voiced a readiness to work beyond the age of retirement.

They need to be sent on Vacation for Vocational Training to update them for todays technology.Industrial Automation: Offers Productivity Improvement in case of Repeatability, Quality Control, WasteReduction, and Integration with Business Systems, Reduction of Labor Costs, Faster Cycle Times,Improved Workplace Safety, and Remaining Competitive in Global Economy etc.

India may continue to be one of the more resilient economies in the world, but it is safe to assume thatthe evolving crisis in the Western economies will not leave it untouched.

Analysts believe that, Indias emergence as a superpower will show that it is possible to lift millions ofpeople out of poverty within one generation while embracing pluralism, a free press and a vibrantmultiparty democracy. Most analysts predict that, over the next two decades, India's GDP will grow at afaster pace than China's. As the world's fastest-growing large economy on a sustained basis, India's risewill put to rest the idea that a command-and-control political system is the only viable route to rapideconomic growth and that democracy is somehow antithetical to rapid economic growth.

Studies also suggest that the prospects are high that, by 2025, India will likely emerge as one of theworld's least corrupt developing economies. While widespread corruption is a reality in almost alldeveloping economies (as well as some of the developed ones), India is one of the very few developing


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economies with a free press that continues to be vigilant and merciless in exposing the corruption. It isvery likely that a vigilant and free press will ensure that the likelihood of getting away with corruption willdecline rapidly- with salutary deterrent effects.

Looking ahead, it is logical to infer that the United States & Europe will, in the years ahead, become moreinvolved with revamping their domestic, economic and social institutions before assuming more

responsible role in global geopolitics in globalize and highly integrated world. India has a bigger role toplay so is our Core Sector

Conclusions: Maintaining High Growthcontributors momentum the Industry, on the path of SustainedDevelopment is a joint effort of the Govt., Industry, Regulators, Enforcers and the Legislators. TheIndustrial Growth has changed the face of India and has contributed a bit (a bit) for the Inclusive Growth.More needs to be done. The Challenges of the present time need to be converted into Opportunities forfurther growth which Indian Industry Leaders has shown time and again by M&A overseas, CSR,Technology infusion and so on, but more needs to be done.

Industry Managers have now to be multifunctional and have to take into the everchanging ground realities of today. The High land prices, concept of Annuity,

Training of the displaced persons for Inclusive growth, high cost of capital andcompulsions of Raw Materials. The Technology Up-gradation, Modernization& Modification of the Existing Assets , Skills of Manpower ,Cost Reductionfor Projects and Production

Suggestions that may march up to Recommendations:

Industry to be self responsive for

Deploying Greener Technologies for saving the Environment before it withers away.Preserving the present to savor the Future.

Bridging the awareness gap (Skill Enhancement) at all levels enabling meaningful EnergyConsumption, not restricting it to Energy Auditors & Energy Managers.

Pushing Industrial Boundaries, innovating alternatives. Policies to include Inclusive Growth. Collaborative approach in the Industrial Hub, Reflecting Together. Involving Skill Enhancement Organization for Diversified Skill sets. Fostering the Work Force gearing up for achievement. Utilizing, the Skill sets of the persons nearing retirement after enhancing the skills to

match todays technology.

Government to aggressively support: Driving Development, transforming future. Effective Policy & Regulatory Environment Policy of Ash Utilization by the Developers.

Inter Govt. Dialogue for Resource acquisition overseas. Facilitating Sustainable Industrial Development through Providing Platforms for Inter

Industry Dialogue amongst Core Sector players.

Developing Skill Enhancement Players under National Skill Enhancement Mission Focusing on development of Infrastructure- Roads, Rail & Ports. Reduction of Power Losses in Transmission. Helping the Power Transmission Companies, Distribution Companies and Generation

Companies to get reasonable returns, avoiding heavy Political returns by Free / CheaperPower

Incentives for Energy Efficiencies Incentives for Industrial Automation. Enabling Development of Smart Grids.

Growth

Costs


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Accelerate Power Development and Reforms Program Incentives for developing Skill Enhancement Centres To fast track Rs. 25-30 Core projects, giving them full support on execution in order to kick

start an investment cycle. To accelerate the pace of policy reforms which have already been in the pipeline for some

time Strong commitment and a Systematic (strategic) planning needed to revive poor people of

rich mining lands.

Professional Organizations (Like IIPE) to be more active:

To help set up IIPE platform at various Industrial hubs. Help developing a cross Industry collaborative approach at

these Hubs

About the Author: B.E.Tech. , MBA (Fin), PGDPM & PGDMM from DelhiUniversity. Export Mgmt. from Oxford.

Over 4 decades of Experience in diversified sectors covering Energyincluding Solar & other Renewable Energy, (Ex. BHEL), Water Sector, Agriculture, Infrastructure.

Widely traveled abroad & in India including Foreign Postings.

National Jt Secretary of IIPEContact:[email protected]; [email protected]; 98107-08707

Written Papers on diversified subjects-Energy Sector Conventional, Renewable,Zero Breakdown Maintenance in Steel Sector. Waste Management in Steel PlantsIron Ore Beneficiation; Waste Management; Irrigation Sector; Water SectorMaintenance Practices in Global Economic Melt downChallenges of Zero Breakdown Maintenance,Role of NGOs in Renewable EnergyBusiness Excellence through Human Asset Management Building Competence etc.

Disclaimer While every effort has been to taken to ensure that the published information is authentic &reliable; and has been used by the author very successfully, the author or the company undertake noliability for any damage, accidents, financial losses or expenses arising from the this paper or a differentbehavior of the economy so described.

Sustainable Industrial Growth Paper YPC-1

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