The Global Robotics Revolution – India
From Mumbai to Michigan and far beyond, powerful economic and technological forces are making a robotics revolution an inevitable reality.
Over the next few weeks, we at WR will be assembling a series of articles examining how robotics and automation are advancing in different countries; the factors pushing them forward, and the difficulties holding them back. In this first piece, we’ll be examining warehouse robotics in the world’s most populous democracy, the Republic of India.
Push forward – the GST
Organising a country as large and diverse as India into a single economy has been an ongoing struggle for politicians in New Delhi for decades. But in a historic midnight parliamentary session on 1st July 2017, a huge step forward was made in that direction with the introduction of the Goods and Services Tax (GST).
This new tax has created substantial economic harmonisation between India’s thirty-six states and union territories. A federally administered, destination-based tax, the GST has made it dramatically easier for businesses in Kutch to reach customers in Manipur, and companies in Hyderabad to sell to markets in Nagpur, Noida, and Nashik.
Market integration is the Indian government’s ultimate goal. Despite having a larger population than the European Union and United States combined, prior to the GST it was much harder to send goods across the entire length and breadth of the country, so markets were limited to individual states, and much more local and isolated.
To put the current situation in contrast, the eastern fringes of Maine is approximately 4,600 km from the westernmost edges of California, and the average American container truck drives 300,000 km per year. In contrast, the northern edge of Jammu and Kashmir is 3,300 km from the southern tip of Tamil Nadu, but the average Indian container truck travels only around 55,000 km per year. Markets in America are sufficiently integrated to allow an American container truck to travel the width of the nation 65 times in a year. Indian trucks can only manage a comparable reach 17 times annually.
The GST has enabled companies wanting to sell nationwide to save both time and money. Government estimates suggest that the removal of interstate checkpoints has reduced delivery travel times by as much as 20%. Taxes on individual product sales have been estimated to drop from an average of 26.5% down to 18%, and the cost of logistics is expected to fall by up to 14%.
Faster deliveries, cheaper taxes, and a simpler regulatory regime are a perfect recipe for success for India based ecommerce-enterprises and other warehouse utilising businesses. However, bigger markets create bigger demand, which creates greater economic pressure to complete orders quickly, efficiently, and accurately. Looking ahead for India, robotic automation is the key way forward here.
Hold back – Cheaper labour
While many other markets are feeling the pressure to move towards automation because of costs related to staff, India feels these pressures far less due to its lower wages, and lower overall cost of living.
Picker’s value proposition is greatly diminished when it is demonstrated that up to 70% of picking staff’s time is spent moving between bins. Automating that part of the process represents huge economic gain.
India feels this pressure much less strongly than in many other regions. Out of the 132 countries whose cost of living is monitored by Numbeo.com, India has some of the least expensive, ranking at 130th. Out of the 77 countries whose average wage is monitored by WorldData.com, India is only ten points away from the lowest possible level, at 67th.
With these lower wage levels, Indian businesses are not feeling the pressure to invest in technologies to reduce these costs. However, as the Indian economy continues to grow and develop, this state of affairs is unlikely to be permanent.
Push forward – Made in India
Thanks to the “Made in India” initiative that began in 2014, the Indian government is making huge strides in improving and advancing the manufacturing and engineering sectors of its economy. The goal of this project has been to raise manufacturing’s presence up from its current 15% of the economy, to reach 25%.
Moves towards this goal of turning India into a major manufacturing hub have already been successful. Major global companies such as Perkins Engines, Rolls-Royce, JCB, BAE Systems, and Renishaw, have all established new bases on the subcontinent.
With new factories and new manufacturers, not only is there a huge new market for warehouses storing components and equipment, there is also an increasingly educated and technically proficient workforce. With this kind of workforce, robotic automation more possible than ever before. This combination of new customers and more capable workers makes India a prime market to watch for the further growth of robotic automation.
Hold back – Power problems
In 2017, ahead of a major visit by the Japanese Prime Minister, the Japanese ambassador to India – Kenji Hiramatsu – was quoted as saying “unstable power supply is still one of the biggest investment barriers in India”. The spread of electrical supply to all households has been an ongoing struggle for India. It was not confirmed until as recently as January 2019 that 96% of all Indian households were fully electrified.
India has an unenviable reputation for unstable power grid related problems that have not been going away. Data from February 2018 showed that power cut levels had risen by 26% to the level of nearly seven hours per month.
This kind of instability in what is possibly the single most important utility for a robotic warehouse will likely hold back the development of some forms of automated warehouses. However, it is precisely these kinds of problems that also demonstrate why flexible robotics is far superior to fixed conveyor systems. A power cut in a warehouse using fixed conveyors or other similar robotics techniques will see a complete shutdown. For flexible warehouses, the independently battery-powered robots like the Q3 can remain operational while waiting for any backup generators to take over, so your workflow is subject to less disruption. While power failures might hold India’s robotics back for a while, necessity is the mother of invention.
Push forward – SMEs
Like the UK market, India’s biggest opportunity sector for new warehouse robotics is the SME sector. Thanks to the developments with the GST, the Indian market is now a wide-open opportunity for more and more SMEs to enter into both B2B and B2C sectors that can serve the country as a whole.
A company with a robotically automated warehouse has a big headstart on long term reductions in staff-related expenses, which will only increase as India’s economy grows and India’s cost of living slowly creeps upwards. The opportunity is especially enticing given the relative slowness of India’s larger and more established market players to embrace the robot revolution.
Whereas in the west companies like Ocado and Amazon are leading the charge while SMEs catch up, in India SMEs have the option to be at the robotic revolution’s forefront. That is why companies like BigBasket, an Indian online grocery sales start-up, have invested heavily in automating their warehouses, using robotics to lower their prices and widen their margins.
The Robotics Revolution is a global phenomenon. As businesses around the world move to embrace it and learn its true potential, the need to take its lessons onboard will become greater and greater. To discover how WR could help your business reap the benefits of automation, why not book a consultation, or come and see our robots in person at our new demonstration centre.