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Will manufacturing sector boom with ZED model?

Will manufacturing sector boom with ZED model?
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You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

India is trying to increase manufacturing sector’s contribution to national GDP from current 16 per cent to 25 per cent by 2025. To achieve this, it is requisite to produce quality products. The government’s new initiative to produce ZED products will help to make things easier and thereby boost India’s manufacturing growth.

The Commerce Ministry is planning to come up with ZED Maturity Model, an integrated and holistic certification system, which can account for quality, productivity, energy efficiency, pollution mitigation, financial status, human resource and technological depth, including design and Intellectual Property Rights, both in product and process of manufacturing. The MSME Ministry has launched the pilot phase of ZED Maturity Assessment Model implementation through its agencies National Productivity Council (NPC) and Quality Council of India.

The vision of the government can be fulfilled if the industry takes corrective measure to attain frugal engineering. “The government is now planning to come up with a new scheme based on the ZED model. Under this, there will be a rating mechanism for enterprises. NPC will be the implementing agency of the scheme,” says ML Suryaprakash, Deputy Director General, NPC.

The purpose of ZED mark

The ZED Maturity Assessment Model will facilitate, assess and rate SMEs based on the matrix of 50 quality productivity and environment parameters. Each parameter will have five maturity levels. An SME will be rated on a minimum of 30 parameters. There will be categories for each parameter ranging from bronze to silver to gold to diamond. The objective of ZED Mark is to provide credible recognition for MSMEs and be a quality indicator for foreign investors.

It will also help to make aware, assess, rate, counsel, handhold, re-assess and certify one million MSMEs and ensure that they rise up the ZED ladder, thus enhancing their competitiveness in the global marketplace and making them an important partner in the “Make in India” campaign. This ZED model is likely to be abenchmark for suppliers to PSUs and Defence offsets.  

The rating can be shown on e-commerce portals like Flipkart, Snapdeal and Indiamart to increase confidence level among customers. “The government is the largest buyer of goods and services – buying almost one-third of India’s GDP, and it can play an exemplary role in promoting ZED model. It is not about having schemes – we already have plethora or schemes on quality – but having a public procurement process that ensures buying of quality products not necessarily cheap products,” says Dr Sangam Kurade, Managing Director, Zuari Foods and Farms Pvt Ltd, and President, Federation of Indian Small and Medium Enterprises.

In fact, the government has a MSME public procurement policy that mandates all public sector units to source a minimum of 20 per cent (of the total) procurement from MSMEs. Kurade says, “Producing ZED products is the need of the hour as pressure is mounting from all quarters: regulatory bodies, supply chains players and consumers. Quality standards are becoming stringent in India also owing to international treaties that India is signatory of.

Therefore, whether you are catering to domestic market or international, you have to embrace ZED as a philosophy to survive and grow.” “Moreover, zero effect quality products will bring down the pollution level,” says Suryaprakash and adds, “We will be also doing the assessment of units and spread awareness about pollution. We will provide handholding for MSMEs and show them ways to improve.”

Raj Singh Rathee, Managing Director, Kuka Robotics (India) Pvt Ltd, says, “We are already in a situation where there are flaws in our existing policies, making it difficult for having zero effect on the environment. For instance, there is an ineffective ban on polybags.”

He further says, “Indian entrepreneurs are highly dependent on cheap Chinese products, which are not suitable for long run. There is a need to change the mentality of entrepreneurs. India has several infrastructural bottlenecks. There is a need to purchase high-quality and reliable machines to produce quality products. There is no single-window concept and companies usually face difficulties here.”The industry is also expecting the earliest implementation of the Goods and Services Tax (GST) so that they can do away with the completed tax structure.

Reduce wastage and grow

India cannot achieve manufacturing growth without taking steps such as reducing discharges and wastes at every stage of operation. It will enhance the environmental sensitivity of processes and can have far-reaching impact. Archana Shahrawat, Regional Head - Manufacturing Vertical, Ricoh India Ltd, says, “We need to minimise the time to get a product out in the market. The product should be cost-effective, have quality and agile design.”

By implementing “Lean Manufacturing Competitiveness (LMC) scheme,” the government has actually helped various industrial units cut down production cost and reduce waste. Under the 12th Five Year Plan, around Rs 250 crore will be invested to promote LMC scheme in 350 clusters across India. “Lots of materials lie unused in factories, we can make good use of such materials and make profit. If there is a defect, it adds to the inventory,” says Suryaprakash.

Indigenous manufacturing

Today, large manufacturing giants are setting up their base in India for producing products that are marketed domestically and internationally. The reason is India has cheap labour, land and fine talent that attract foreign manufacturers easily. Pankaj Dubey, Managing Director, Polaris India, says, “We are working on setting up a manufacturing unit in India, and we have a source base in Chennai. We have met many auto component manufacturers who are eager to work with us.”

Like Polaris many manufacturing companies like Samsung, LG and Hyundai have set up manufacturing base in India. Problems they face from component suppliers are in quality and delivery timeline. Gautam Dutta, Senior Director–Marketing, Siemens Industry Software (India) Pvt Ltd, says, “You cannot attain ZED products by using hand. You have to use machine for it. It has to be automated, so the use of digital technology is must for producing it. Acquire accuracy and precision is also vital.”

Moreover, industry experts say many foreign companies are setting up manufacturing base in India. This thing should change and there should be indigenous production capacity and growth in India. “India does not have many product companies that have global exposure, quality, and improved manufacturing capacity.

The foreign companies should not come and manufacture here but Indian companies should learn and innovate,” says Saurabh Mohan Saxena, Chief Executive Officer, ZF Hero. The ZED concept will only be successful if all bottlenecks are removed. In this way, India can achieve its manufacturing growth, increase factory output and boost economic development.

This article first appered in the Indian edition of Entrepreneur magazine (September, 2015 Issue).