ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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How Will Automation Affect India’s Manufacturing Industry?

Robot Apocalypse

Anxiety about the prospect of technology displacing jobs on a large scale is currently dominating academic and public debate. A number of different occupations are likely to see an increased rate of automation in the near future. However, while studies have shown that this is likely to have an adverse effect on employment, they have all used the occupation-based approach to arrive at their conclusions. A task-based approach is used to arrive at a more accurate estimate of the effect of automation on manufacturing employment in India. Employing a comprehensive data set from the International Federation of Robotics, the nature and extent of diffusion of industrial robots into the manufacturing industry in India is also analysed.

The initiation of the “Make in India” programme is an indicator of the current Indian government’s desire to increase employment in the country through the manufacturing route. Under this programme, the manufacturing sector is expected to contribute to at least a quarter of India’s gross domestic product (GDP) by 2020. However, due to the capital-intensive nature of manufacturing, employment generated by the sector so far has been minimal. The pessimism surrounding this issue has been accentuatedby the increasing amount of automation in manufacturing processes elsewhere in the world. Industrial automation is thought to have a deleterious effect on the creation of employment in different sectors of the economy, manufacturing included. This has given rise to an important debate, primarily in the context of developed countries where industrial automation has diffused manifold over a long period of time. This debate, which began in the popular press, has now been brought to the formal academic table by the publication ofan influential and highly-cited piece of research by Frey and Osborne (2013). Subsequently, the Journal of Economic Perspectives organised a symposium on “automation and labour markets” in its summer 2015 issue.1 In the wake of the symposium, a series of studies by academic economists and multilateral institutions, such as the Organisation for Economic Cooperation and Development, have also been published (Acemoglu and Restrepo 2017; Autor 2015; Brynjolfsson and McAfee 2014; Chang et al 2016; Hallward-Driemeier and Nayyar 2018).

Given this context, this paper seeks to understand the extent of diffusion of automation technologies in Indian manufacturing and analyse its effects on employment in the sector. The paper is structured as follows. The first section discusses the concept of automation and identifies the specific automation technology that we consider in the present study. This is followed by a discussion of the motivation for the present study and the significance of the issues being dealt with. The next section delineates the major research questions raised, the methodology adopted to answer them, and the data sources employed. The section that follows engages with existing literature on the diffusion of automation technologies in manufacturing. The next section reports the main findings of our analysis with respect to Indian manufacturing. Finally, the implications of future developments in automation technologies on the conclusions reached in the previous section are discussed.

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Updated On : 25th Feb, 2019
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