The number of MSMEs in India has boomed in recent years. According to government data, India has around 6.3 crore micro industries, 33 lakh small enterprises, and 5000 medium enterprises. The Department of Scientific and Industrial Research in India revealed that the total production value of these MSMEs is almost Rs. 8,16,000 crore, contributing to around 40% of all production and exports in India and 30% of India’s total GDP. This paints a vivid picture of their importance for India’s export ambitions.
Recent advancements in AI and robotics have presented a new opportunity for India’s MSME sector in the form of collaborative robots, or Cobots. These robots can work in conjunction with the human workforce and scale the production of Indian MSMEs while reducing the operation and production costs. Due to high prices in the past, Indian MSMEs have been shy of using Cobots for their operations. However, this is not true anymore. Today, an MSME can buy a cobot for anywhere between Rs. 5 lakh to Rs. 21 lakh. As a result, many MSMEs in India have already started using lightweight cobots that work alongside humans to increase productivity. According to a report by McKinsey & Company, automation can increase the labour productivity in India by a whopping 85% by automating repetitive tasks and freeing the human workforce for product designing and quality control.
In 2017, Mew Engineering Works, a Jharkhand-based SME, installed 6 cobots from Universal Robots, significantly improving their production and working hours. According to New Engineering Works, they have seen a 40% increase in their production, and the deployment of cobots has enabled the SME to work 24/7 while taking a fraction of space as compared to traditional industrial robots.
As per the government’s Make In India scheme, many MSMEs strive to increase their production and export figures. However, there are some scenarios where they face many difficulties, including the skill gap in the workforce. As highlighted by a 2021 report by the Associated Chambers of Commerce and Industries, in India, 40% of the jobs available require skills that are not readily available in the market. This is another sector where cobots can be the key to significant improvements. Cobots can help automate repetitive tasks, allowing MSMEs to focus on upskilling their human workforce to fill the required roles. A study by Delloite also suggested the same. The study concluded that automation not only helps increase the productivity of MSMEs but can also result in new job opportunities in sectors like design, engineering, and maintenance of these cobots.
Many MSMEs think that automation is not the way to grow as it will only increase their expenditure. They believe that the high costs of cobots and their maintenance cost will pile up and will end up as an extra financial burden. However, studies and reports suggest the opposite. A 2022 report by the Robotic Industries Association claims that cobots can deliver their return on investment within the first two years of deployment in the case of most MSMEs. Moreover, a McKinsey Global Institute study stated that deploying cobots can result in a 20-to-30% reduction in manufacturing costs. A robot makes nominal errors, reduces waste, and decreases downtime. Each of these results in cost reduction and significant increase in production. Also, cobots can significantly decrease the number of fatalities in the workplace. In 2020, the International Labour Organisation reported that India has one of the highest fatality rates globally, which can be reduced significantly by using cobots for operations.
This, however, can also affect the price of the services and products offered by these MSMEs, which will result in a competitive landscape. Moreover, cobots can decrease the time it takes to produce a particular product or to cater a service, allowing very few MSMEs to cater to a big chunk of the market, further increasing the competition within the industry.
Although cobots are significantly less expensive than traditional industrial robots, they still require an up-front investment, which is not feasible for most of the MSMEs in India. However, government subsidies and incentives have made it possible for some MSMEs.
