Technology Absorption

Sources of Technology:
Indigenous
Imported
Once a technology is imported from another country, it needs to be absorbed and
updated in accordance with the local requirements. Foreign technology may
have been developed eeping in mind or to serve:
!ifferent set of users and
!ifferent parameters such as scale of production, raw material and
components, quality standards, costs, production techniques, maintenance
requirements, social aspects including environmental and pollution
aspects, employment, etc.
It is common in many developing countries such as South "orea, Taiwan,
Indonesia, India, #aistan, Sri $ana, %angladesh, #hilippines, etc. to import
technology as a pacage.
Several of these countries have developed indigenous &'! capabilities of
varying order to absorb and upgrade the imported technologies and to achieve
technological self reliance.
Some of the countries lie South "orea, Taiwan and Singapore have absorbed
technologies predominantly for e(ports, India has done so predominantly for
local marets.
The concept of absorption differs from country to country and even from
organi)ation to organi)ation.
In India, *bsorption is generally considered as the capability to reproduce or
manufacture products according to the now+how supplied by the licensor of
technology, without really understanding the now+why of the technology.
In a country lie South "orea, now+why e(ercises to understand the ,blac
bo(- of technology have been emphasi)ed at the firm level without which
e(ports are difficult.
Technology Package
Technology is acquired in the form of:
hardware
software
related services
using the brand names
It could be for a totally new pro.ect from scratch or for further technological
requirements of an e(isting plant or for moderni)ation or enhancement of a
product/process capability.
* foreign technology may consists of all or any of the aspects such as:
#roduct !esign
#rocess or #roduction "now+how
Systems engineering
*pplication information
Tailor made equipments or their designs
Technical services regarding maintenance, safety, continued
improvements or international e(periences, etc.
Technological Dependence
Technological dependence on foreign now+how can be in any of the
following areas:
#roduct designs/standards/specifications
"now+how for assembly of products
$icensing for the use of patents/trade mars
#rocess now+how design and basic engg., detailed engg.,
production technology
0uality control, safety, pollution control and continued
assistance in improvements of technology used in the e(isting
manufacturing facilities
Supplies of hardware and proprietary equipments and their
designs
%acup assistance in guarantees, checing up drawings, etc.
1se of foreign e(perts and training of Indian #ersonnel
Operating now+how related to imported production equipments
#re+production activities lie feasibility studies, pro.ect engg. On
management, assistance in procurement of capital goods and raw
materials as well as components, erection and commissioning,
assistance in e(ecuting contracts, mareting, etc.
Adoption
*doption of a technology is a process under which the various features of the
technology, which is the sub.ect of transfer, are suitably modified, changed or
altered eeping in view the needs of the buyer. In other words, the needs of the
buyer of technology get crystalli)ed and the supplier maes suitable
modifications in the technology being supplied so that it conforms to the
requirements of the buyer as far as possible. This in essence would mean that a
foreign technology is scaled up or down or modified, where necessary by the
supplier in accordance with the requirements of the buyer of technology. Such
adopted features are finali)ed as a part of the technology pacage.
Adaptation
*daptation of technology is a phase that taes place after a technology has been
adopted and put to use in production activities/facilities. !uring this stage, a
number of alterations and modifications to suit the indigenous conditions are
made and they may relate to the use of raw materials/components manufactured,
practical difficulties in down scaling, etc. Thus the particular plant in India could
gear itself up to meet the desired capacity, production, product quality and other
related aspects as planned. The adaptation e(ercise covers both product
modification as well as production technology changes, using indigenous sills
and facilities as well as local materials.
Absorption
Technology is said to absorbed if it is fully understood, so that it is in a position
to be further optimi)ed and upgraded. Technology absorption involves ,"now+
2hy- e(ercises, basic investigations into the product and/or process and or
systems. This will require ,unpacaging- of a technology pacage. To avoid
further dependence, technology absorption requires &'! pro.ects in now+why,
optimi)ation and improvement of product/process/systems and related
equipments. Such efforts encompass design investigations, alternate raw
materials/components, modifications to suit Indian requirements, etc. Successful
pro.ects in these areas will lead to achieving technology absorption capabilities.
Optimization
*fter this understanding, further e(ercises to remove rough edges through &'!
and value engineering to effect savings in the use of material and energy
consumption, etc. both in product and processes constitute ,optimisation- of
technology.
Improvement & Upgradation
Further e(ercises to improve the e(isting products and processes by &'! efforts
of industry and other associated research organi)ations is attempted. This will
enable industry to meet the changes in technology of th product or processes.
Technology upgradation e(ercises lead to industry-s efforts in e(tending its
now+why capability to a higher range of products or in upscaling the e(isting
process/production technology or manufacturing equipment.
Important Factors for Absorption
Factors for achieving higher productivity, quality and reduced costs:
a3 Optimum utili)ation of capital equipments to bring about ma(imum
production leading to better capital+output ratio.
b3 *dequate investments for quality control, material and energy
conservation/recovery, elimination of ha)ards, which would necessitate
use of, sophisticated equipments.
c3 4inimum economic scale of production, particularly in industries where
scale factor is important in optimi)ing the operations, especially if in
larger quantity of critical production equipment is employed.
d3 Targeting and achieving international levels of performance and operating
parameters.
These re!ire !se of contemporary technologies needing large capital investments
and accompanied by sizable domestic demands and satisfactory absorption of
technology"
In scale sensitive ind!stries# lo$er the scale of operations# lesser is the level of
technology" %evel of technology is also reflected by the !se of less prod!ctive and
sometimes second&hand machinery from abroad" In mass cons!mption ind!stries#
s!ch as petrochemicals# electronic components# etc" lo$er the initial installed
capacity# lesser is the technological level" In s!ch cases modernization'(&D costs
$o!ld be heavy in order to )!mp to the ne*t generation of technology.
+onstraints in Absorption of Technology
5hoice and use of imported technology by most Indian industries have not
been at international levels. This is an important factor while establishing
scale sensitive high technology industries
The demand of products in our country whose production is influenced by
scale factors of latest technologies is generally not very large, presently
these are being met by a number of units of suboptimal si)es as compared
to international levels. This constraint increases the gaps to be bridged
through technology absorption. Industry would not be in a position either
to invest similar &'! resources in comparison with international units or
even to improve the products/processes. 6(panding the e(isting units and
establishing new units and with larger capacities tend to minimi)e the gap.
In general industry has not given adequate attention to absorption of
technology. In such cases, the firms have usually approached the
collaborators once again for renewal of earlier agreements or for new
collaboration for improved or new products and processes. There are
instances where e(isting items made with marginal process or product
improvements have continued to be supplied even after e(tensions of
collaborations. In the absence of a competitive domestic maret or where
industrial users are dictated by equipments/products based on imported
technologies, the inherent tendency to supply the same product has
continued, till the users requirements change or substantial imports of a
new product tae place. The possibility of continued access to imported
technology through further collaboration involving only nominal costs
and assured marets have desisted many Indian firms from channeling
adequate resources for absorption and improvement of imported
technology. In scale sensitive technologies, technology gaps have
increased because of inadequate absorption of e(isting technologies.