India is well positioned to undergo its second revolutionary business transformation in three decades, becoming a hub for AI-powered manufacturing in the coming years just like it dominated the IT services boom in the 1990s.
In fact, India already possesses many of the prerequisites necessary to become an AI powerhouse. For AI to flourish, it must have the right kind of data to enable its ‘thought’ processes. India has an extensive computing and analytical infrastructure that allows for a seamless transition from Big Data mining and analytics to machine learning and the so-called digital understanding inherent in AI systems.
India also has a unique opportunity to leverage its strengths in IT talent, cost advantages, and a growing manufacturing base to become a global leader in AI-powered manufacturing. By addressing key challenges and implementing strategic initiatives, India can attract investments, foster innovation, and unlock immense economic potential.
Numbers have a story to tellÂ
AI is expected to add up to $500 billion to India’s gross domestic product by 2025 and $967 billion by 2035, according to a report. Specifically in the manufacturing sector, market study reports indicate that the market size of manufacturing AI in India is projected to reach more than INR 12.5 billion by 2028, registering a phenomenal CAGR of 58.96 per cent from 2023 onward. A Global AI Index report accorded India the fifth position among 62 countries, which, again, is a testament to the country’s immense transformative potential when it comes to AI. To be sure, the road ahead is not without its challenges. But given India’s second-place ranking in the Talent category (with half of its population under 30) the country’s young and talented workforce gives it a sound foundation. The significant advantage lies in India’s abundance of high-quality AI-trained engineers.
According to Generative AI Radar 2024 report by Infosys, India, like most of its Asia-Pacific neighbours, punches above its weight when it comes to the adoption and development of AI. Aiming to be a frontrunner in the AI race, India is set for a significant increase in AI investments. Our forecast suggests a massive 165 per cent jump in spending on general AI by Indian AI companies, reaching USD 386 billion.
The latest NASSCOM AI Adoption Index positions India as an ‘Enthusiast’ with an AI maturity index of 2.45 out of a possible four. In its report, NASSCOM highlights that 78 per cent of India’s manufacturing companies have a well-defined AI strategy and 67 per cent of manufacturing companies are already testing AI POCs or limited use cases. What’s interesting to note is that 68 per cent of manufacturing companies focus on cost optimization with AI, while 56 per cent of manufacturing companies leverage AI in production & operations.
Opportunities and Benefits
Artificial Intelligence is increasingly being used across industries in India—from banking and health care to farming and manufacturing—to improve efficiency by using the intelligence of technology and machines to perform tasks. It’s in the manufacturing sector, however, where the most profound effects of AI are occurring.
- Automation and predictive maintenance are now being driven by AI, with smart factories wielding AI-enabled robots and sensors that optimise production processes, reduce downtime, and enhance product quality. Not to mention doing assembly line tasks that could be potentially dangerous to humans.
- One of the most common uses is on the customer service front, with automated conversational AI voice bots.Â
- Besides supply chain management and automation, AI in India stands to improve operational efficiency as well. When a manufacturing concern focuses on operational efficiency, it can reduce costs and increase profitability, thereby improving customer satisfaction.Â
- Customer segmentation is experiencing an AI boost as well. Companies can understand how customers act—with trained data sets on factors such as demography, purchase history, and campaign engagement—to target and acquire the right audience.
Key Enablers and Challenges
Although the potential benefits of AI are immense in India, so, too, are the challenges that come with its widespread adoption. Foremost are the ethical and societal impacts of AI technologies. Concerns around data privacy underscores the need for responsible AI development and deployment. Also important is the rapid pace of technological advancement, which is raising questions about regulatory frameworks and workforce readiness. That’s why policymakers are now collaborating with industry stakeholders across India to establish robust governance mechanisms that balance innovation with ethical considerations. India is also investing in education and upskilling initiatives to prepare its workforce for AI jobs.
The Road Ahead
Technology has always served as a catalyst for positive change. In India, AI is driving economic prosperity, social well-being, and sustainable development in the manufacturing sector with far-reaching effects. That’s why it’s vital for a country that has already experienced a technology boom in the past decades to ensure that its people harness the power of AI today in a responsible and ethical manner. A favourable geopolitical climate is encouraging global manufacturers to set up shop in the country. Embracing AI can be the game-changer, propelling India’s manufacturing sector to global leadership.
