The National Association of Software and Services Companies (NASSCOM), in collaboration with Capgemini, today announced the findings of a research study on the adoption of Industry 4.0 in India’s manufacturing sector. The study titled. ‘India Industry 4.0 Adoption: A Case to Mature Manufacturing Digitalization by 2025’, reflects that the investments in Industry 4.0 have grown by approximately 10X in the last decade and are expected to grow to $200+ bn by 2025. 

The study shows that from comprising 5% of manufacturing IT spend in 2011, to 20% by 2021, Industry 4.0 has witnessed over a decade of transition since 2011.  Investments in Industry 4.0 have grown by approximately 10X in the last decade and are expected to grow to $200+ bn by 2025. Countries such as the US, UK, China, India and Brazil are expected to supplement this with new investments, amounting to a total of $100+ bn. 

Digital Technologies

This investment will predominantly be in digital technologies like IoT, AI/ML, IT-OT integration, robotics, and human-machine interfaces. These will account for almost 40% of all manufacturing technology spending. Servitization, integrated customer and employee experience, and an urgent need for flexible operations and business agility are set to be the biggest drivers of Industry 4.0 in the next decade.

Sharing her thoughts, Debjani Ghosh, President, NASSCOM, said, “Industry 4.0 has reached a tipping point in Indian manufacturing, with a strong desire to boost investments in the next two years to create exceptional customer experiences and long-term business models. Moving forward, it will be fascinating to watch how ready the Indian manufacturing industry is to adopt and scale Industry 4.0, which is largely determined by the use cases selected, the capacity to scale Proofs of Concept, and the alignment of IT and OT capabilities.”

With accelerated investment in foundational techs like Cloud and IoT, the Indian manufacturing sector has started pivoting to digitalization, cites the report, with $5.5 - $6.5 billion spent on Industry 4.0 in FY21. This accounts for nearly 50% of the annual technology spend by Indian manufacturers. 75% of this is led by discrete manufacturers in Auto, Electricals, and Electronics, while Chemicals and Pharma are leading the process manufacturing segment. 

MSMEs in India 

MSMEs (Micro, Small and Medium Enterprises) in India account for 33% of the manufacturing output and 45-50% of exports, across textile, food processing, chemical, and electrical or equipment. The research shows that while the sector is facing challenges around scaling up Industry 4.0 solutions, financing, and leadership constraints are presenting opportunities to mitigate these challenges. The report highlights digital solutions to aide growth could include cloud and SaaS-based solutions to outsource non-core activities and minimize upfront or fixed costs; a reduction in the cost of quality inspection and rework/defects with AI-based computer vision; and big data analytics to minimize risk impact.

Investment in the next two years

The report concludes that Industry 4.0 is at an inflection point in Indian manufacturing. There’s an urgent need to increase investments in the next 2 years and drive a rapid shift from proof-of-concept to a more ROI driven, outcome-based deployment. Over the next 18-24 months, enterprises in the sector need to prioritize investments across emerging connectivity tech, big data analytics, central and remote-controlled monitoring, and process automation. These new investments will consist of a combination of scaling-up existing IoT and Cloud deployments for rapid PoC-to-production of new use cases and industrial automation.