According to a report from the Confederation of Indian Industries (CII), manufacturing companies are expected to boost their technology investments to 11-15% of their overall budgets over the next two years, up from the current 10%. The increased spending is likely to focus on areas like IoT (Internet of Things), robotics, and Big Data, as highlighted in the report, Smart Manufacturing: Unlocking India’s Potential.
This shift is significant as the manufacturing sector’s contribution to India’s GDP has remained stable at 13-17% in recent years, while the services sector continues to lead in economic growth. Industries that are capital-intensive, such as semiconductors, aerospace, and automotive, are taking the lead in adopting new technologies, while more traditional sectors like textiles and food processing are slowly moving towards digitization.
The manufacturing sector employed approximately 18.4 million people in FY23, a 7.5% increase from 17.2 million in FY22, according to the Annual Survey of Industries (ASI) data. Despite this growth, less than a third of firms benefit from integrated IT systems, highlighting the potential for further progress. The report also noted that most Indian manufacturers are committed to digital transformation as automation and AI adoption rises globally.
While many industries, such as chemicals, electronics, and steel, are investing in digital technologies, there are variations across sectors. In electronics, companies have strong technology strategies in place, while in the automobile sector, approaches vary widely, from companies lacking strategies to those with clear, committed plans. This discrepancy is attributed to differences in business sizes and market segments within the automotive industry.
The capital goods sector is also making strides in technology adoption, with many companies either already following clear investment roadmaps or in the process of developing them. Larger companies are leading the way, but smaller firms are catching up, the CII report said.
However, the report highlighted challenges in the manufacturing sector, including high costs, uncertain returns on investment, and the integration of legacy systems, particularly for small and medium enterprises (SMEs). It also emphasized the urgent need for workforce upskilling to bridge the skills gap and facilitate the smooth adoption of advanced technologies.
CII recommends forming more public-private partnerships to create shared technology hubs, strengthening industry-academia collaborations, and implementing policies that encourage broader adoption of smart manufacturing, alongside increasing budgets for technological investments.
