The National Association of Software and Services Companies (NASSCOM), in collaboration with Capgemini, recently announced the findings of a research study on the adoption of Industry 4.0 in India’s manufacturing sector. Titled, ‘India Industry 4.0 Adoption: A Case to Mature Manufacturing Digitalisation by 2025’, the report sheds light on the maturity of digitalised manufacturing in India and recommends a focus on increasing investments, scaling up foundational technology readiness & enhancing capabilities. These recommendations, cites the report, will help facilitate globally connected smart factories that will enable India’s manufacturing sector to become an intelligent industry and achieve the national growth target of $1.1trillion by FY26.
Global Industry 4.0 evolution drivers
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. It has also grown by 9.6 times during the same period, from $10.5 billion in 2011 to $103 billion in 2021, driven by business growth, resilience & sustainability needs.
According to the report, investments in Industry 4.0 have grown approximately 10X in the last decade and are expected to grow to $200+ billion 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+ billion. 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 spend. Servitization, integrated customer & employee experience and an urgent need for flexible operations & business agility are set to be the biggest drivers of Industry 4.0 in the next decade.
Expressing his views, Debjani Ghosh, President, NASSCOM, put across, “Industry 4.0 has reached a tipping point in Indian manufacturing, with strong demand for an increased investment in the next two years, likely to create exceptional customer experiences and long-term business models. Moving forward, it will be fascinating to watch how prepared 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 & OT capabilities.”
Commenting on the potential of Industry 4.0 to build interconnected factories of the future, Ananth Chandramouli, Managing Director & Head of the India Business Unit, Capgemini, added, “It is evident that by 2025, more than two-thirds of the Indian manufacturing sector will embrace Industry 4.0. We have seen that Indian manufacturers today are talking about holistic digital transformation. This research shows that this decade is going to experience an amalgamation of digital insights (sensors and embedded software in products), digital continuity (creating and managing virtual models) and digital convergence (digitalisation of core processes in an extended ecosystem of enterprise IT systems). Enterprises will begin to concentrate on new business models, and on understanding the needs of end customers so that they can innovate new products and become truly intelligent.”
India’s Industry 4.0 spend in discrete & process manufacturing segments
With accelerated investment in foundational tech, like cloud and IoT, the Indian manufacturing sector has started pivoting to digitalisation, 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 & electronics, while chemicals and pharmaceuticals are leading the process manufacturing segment.
MSMEs 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 also highlights digital solutions to aide growth could include cloud and SaaS-based solutions to outsource non-core activities and minimise 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 minimise risk impact.
Investment focus for the next two years is key
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 two 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 prioritise investments across emerging connectivity tech, Big Data analytics, central & 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 & industrial automation.