A recent PwC report shows 59% of Indian manufacturers plan to use AI for strategic goals within five years. While this optimism exceeds global averages, the industry faces hurdles in homegrown innovation and technology adoption among smaller suppliers.
Indian industrial manufacturers are increasingly shifting their focus toward artificial intelligence to drive future productivity and decision-making. According to a recent report by PwC, 59% of surveyed Indian manufacturers view AI as essential for meeting their strategic objectives over the next five years. This level of confidence is higher than the global average of 52%, highlighting a strong domestic push toward digital transformation.
Focus Areas for Industrial Automation
Companies are heavily investing in digital tools to streamline operations. Data capture and analytics lead the adoption list, with 82% of manufacturers prioritizing these areas to gain better insights into their processes. Other key areas of focus include quality assurance at 69%, planning and forecasting at 65%, and digitizing customer interactions at 63%. These investments are designed to transition traditional facilities into smarter, more connected supply chains where human-machine interfaces play a central role.
The Challenge of Indigenous Innovation
Despite high enthusiasm for adopting existing technologies, the industry faces a structural challenge: a heavy reliance on imported innovation rather than domestic R&D. The report points out that Indian manufacturers often choose to replicate global technology models rather than creating original solutions. This trend is driven by several factors, including a persistent shortage of specialized talent, limited spending on research and development, and a cultural bias toward importing core systems. Experts suggest that to achieve true global competitiveness, companies need to move beyond simple adoption and foster local engineering capabilities.
The MSME Technology Gap
Another significant hurdle is the widening digital divide between large industrial players and Micro, Small, and Medium Enterprises (MSMEs). Many of these smaller firms serve as critical Tier-I and Tier-II suppliers for larger manufacturers. However, they frequently lack the capital and technical expertise to integrate advanced digital systems, which can create bottlenecks in the supply chain. Since manufacturing accounts for approximately 16% of India's economy, the ability of these smaller firms to upgrade their operations remains a key monitorable. Industry experts argue that digital transformation must be applied across the entire supply chain to deliver real economic value, rather than remaining limited to large-scale, automated factories that operate with minimal human intervention.