The Indian manufacturing industry is witnessing significant technological advancements, making a leap from traditional automation to smart factories. With the use of disruptive technologies such as data and analytics, industrial internet of things (IIoT) and artificial intelligence (AI), manufacturers are enhancing their business performance and efficiency. They are proving to be useful in a number of ways. Apart from helping firms in improving their core productivity function, these technologies are enhancing their customer services and financial performance.

According to a recent study by EY, around 66 per cent of the manufacturing enterprises ranked big data and predictive analytics as their top investment priority in technology, and 63 per cent considered sensors and IIoT as their second key priority. The study reveals that around 60 per cent of Indian manufacturing enterprises have a broad understanding of digital manufacturing and 23 per cent have a clear digital strategy.

However, skill deficiency in terms of technology, deployment and integration of digital platforms, and cybersecurity remain the key hurdles in technology adoption, which need to be addressed in order to facilitate the transition to connected factories.

A look at the key technology trends that are transforming the manufacturing industry…


Manufacturers are leveraging AI and machine learning (ML) to enhance their overall efficiency, reduce manufacturing costs, and improve productivity and quality of goods. As per industry estimates, the AI market for global manufacturing is expected to grow from $1.1 billion in 2020 to $16.7 billion by 2026, at a compound annual growth rate of 57 per cent. The growth is mainly attributed to the availability of big data, increasing industrial automation, improving computing power, and larger capital investments. Enterprises in the sector are using AI and ML tools to pre-inspect raw materials, identify defects and perform quality evaluation. Besides, AI ensures predictive maintenance of machines and optimises asset utilisation.

Many AI solutions currently being deployed have visual inspection capabilities, which are used for correct labelling, and identifying size or dimension mismatches. For instance, with the use of AI, the BMW Group evaluates component images from its production line. The technology allows the company to spot deviations from quality standards in real time.

Another big way that AI is impacting manufacturers is enabling the safe and routine use of collaborative robots, or cobots. These cobots are an array of assistive technologies, which assist workers in handling repetitive tasks. For example, Hyundai Motors uses augmented assembly cobots to complement human tasks and enhance productivity.

Similarly, food products manufacturer, the Danone Group, uses ML systems to improve its demand forecast accuracy and efficient planning coordination across segments, leading to more accurate forecasts. Further, by implementing IIoT embedded with AI, Bosch identifies defective tyres and measures the defect size. This helps the company undertake predictions and estimations, and thus make better decisions.

Smart factories

Smart factories have helped create highly digitalised and well-connected set-ups, enabling hyper-flexible and communicative manufacturing capabilities. According to a study by Capgemini Research Institute, around 30 per cent of Indian factories were transformed into smart factories during 2018-20. This number is expected to go up to 40 per cent in the next five years. Interestingly, the report reveals that Indian manufacturers are ahead of their global peers with respect to investments in smart factories.

For instance, India’s Piramal Group is transforming its business through smart factory initiatives. It has deployed connected technology for real-time manufacturing insights in its 60 production lines across four plants. This has enabled Piramal to get real-time visibility into manufacturing operations and thereby analyse production line losses at various stages. Further, the firm has implemented a warehouse management automation project across its manufacturing sites.

While the adoption of smart factories in India is currently at a nascent stage, it is expected to gather steam in the coming years. According to industry experts, smart factories will produce 30-40 per cent more output and reduce costs by 20-30 per cent through downsizing.


In the manufacturing space, augmented reality (AR) and virtual reality (VR) can not only support training and field services, but can also facilitate the efficient sale of products through virtual screening. For instance, IKEA launched an AR app, IKEA Place, which allows its users to visualise how furniture will look by virtually placing it in their home. Meanwhile, Lenskart recently introduced the virtual trial room feature, which allows buyers to try on spectacles before they purchase them. Using 3D technology, buyers can click a selfie through their webcam, and pick out glasses that best suit their face.

Similarly, Godrej plans to launch AR/VR technologies that enable the customers to do a virtual walkthrough of the entire showroom. This technology is also being leveraged for training teams for various operations such as site installation work. Further, Gabler has integrated VR into its manufacturing processes to inspect production lines for potential hazards to ensure safety and quality.


The manufacturing process is increasingly getting smarter, and IIoT is playing a vital role in this journey. Enterprises are adopting IIoT for predictive and proactive maintenance, real-time monitoring of operations, resource optimisation and remote diagnosis. Besides, as the devices are integrated with radio frequency identification (RFID), IIoT transforms the data collected by RFID readers into valuable business insights. Furthermore, the technology helps in smart inventory management. Companies such as DHL and SAP are taking full advantage of the smart inventory management system. IoT also enables predictive maintenance, detecting irregularities and understanding their root cause and prevent machine failure and production delays. For instance, JK Tyre has deployed the solution at its various manufacturing units for the identification of bottlenecks in the  manufacturing line. The technology gives comparative insights about the performance of the manufacturing units.

Recently, the Tamil Nadu government has partnered with the World Economic Forum to establish India’s first advanced manufacturing hub (AMHUB) in the state. The state will utilise the AMHUB to adopt IoT and other emerging technologies for advanced manufacturing to sustain and create new avenues of manufacturing growth.


Enterprises in the sector are exploring ways to utilise blockchain technologies. With manufacturers leveraging IoT and predictive analytics in their supply chain, blockchain can provide an increased level of visibility into this process. Enterprises are using this technology to increase transparency, recognise issues within the supply chain, and streamline industrial processes.


The manufacturing industry has become the biggest adopter of hybrid cloud solutions and considers it a long-term infrastructure investment. As per industry reports, the manufacturing sector spending on cloud adoption was valued at $5 billion in 2019 and expected to witness a 20 per cent year-on-year growth, going forward. Cloud computing enables sophisticated manufacturing techniques, leveraging high performance computing, 3D printing and industrial robots.

Reimagining manufacturing: Impact of Covid-19

The role of advanced technologies becomes even more critical in the backdrop of a crisis such as Covid-19 as enterprises are utilising these solutions to weather the storm. According to a recent McKinsey survey, 93 per cent of manufacturing and supply chain professionals plan to focus on the resilience of their supply chain, and 90 per cent plan to invest in talent for digitalisation.


While the adoption of new-age technologies is picking pace in the manufacturing sector, enterprises are facing challenges when it comes to taking their digitalisation initiatives to the next level.

According to Capgemini, the top three challenges for Indian manufacturers in scaling up smart factories are:

  • Deployment and integration of digital platforms and technologies,
  • Data readiness and cybersecurity, and
  • Development of hybrid, soft and digital capabilities.

Besides, the current economic crisis due to the pandemic is acting as a hurdle in the adoption of newer technologies. The economic slowdown has delayed some of the Industry 4.0 initiatives. Further, most Indian manufacturing firms still lack advancements in their hardware and software capabilities. According to industry reports, only 29 per cent of firms have appropriate hardware and software infrastructure with data capture and monitoring capabilities.

The way forward

Net, net, advanced and emerging technologies are making fast inroads into the sector, and catalysing transformation across the manufacturing space. Going forward, both immediate and long-term future of the manufacturing industry will be defined by the development of cutting-edge technologies. s

By Shikha Swaroop