The journey of India’s manufacturing sector has been nothing but exemplary. From undergoing economic liberalisation in 1991 to strategically positioning itself as the world’s next manufacturing hub in the aftermath of the pandemic, the sector has seen many noteworthy moments. According to the United Nations Industrial Development Organization, as of the first quarter of 2024, India has emerged as one of the top 10 manufacturers in the world. Its technological prowess has transformed India into a competitive player in the global manufacturing landscape. As per a survey by NASSCOM, digital technologies will constitute around 40 per cent of total manufacturing expenditure in India by 2025. The 9th annual State of Smart Manufacturing Report highlights that the warehouse and fulfilment industry and the renewable energy and chemical sectors have seen the highest rates of digitisation in India. It also states that a whopping 91 per cent of Indian manufacturers surveyed acknowledge the urgency of digitising their enterprises. Smart (or digital/intelligent) factories lie at the heart of this ambitious aspiration.
The concept of smart factories is embedded in Industry 4.0 and entails a sophisticated ecosystem where people, machines and data are flawlessly integrated to drive greater collaboration along the manufacturing value chain. Enhanced productivity, process efficiency, improved product quality, significant cost reductions, greater flexibility, downtime minimisation and enhanced customer experience are some of the benefits of smart factories.
A look at some of the technologies driving the growth of smart factories…
AI/ML
Artificial intelligence (AI) and machine learning (ML) can help manufacturers across various industries gather the data necessary for making informed choices regarding production trends, identify potential failures, undertake predictive maintenance, reduce downtime, create leaner value chains by bridging demand-supply gaps and optimise overall manufacturing operations. For instance, automotive giant BMW’s Car2X leverages AI to transform vehicles into cloud-based communicative tools, providing regular updates on their assembly status and automated error detection. The company also uses Artificial Intelligence Quality Next for visual and acoustic quality assessments. Automakers are leveraging AI for various purposes, including collecting information on vehicle performance on roads to aid in car accident case resolution and conducting research on future product innovations. Similarly, beverage company Coca-Cola is deploying AI in its factories to decode customer needs and market dynamics in real time, develop product innovations and boost productivity. Further, athletic footwear and apparel corporation Nike is harnessing the power of AI prompts to create various design visuals for its customers. AI and ML are expected to continue shaping India’s manufacturing industry, as studies project that India’s AI market will grow at a
healthy CAGR of 25-35 per cent to reach $17 billion by 2027.
AR/VR
Augmented reality (AR)/virtual reality (VR) elements are also becoming common features in smart factories. Refined conditions for enhanced worker safety and training, improved customer engagement, increasing productivity, issue tracking, warehouse management, remote collaboration, real-time compliance and safety inspections, and diminished downtime are some of the major benefits of using these technologies. For example, energy firm BP has been leveraging VR to provide training to its employees, while Siemens Gamesa, along with Vinci VR, has pioneered the creation of VR training simulations for the offshore wind sector. Meanwhile, food and beverage company Nestlé is facilitating virtual factory visits using the power of VR and AR to create an immersive experience for its customers, while logistics firm DHL recorded a 25 per cent spike in efficiency at its warehouse in the Netherlands after deploying smart glasses and AR. Looking ahead, the odds are in favour of India’s AR/VR landscape. The sector is expected to witness a CAGR of 38.3 per cent during the 2024-32 period.
Blockchain
Blockchain is also becoming a game changer in smart factories for making and recording transactions, thereby promoting transparency within the system. Further, it instils efficiency in supply chain management by using technologies such as barcodes, QR codes and radio frequency identification readers. Consequently, it ensures product authenticity and minimises errors. Unilever, for instance, is relying on blockchain-enabled GreenTokens to monitor the responsible sourcing of palm oil used in its products to make its supply chain deforestation-free. Interestingly, automobile company Toyota (29 patents) has significantly increased its patent filing in the second quarter of 2024 to bolster blockchain technology. It is exploring managing non-fungible tokens (NFTs) associated with vehicles in dealer storage. Estimates are quite optimistic with regard to India’s blockchain market growth, with a predicted CAGR of 82.3 per cent between 2022 and 2030.
Digital twins
Enterprises across industries are also creating digital twins using technologies such as AI, ML, cloud and internet of things. In a nutshell, digital twins are virtual representations of a physical asset, such as a machine or a production plant. Traceability, augmentation of productivity, reduction of costs, risk-free research and enhanced product development, and incorporation of efficiency within the supply chain are some of the key benefits of digital twins. For instance, engineering firm Bosch is leveraging digital twins to make products traceable throughout their entire life cycle through semantic data structuring. In June 2024, elevator company Kone came up with an innovative digital twin concept to facilitate better people flow in crowded city hubs. Kone’s concept combines real-time and historical data from people flow sensors with elevators, escalators and train status information to provide valuable insights. At the same time, kitchen appliance maker Electrolux is working on deploying digital twins across all manufacturing sites to make goods that are production- and assembly-friendly. Studies predict India’s digital market will rise from $0.8 billion in 2022 to $12 billion by 2032, recording a CAGR of 39.3 per cent.
Robotics
Robots and collaborative robots are also revolutionising the manufacturing process by providing consistent and precise product scrutiny, performing new tasks, reducing the use of natural resources, minimising human errors, and maximising production and cost efficiency. Recently, in November 2024, researchers at the University of Liverpool found that AI-powered mobile robots can perform chemical synthesis research, which is typically considered to be very time-consuming and costly, just as well as human beings and make complex decisions. On the industrial front, machine equipment provider Makino Asia’s smart factory employs robots and harnesses automation and digital technologies for optimal productivity, while automaker Tesla has announced the introduction of humanoid robots in 2025. Going forward, the country’s industrial robotics market is likely to grow from $4.92 billion in 2022 to $11.29 billion by 2029, registering a CAGR of 12.6 per cent.
3D printing
3D printing or additive manufacturing is another technology that is gaining traction within the manufacturing sector. Using 3D printing, producers can foster geometrically sophisticated objects, shapes and textures with fewer resources. For instance, aerospace company Airbus has recently developed the world’s first metal 3D printer for space for the European Space Agency, while multinational conglomerate General Electric is planning to invest over $650 million to expand the manufacturing of 3D printed jets. Looking ahead, India’s 3D market is projected to grow from $578.4 million in 2023 to $3,865.72 million by 2032, exhibiting a CAGR of 22.3 per cent.
Key considerations
Like all innovations that are still in their infancy, these technologies may be precarious. To begin with, investing in these technologies may be challenging for small and medium enterprises as they entail expenditure on new equipment, infrastructure and software. At the same time, technologies such as blockchain are criticised for being highly energy-intensive and this could be a stumbling block for manufacturers trying to reduce their carbon footprint. AR/VR devices also struggle to maintain battery power as functions become
more sophisticated.
In addition, there are operational challenges associated with certain technologies. Blockchain, for example, has scalability issues – an increase in the number of transactions is likely to result in a corresponding rise in energy consumption and a drop in data processing speeds. Meanwhile, digital twins have a complex life cycle, requiring regular software and hardware updates, while headsets and displays may not always provide the most immersive experience.
Another major obstacle is ensuring data privacy and minimising potential cybersecurity breaches. Homomorphic encryption, which enables computations on encrypted data, can serve as a robust guardrail in this situation. Moreover, solid policies such as the Digital Personal Data Protection Act, 2023, will add an enhanced layer of security for AI systems.
Further, poor data quality can adversely impact the quality of digital twins. Similarly, AI algorithms may lead to skewed results or perpetuate bias if the data that they are processing has inherent biases. This requires human supervision, and currently, there is a shortage of workforce specialising in these next-generation technologies. This is also the case for other next-gen technologies.
Conclusion
Going forward, the future of manufacturing is filled with exciting opportunities as cutting-edge technologies as 3D printing, AI and digital twins transition from being merely novel to becoming mainstream. That said, the industry needs to overcome certain teething troubles to increase adoption as companies strive to attain production efficiencies and competitive edge. This underpins the need for collaboration between multiple stakeholders. For instance, educational institutions must strive to impart AI and other technological skills to their students, while a robust regulation ecosystem should be established to ensure cybersecurity. This multipronged approach will fully harness the potential of these technologies and catapult India into becoming one of the world’s top five manufacturing hubs.
