Tech investments by manufacturing firms likely to rise, CII report says
- The share of the manufacturing sector in the gross domestic profit (GDP) has remained flat at about 13-17% over the last few years.
New Delhi: Manufacturing companies are likely to ramp up investments into technology integration to 11-15% of their overall budget in the next two years, compared with the existing 10%, a report by the Confederation of Indian Industries (CII) showed.
These increased investments are likely go into IoT (Internet of Things), robotics and Big Data, the report titled ‘Smart Manufacturing: Unlocking India’s Potential' said.
This could be important as the share of the manufacturing sector in the gross domestic profit (GDP) has remained flat at about 13-17% over the last few years, even as services leads growth in India's economic output.
Capital-intensive industries like semiconductors, aerospace, and automotive are leading the charge in adopting these technologies, the report said, while traditional industries like textiles and food processing are gradually transitioning towards digitization.
Manufacturing employed about 18.4 million people in FY23 as per Annual Survey of Industries (ASI) data released in September this year, about 7.5% higher than the 17.2 million in FY22.
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Less than a third of Indian firms across major manufacturing sectors benefit from the integrated information technology (IT) connectivity they have created among subsystems, indicating room for improvement, the report also showed.
IT connectivity integration
About 20% of the surveyed firms have little or no IT connectivity integration in place, the report noted.
"Only 30% of companies with very well integrated IT systems benefit from seamless connectivity between subsystems, enabling real-time data analysis and supporting agile decision-making. This suggests that there is significant room for improvement, especially for the 20% with limited or no integration," said the CII report.
CII noted from its extensive surveys across the Indian manufacturing sector that most Indian firms are committed to digitization and technology adoption, at a time when the adoption of automation tools and artificial intelligence (AI) is rising across the globe.
While many companies, particularly in sectors such as capital goods, chemicals, electronics, and steel are committed to investing in technology and going digital, CII observed variance across these sectors.
For instance, in the electronics sector, many companies have well-defined strategies with a high commitment to technology integration, while in the automobile sector, there is more variation - ranging from companies with no strategy at all to companies with extremely committed and clear strategies, CII said in the report.
This is due to the differing business sizes and market segments observed in the automobile sector, the CII report said.
Also read: Time is running out to revive India’s manufacturing sector
The capital goods sector is bolstering its technology inclusion, with many companies either having a clear roadmap towards technology investments, or companies being in the process of developing such investment plans. "Larger companies are likely leading the charge, but smaller ones are catching up," the CII report said.
The report said that challenges within the manufacturing sector such as high costs, unclear returns on investment, and the integration of legacy systems persist, especially for small and medium enterprises (SMEs). Additionally, the report underscores the urgent need for workforce upskilling to bridge the skills gap and enable seamless adoption of advanced technologies.
CII recommended in the report the formation more public-private partnerships to establish shared technology hubs, the strengthening of industry-academia collaboration, and implementation of supportive policies to encourage broader adoption of smart manufacturing along with a push for increasing budget allocations for technology.
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