India’s Manufacturing Revolution: Industry 4.0 transforms sectors with AI and IoT

India’s manufacturing landscape is undergoing a major transformation as technologies such as AI, the Internet of Things (IoT), robotics, 3D printing, and digital twins gain traction across sectors, from automotive and electronics to pharmaceuticals and precision engineering.

This shift, driven by Industry 4.0, is extending beyond large factories to micro, small, and medium enterprises (MSMEs), supported by government initiatives and a growing start-up ecosystem.

“India’s large-scale manufacturing sectors are at a pivotal point in their Industry 4.0 journey,” says Chandrajit Banerjee, director general of the Confederation of Indian Industry (CII).

According to PwC India, India’s gross value added (GVA) in the ‘Make’ domain is expected to grow from $945 billion (Dh3.47 trillion) in 2023 to $2.7 trillion by 2035, with high-tech manufacturing emerging as a key engine of inclusive and sustainable growth.

“It’s not just about producing more but about creating higher-value outputs,” says Arnab Basu, Partner and Clients & Industries Leader at PwC India. “The next wave of growth in this domain will come from this convergence of innovation, infrastructure, and intent.”

Several Indian manufacturers have already begun reaping the benefits of digital transformation. Ashok Leyland, for instance, has integrated over 1,700 machines across 27 assembly lines through its Manufacturing Process Assurance System (MPAS).

“MPAS enables real-time monitoring, predictive analytics, and automated operational controls, significantly improving productivity, quality, and traceability,” says Vinod G, Chief Information Officer at Ashok Leyland. The company has recorded a 10–15 per cent improvement in productivity and saved the equivalent of 75 additional production shifts.

CEAT, which became the world’s first tyre brand to receive the Lighthouse Factory designation from the World Economic Forum, is another notable example.

The company’s focus on cross-functional collaboration and data-driven workflows has led to 54 per cent improvement in dispatch turnaround and 25 per cent rise in labour productivity.

Tata Technologies, meanwhile, is helping manufacturers digitise every dimension of their operations across automotive, aerospace, industrials, and heavy engineering.

“From shop floors and EV lines to steel plants and aerospace programmes, we are delivering industry-first solutions that unlock productivity, sustainability, and scalability,” a company spokesperson tells GN Focus.

One notable case involved transforming a dormant EV facility into a smart, paperless, 300,000-vehicle-a-year plant in just nine months— a true showcase of Indian engineering speed and digital agility.

While large firms are spearheading the smart factory revolution, the ripple effect is being felt across smaller manufacturing units as well, especially those able to tap into government-backed initiatives. SAMARTH Udyog Bharat 4.0, India’s flagship Industry 4.0 programme, is helping MSMEs overcome barriers to adoption.

“The SAMARTH Udyog Bharat 4.0 initiative is central to India’s strategy of fostering smart manufacturing capabilities,” says Banerjee.

“It serves as a key enabler for digital transformation, especially for MSMEs and mid-sized firms that often lack the capacity and resources to navigate Industry 4.0 on their own.”

In addition to technical enablement, Banerjee explains that SAMARTH has helped build awareness and confidence among industry players, particularly MSMEs, by addressing misconceptions about high costs and complexity.

“This initiative, along with complementary programmes under Make in India 2.0 and Digital India, is instrumental in laying the foundation for India’s transition to a future-ready manufacturing ecosystem,” he says.

“We’re also exploring video analytics, starting with safety-related insights, with potential to support quality control, vehicular movement, and broader process adherence in manufacturing environments.”

Tata Technologies is enabling this transition by making advanced technologies more affordable and modular. “Smart manufacturing should be for every factory, not just the few,” the spokesperson says. “At Tata Technologies, we’re making Industry 4.0 affordable, modular, and made-for-India; so every manufacturer can compete globally.”

The company is also leading one of India’s largest digital skilling efforts. “We’ve partnered with state governments to transform traditional trade schools into Industry 4.0 Centers,” the spokesperson adds.

With productivity and cost benefits becoming clear, the next frontier is talent transformation.

Both CEAT and Ashok Leyland report significant investments in digital skilling and culture change.

“Over 80 per cent of the workforce has been equipped with digital tools,” said Kuruppal. “We invested in tailored training programs, digital design thinking workshops, and ideathons to upskill teams at all levels — from operators to leadership.”

Ashok Leyland has adopted tools like virtual reality for immersive assembly-line training and augmented reality to verify component fixtures.

“We consistently invest in training, skilling, and upskilling our workforce to ensure they are future-ready,” said Vinod G.

Industry 4.0 is also boosting sustainability and expanding cross-sectoral innovation. At Tata Technologies, predictive AI systems helped a global automotive OEM reduce power use by 18 per cent, fuel consumption by 10 per cent, and chemical inputs by 8 per cent. In the steel sector, a digital twin commissioning solution cut project lead time by 15 per cent and costs by 30 per cent, while improving safety and quality.

Such results align with PwC’s view that India’s ‘Make’ domain is moving beyond cost-efficiency towards deeper integration, precision, and sustainability. “Ecosystem partnerships enable companies to co-innovate across domains — and that’s accelerating momentum across the economy,” says PwC’s Basu.

Despite visible gains, industry leaders caution that the transition remains uneven, with large enterprises demonstrating greater digital maturity while MSMEs continue to lag behind.

“Only 30 per cent of firms have successfully scaled their digital initiatives despite 85 per cent of leaders identifying digital transformation as a strategic priority,” notes Banerjee. He cites gaps in execution, legacy infrastructure, cyber risk, and a persistent digital divide between large firms and MSMEs as critical roadblocks.

To bridge this divide, stakeholders are calling for agile policy frameworks, accessible financing models, and stronger industry-academia collaboration. “Digital transformation demands new capabilities in data science, automation, cybersecurity, and systems integration areas where most workers are underprepared,” Banerjee added.

India’s ambition to become a high-tech manufacturing hub by 2047 depends on the depth and speed of digital transformation.

According to Tata Technologies, the 2047 goal is both “a bold national ambition and a shared industrial responsibility.”

The convergence of AI, IoT, automation, and human capital is not just reshaping factories, it’s redefining the core of industrial value creation.

“This is the future of growth, where innovation is co-created, not just built in-house,” said Basu. As the foundation strengthens, Industry 4.0 may well become the cornerstone of India’s journey from a production-driven economy to one that leads in intelligent, sustainable manufacturing.