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In a NASSCOM recent report, it was mentioned that the Indian manufacturing industry has spent between $5.5 to $6.5 bn on Industry 4.0 solutions in 2020-21 fiscal. Can you elaborate on the leaders and laggards, key elements driving this investment and bottlenecks?
Globally Industry 4.0/Intelligent Industry has acquired a mission status. Emerging economies including India have accelerated digital transformation across their manufacturing sector, specifically MSMEs, led by the urgent need to be a connected, visible, and trusted global value chain partner. In India manufacturing technology investments of about $5.5-$6.5 Bn is spent on IoT platforms, Cloud, Cybersecurity, Data Analytics, AI/ML, AR/VR IoT platforms, Cloud, and Cybersecurity. Due to government policies and private sector investments, Indian manufacturing is witnessing a push to adopt digital technologies aiming for 25% contribution to the GDP by FY26. Discrete manufacturers, led by the Auto, Electricals, and Electronics sectors, are leading the in Industry 4.0 spending, while process manufacturers are investing more in process automation.
90% of India’s manufacturing companies are MSMEs that account for 33% of manufacturing GVA and 45-50% of exports, but they face scale, financing, and leadership challenges in digital adoption. MSMEs’ investments are currently in Cloud, IoT, Big Data Analytics, Connectivity Tech, and RPA, while a few manufacturers are experimenting with single/multi-site dark factory platforms.
Mature Industry 4.0 value chains have advanced tech deployment and healthy global supply ecosystems, but the established value chains lack technological sophistication. There is a clear need for emerging value chains to become digital native.
What will be the key factors that will drive the deployment of Industry 4.0 in the short term and over the next decade?
Industry 4.0 is at an inflection point in Indian manufacturing. There is an urgent need to increase investments in the next 2 years and drive a rapid shift from proof-of-concept to a more ROI-driven outcome-based deployment. Emerging connectivity tech, big data analytics, centralized and remote-controlled monitoring, and process automation will invite priority investments in the short term.
Servitization, integrated customer and employee experience, greater operational flexibility and agility, and the pursuit of smart products are key drivers of Industry 4.0 in the next decade. MES, SCADA integrated with strategic planning ERP, SCM, and CRM would enable a complete customer view. Smart products and smart services can leverage massive machine-to-machine data to enhance and innovate existing solutions. Accelerated push for automated lines, and human-machine interface, multi-shoring as a strategic plan to hedge risks for a viable and sustainable supply chain, and improvements in supply chain latency are key factors driving the adoption of Industry 4.0.
Government policies on infrastructure upgrade and MSME participation, coupled with corporate investments in large digital projects will influence Industry 4.0 adoption. According to the survey finding, Industry 4.0 will be critical for sustainability and margin growth and the Government’s industrial corridor policy and incentives will push SMEs/MSMEs to fast track Industry 4.0 adoption.
For a company looking to implement Industry 4.0 solutions, what would be the key elements that would help determine success?
According to the study, leadership commitment, digital talent acquisition, cross-skilling, reskilling and upskilling a dedicated team, data integration, and overall transformation strategy are some of the key elements to successful Industry 4.0 adoption. Industry 4.0 as a digital transformation journey will sustain when driven from the top, with practical investment planning, and a fail-fast approach to experimentation. Importantly, right talent strategy with a combination of hiring and upskilling, a robust strategy for R&D allocation, an open platform for academia and industry to address real issues, amplification of reach and investment via Samarth Udyog Bharat 4.0, and focus on cross tech skills through the Skill India program are some key factors for the successful implementation of Industry 4.0.
What are the technological trends you are seeing across industries from an Industry 4.0 perspective?
By 2025, Industry 4.0 will have created a tightly integrated manufacturing and value chain digitalization experience for over two-thirds of the world’s manufacturers. US, China, India, Brazil, and the UK are betting big on Industry 4.0 acceleration through 2025, as these nations plan $100+ Bn of new investments, majorly in IoT, AI/ML, IT-OT integration, robotics, human-machine interfaces, and digital twin capabilities.
Discrete manufacturers, led by the Auto, Electricals, and Electronics sectors, are the leaders in Industry 4.0 spending. The share in Discrete Manufacturing is 75% with an investment of $4.8 Bn; 65% of this investment is being made in data and analytics, 25% in connectivity tech, 8% in intelligent automation, and 2% in advanced digitech. While Indian automakers stepped up investments in cloud and digital systems shedding legacy IT infrastructure, electronic component manufacturers in India have invested heavily in connected technologies like 5G & IIoT, boosted by initiatives of NASSCOM CoE-IoT and central and state governments’ VAR CoE.
Process manufacturers, with a share of 25% ($1.6 Bn), are investing more in process automation; 40% investment in data and analytics, 30% in connectivity tech, 25% in intelligent automation, and 5% in advanced digitech. 50% of the sector spends greater than 6% of its annual revenue on technology and is in early or intermediate stages of Industry 4.0 adoption.
Indian pharmaceutical companies are taking a technology-first approach, prioritizing cloud-based modernization with a preference for “pay-per-use” models. Chemical industry is in early stages of Industry 4.0 deployment, with a greater focus on vloud, and plan to speed up automation
Where would India stand on Industry 4.0 deployments compared to global, more developed economies?
Globally, consumers of Industry 4.0 can be segmented into leading, disrupting, and emerging economies. US, Germany, and China are leading the way with 16.5%, 4.9%, and 28% of the global manufacturing share and the highest manufacturing technology spending followed by Japan, South Korea, and the UK the disruptors with 7.4%, 3.6%, and 1.6% market share while France, Canada, and India are emerging consumers of Industry 4.0 with 1.8%, 1.2%, and 2.5% share.
Leading economies started early and are now ready to reap the multiplier effect of a strong foundation in Industry 4.0. Disruptors are building unique propositions, such as Japan’s Society 5.0. Emerging economies are taking the collaborative ecosystem development route, along with tax incentives.
India ranks 20th in the industrial digitalization and 30th in readiness for the future of production. Emerging economies like India have lately focused on building industry and academia partnerships to innovate and take advantage of government incentives.
Can you tell us more about some of the key solutions that Capgemini is working on in the space and the role that Capgemini India plays in it?
The key promise of the Industry 4.0 concept is fascinating as we are about to witness a new industrial revolution, fueled by the advancement of digital technologies.
Facing the industrial revolution ahead, manufacturing companies need to start developing a comprehensive vision of how they will run their business in the future. They are required to look beyond the hype and identify which specific opportunities and challenges arise from Industry 4.0. Building on that, manufacturing companies need to define a target picture and a transformation roadmap that outlines the journey to prepare for the new world ahead. To guide this process, Capgemini Consulting has developed a framework structuring the key building blocks of Industry 4.0.
To better understand what stands behind this vision in terms of levers for business success, we have identified eight value drivers along four main pillars. Smart Solutions, Smart Innovation, Smart Supply Chains, and the Smart Factories, are the fields in which manufacturers can realize enormous potential by digitizing their business. While Smart Solutions and Innovation primarily leverage company growth, Smart Supply Chains and Factories drive efficiency
Intelligent Industry, powered by data, is the evolution of Industry 4.0. The rapid development of key technologies like 5G, Edge computing, Artificial Intelligence (AI), and the Internet of Things (IoT) means that every type of company, in sectors as diverse as healthcare, automotive manufacturing, and even services, can start to do business in a new way.
By taking an Intelligent Industry approach, businesses will be able to unleash waves of innovation across three dimensions. 1) Intelligent products and processes: Smart and connected, products can be continuously improved thanks to real-time feedback. 2) Intelligent operations: enable supply chains, factories, plants, and networks to become more efficient and cheaper to run. 3) Intelligent services and support: where servitization takes center stage, leading to new business and revenue models.