Six in ten Indian companies believe AI to play a significant role: PWC
Jul 29, 2026
Synopsis
Indian manufacturers anticipate artificial intelligence significantly aiding strategic goals within five years. This optimism surpasses global counterparts regarding productivity and long-term growth potential. Automation adoption is led by data capture and analytics, followed by quality assurance. However, India lags in developing homegrown manufacturing capabilities and faces an MSME technology gap. Coherent integration of manufacturing capabilities will distinguish the Indian economy's future.
Indian industrial manufacturers predominantly believe that artificial intelligence will play a significant role in elping them achieve strategic goals in the next five years. A report by PWC titled The Rewriting the rules: The next chapter of Indian industrial manufacturing, highlights that nearly 59% of Indian industrial manufacturers—compared with 52% globally—believe AI will take on a larger role in assisting these industry stakeholders in attaining strategic objectives.
The findings suggest Indian manufacturers are more optimistic than their global counterparts about AI's potential to drive productivity, improve decision-making and support long-term growth.
The report was released as part of a workshop conducted by Vinod Kumar Pathak, the firm’s national head of manufacturing at the PwC Delhi campus which discussed how India can leverage on the digitisation of the manufacturing sector.
As per the PWC findings, Indian manufacturers are pushing ahead with automation over the next five years which is led by data capture and analytics (82%), followed by quality assurance (69%), planning and forecasting (65%), and customer interactions (63%)
Pathak, additionally, highlighted the four pillars of modern digital manufacturing, which are:
smart factories,
human - machine interfaces,
agentic support functions
and connected intelligent supply chains
The Dark Factory analogy
Drawing from his visit to a fully automated "dark factory" in China—so called because it operates without workers and therefore requires no lighting—Pathak questioned whether such a model was desirable for the broader Indian economy.
“I visited so-called Chinese “dark factories” because there were no workers running the factory (fully automated factory) and hence did not require lights,” said Pathak.
Additionally, Pathak emphasises that India's digital manufacturing sector needs human machine interface and warns against the potential ramifications to the economy with extensive automation.
“The need for human-machine interface raised the question of whether factories operating without workers are good for the economy,” said Pathak.
He also emphasised that modern manufacturing is increasingly being shaped by interconnected intelligence systems and agentic AI-enabled support functions that can optimise industrial supply chains and operations.
India’s replication over innovation problem
Pathak is of the assessment that the adoption of digital technologies in India is already relatively higher among large enterprises and mid-sized manufacturers,importing core tech from other competing countries.
However, he flagged that India lags in terms of development of homegrown manufacturing capabilities. He attributed this slow pace to limited private-sector investment in research and development, talent shortages and a culture that often favours replication over innovation.
"Copying is easier compared to development," he said.
He noted that while Indian manufacturers have made significant progress in developing peripheral technologies, they continue to rely heavily on imported core engineering and manufacturing technologies.
Pathak also pointed to a lack of sufficient emphasis on technology adoption at the policy level, even as several industrial leaders actively promote advanced manufacturing technologies within their organisations.
‘The secret weapon’
During the discussion, PwC executives also highlighted concerns that many Indian companies remain reluctant to invest in technologies that improve manufacturing productivity.
Responding to questions on India's manufacturing differentiator, Pathak said the country is making significant investments in shop-floor technologies and sees strong opportunities in sectors such as chemicals under the global "China+1" manufacturing strategy. However, he said technology adoption remains uneven and lacks scale across the manufacturing ecosystem.
“PWC wants an active role in the growth of manufacturing and India, unlike most developed nations, has only 16% of its economy contributed by the manufacturing sector,” said a PWC official in the meeting.
“Every country has had a specific strength, or a ‘secret weapon’ in their manufacturing growth—Japan had their quality, Germany had its engineering marvels, the Americans had their financial might and China had their scale of manufacturing that supplied China and the rest of the world.”
"The significance of tech absorption is not apparent to us because it's largely business to business (B2B)," he said.
Raghav Manohar Narsalay, partner at PwC, stressed that digital transformation must extend beyond boardroom strategy and be implemented across operations, marketing, management and factory floors to deliver meaningful outcomes.
The MSME gap
Narsalay also flagged the widening technology gap for India's micro, small and medium enterprises (MSMEs), many of which serve as Tier-I and Tier-II suppliers to larger manufacturers.
"MSME manufacturers are also not able to play catch-up with the adoption of technologies. Remember, they are Tier-I and II suppliers to larger manufacturing companies," he said.
The pervasive adoption of automation, the factor that would distinguish the Indian economy would depend on how coherently it adopts and integrates manufacturing capabilities into its enterprise strategy, product development, supply chains and decision making.
[The Economic Times]
