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India's $5 Trillion Manufacturing Gap: AI & Automation Hold the Key

A new report warns India faces a potential $5.1 trillion manufacturing GDP shortfall by 2047 if it fails to accelerate advanced manufacturing. The key to unlocking this $7.4 trillion potential lies in AI-led innovation, industrial automation, and adopting frontier technologies. Progress is noted in foundational reforms and major investments like those from Micron and Google. Sectors like advanced electronics and clean energy are projected to drive up to $1.9 trillion in GDP growth by 2035 through this technological upgrade.

Key Points: AI, Automation Crucial for India's $7.4T Manufacturing Goal: Report

  • $5.1T GDP gap risk by 2047
  • AI & automation are key enablers
  • PLI sectors to drive 27% of industrial capex
  • Frontier tech can add $1.1T to manufacturing GDP
2 min read

India must accelerate AI, industrial automation to unlock manufacturing potential: Report

Report warns of a $5T manufacturing GDP gap by 2047 unless India accelerates AI, industrial automation, and frontier tech adoption.

"failure to unlock advanced manufacturing could leave India with a manufacturing GDP gap - Ionic Wealth Report"

New Delhi, January 11

India must accelerate AI-led innovation, industrial automation, and the adoption of frontier technologies to fully realise its manufacturing ambitions, according to The Make-in-India Upgrade: Advanced Manufacturing Trends, a December 2025 chartbook by Ionic Wealth.

India stands at a critical juncture in its industrial journey, with advanced manufacturing emerging as a decisive lever for long-term economic competitiveness.

The report noted that failure to unlock advanced manufacturing could leave India with a manufacturing GDP gap by 2047 Viksit Bharat vision.

Under a business-as-usual scenario, manufacturing GDP would reach only USD 2.3 trillion, far below the USD 7.4 trillion potential, highlighting what the report calls a "significant gap" if decisive action is not taken

At the core of the recommended strategy is AI-led innovation and productivity gains, combined with automation, digitisation, and product and process innovation.

The report stated that AI-led innovation and productivity gains, along with industrial automation and adoption of frontier technologies, are the key enablers to foster India's manufacturing progress.

Technologies can help Indian firms move up global value chains, reduce costs, and compete with manufacturing powerhouses.

India has already made progress on foundational reforms. The report noted advances made in labour code implementation, GST rationalisation, easing of FDI norms, land reforms, and infrastructure modernisation, including single-window digital clearances under PM Gati Shakti and the rollout of the National Logistics Policy.

Large investments such as Micron's USD 2.75 billion semiconductor assembly plant and Google's combined USD 25 billion commitment to digitisation and AI-led data centres are cited as early indicators of momentum in the report.

Looking ahead, the report highlightd that emerging and PLI-linked sectors are expected to contribute 27 per cent of industrial capital expenditure over the next decade, with average annual capex projected to rise from Rs 4.3 lakh crore in FY21-FY25 to Rs 7.1 lakh crore in FY26-FY30.

Sectors such as advanced electronics, clean energy, next-generation auto technologies, aerospace, and AI-cloud-cyber stacks could collectively drive USD 1.4-1.9 trillion in GDP growth by 2035.

Also, the adoption of frontier technologies, including AI/ML, robotics, digital twins, 3D printing, advanced materials, and smart grids, could boost India's manufacturing GDP by USD 1.1 trillion, the report estimated.

The Ionic Wealth report also cited NITI Aayog, which had earlier stated that advanced manufacturing is no longer optional - it is the foundation for India's global competitiveness in the next decade.

- ANI

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Reader Comments

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Priya S
The potential gap of $5 trillion is staggering! It shows how much is at stake. I work in a small manufacturing unit, and even we are looking at basic automation to reduce costs. The report is correct - it's no longer optional. Hope MSMEs get adequate support and financing to adopt these technologies.
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Rohit P
While the vision is great, my respectful criticism is about job displacement. What happens to millions of workers in traditional manufacturing? AI and robots are efficient, but we need a parallel national plan for massive reskilling. "Make in India" should also mean "Employ in India" for our existing workforce.
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Sarah B
The investments from Google and Micron are promising signals. For India to truly compete with manufacturing powerhouses, we need to build complete ecosystems, not just assembly. Focus on R&D and creating our own IP in areas like semiconductors and advanced materials is crucial. The capex numbers are encouraging!
K
Karthik V
Single-window clearances and Gati Shakti are game changers on the logistics front. Reducing the cost and time of moving goods is as important as the tech inside the factory. Hope state governments also get on board fully with these reforms. The future sectors like clean energy and EVs are where the action will be! 💡
N
Nisha Z
As an engineer, I'm excited about digital twins and 3D printing. These can revolutionize prototyping and custom manufacturing. But the cost of these frontier technologies is still high for most Indian companies. Need more public-private partnerships to make them accessible. The $1.1 trillion boost estimate is motivating!

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