The global Industrial Internet of Things (IIoT) market is expected to reach $1.1 trillion by 2028, with a compound annual growth rate (CAGR) of 22.7 percent, but IIoT adoption remains relatively lower in small and medium-sized manufacturing firms compared to large-scale manufacturing firms, according to the latest study by Deloitte India and the Confederation of Indian Industry.
A significant shift has happened over the last few years. “There has been an increase in the use of sensors, artificial intelligence, machine learning techniques in manufacturing, and a data analytics, especially in manufacturing, to improve productivity, quality, reduce downtime, and so on,” said Rajeev Singh, Partner and Automotive sector leader, Deloitte India to BusinessLine.
However, the adoption of AI, ML, and IoT is limited to bigger organizations. Singh adds, “The larger manufacturing companies in the country are the ones that have naturally adopted some of these techniques, but there are a significant number of 3.36 lakh small micro and medium-scale players who are struggling with the adoption of these technologies.”
Difficulties in execution
Data shows that 80 per cent SMEs who have undertaken digitization initiatives have reported difficulties in execution citing a deficit of skills and adequate talent, followed by a lack of funds.
To ensure higher adoption of IIoT across all manufacturing companies, the manufacturing of hardware components must be localized. Singh said, “Since components such as sensors or smart meters are largely imported, the cost remains high. While many people in the country are involved in the assembly chain, to reduce the overall cost, a large part of the value chain has to be localised. Additionally, setting up special funding channels for the MSMEs segment in case they make some investments towards Industry 4.0 would also help.”
The market for Industry 4.0 has grown tenfold in the last decade, from $10.5 billion in 2011 to $103 billion in 2021. Manufacturing companies’ IT spending on Industry 4.0 has also witnessed a steady growth from 5 percent in 2011 to 20 percent in 2021. According to the study, adoption would provide companies with benefits such as real-time monitoring, critical insights leading to efficiency improvement, the development of new products, and predictive analytics to improve asset reliability.
Deloitte, in collaboration with CII at the Manufacturing Conclave 2022, introduced a paper—Industry 4.0: From Vision to Action. The paper highlights the impact of Industry 4.0 on core operations (productivity, quality, safety, and enhanced asset life) and the transformation of business models through real-time visibility and insights.