Digital transformation:

India’s journey
to Industry 4.0
excellence
March 2025
Contents
01
Introduction 10

02
Customer-centric growth in the digital 12
era: A paradigm shift

03
Digital manufacturing: Powering industrial 18
innovation with smart technologies

04
Cybersecurity: Building resilience
and ensuring privacy 22

05
Generative AI: Data-driven insights 28
for the future

06
Digital technology infusion in the manufacturing 38
sector: A focus on MSMEs and start-ups

07
The path forward 42
Executive
summary
India’s journey toward Industry 4.0 excellence is driven by digital transformation, which
is reshaping the business landscape and offering unprecedented growth opportunities for
manufacturing firms and MSMEs. Embracing digital technologies allows these enterprises
to optimize operations, deliver enhanced customer experiences, and stay competitive in an
increasingly globalized market.
Customer-centric growth has become a pivotal focus, with businesses adopting data-driven
strategies to personalize offerings, streamline operations, and create new business models.
In the digital age, customers expect convenience, personalization, and seamless interactions,
prompting manufacturers and MSMEs to embrace digital tools and analytics to remain relevant
and competitive.
Digital manufacturing is powering industrial innovation by integrating smart technologies,
automation, and predictive maintenance, leading to cost optimization and yield improvements.
Sectors such as automotive, electronics, and pharmaceuticals are leading the way in leveraging
these technologies for operational excellence.
However, adopting digital tools brings challenges, particularly in cybersecurity, where robust
defenses are needed to protect operational and informational systems. Advanced threat
detection, compliance with regulatory standards, and the implementation of Zero Trust
architectures are crucial to building resilience and safeguarding data.
The rise of generative AI is transforming industries by enabling new ways to harness data, drive
innovation, and improve decision-making processes. The growth of AI-driven insights is expected
to fuel the next wave of digital transformation, particularly in knowledge work and personalized
customer interactions.
For MSMEs and start-ups, digital transformation is imperative, with IoT, cloud computing,
blockchain, and 3D printing playing a significant role in shaping the future of manufacturing.
Government initiatives, skill development programs, and partnerships with tech providers are
key enablers of this transformation, though challenges such as limited budgets and resistance to
change remain.

Key takeaways:

1 2 3 4 5
Adopt a customer- Invest in digital Strengthen Utilize AI and Collaborate with
first mindset, manufacturing cybersecurity analytics to governments
leveraging data technologies to measures to unlock actionable and start-ups to
to enhance improve efficiency protect critical insights and drive foster growth and
personalization and quality assets innovation digitalization
Foreword EY

In an era defined by rapid technological advancements and shifting global dynamics, digital
transformation has become more than just an aspiration—it is an imperative for businesses seeking
sustained growth and competitiveness. India’s journey toward Industry 4.0 excellence is a testament to
the power of innovation, strategic collaboration, and a forward-thinking approach to technology adoption.
As a trusted advisor to enterprises navigating this transformation, we have witnessed firsthand the
impact of digital technologies in revolutionizing industries, enhancing operational efficiency, and
unlocking new opportunities for value creation. From automation and AI-driven insights to cybersecurity
and digital manufacturing, businesses that embrace these shifts are not only future-proofing their
operations but also positioning themselves as industry leaders.
For MSMEs and large enterprises alike, the road to digital maturity presents both opportunities and
challenges. Addressing key enablers such as customer-centric growth, data-driven decision-making,
and workforce upskilling will be critical to ensuring a seamless transition to Industry 4.0. Furthermore,
partnerships between businesses, technology providers, and policymakers will play a pivotal role in
accelerating this transformation at scale.
This publication serves as a framework for organizations looking to harness the full potential of digital
technologies to drive meaningful innovation and long-term impact. Through a structured approach, it
provides insights into best practices, strategic imperatives, and real-world case studies that illustrate how
businesses can successfully navigate their digital transformation journey.
As we embark on this transformative path together, I encourage industry leaders to take bold, decisive
steps in integrating digital capabilities into their core strategies. The future belongs to those who not only
embrace change but lead it. By fostering a culture of innovation, investing in the right digital tools, and
strengthening collaborative ecosystems, businesses can pave the way for a smarter, more connected, and
sustainable industrial future.

Anirban Mukherjee
Partner, Risk Consulting
Foreword FTCCI

As the world accelerates into the era of Industry 4.0, we stand at the threshold of a profound
transformation. Digital technologies are not just enhancing business processes—they are
revolutionizing the very core of industries across the globe. The Federation of Telangana Chambers
of Commerce and Industry (FTCCI) is proud to present this Thought Leadership White Paper on
Digital Transformation and Industry 4.0, in partnership with EY. The White Paper is a comprehensive
exploration of how these emerging technologies are shaping the future of business in Telangana and
beyond.
In Telangana, we are witnessing an exciting convergence of digital innovation and industrial growth.
From smart manufacturing to data-driven decision-making, the adoption of Industry 4.0 technologies,
such as artificial intelligence, Internet of Things (IoT), automation, and big data & AI is enabling
businesses to improve efficiency, enhance product quality, and create new value propositions.
However, this transformation also brings forth challenges—ranging from the need for skilled workforce
development to the integration of complex systems across traditional industries.
This White Paper offers a strategic framework for businesses to navigate this digital revolution.
Through insightful case studies, industry perspectives, and expert analysis, it provides actionable
recommendations for businesses of all sizes to adopt, integrate, and scale digital solutions effectively.
At FTCCI, we believe that the future of Telangana’s industrial landscape depends on our collective
ability to embrace technological change and foster an ecosystem that encourages innovation,
collaboration, and investment. The ICT Committee at FTCCI has been working relentlessly for
collaboration with all stake holders towards this goal. This paper aims to equip business leaders,
entrepreneurs, and policymakers with the knowledge needed to accelerate digital transformation,
unlock new opportunities, and position Telangana as a global hub for Industry 4.0.

Dr. Suresh Singhal

President, FTCCI
I congratulate the FTCCI ICT
Committee and EY for coming up with
this thought leadership whitepaper. It
is a great framework to achieve the goal
of accelerating digital transformation
and making our MSMEs competitive.

K Mohan Raidu
Managing Director, Informatics India
Chair, ICT Committee, FTCCI

DeepTech and emerging

technologies are revolutionizing
digital manufacturing and MSMEs—
driving intelligent automation,
precision, and scalability for a
future-ready economy.

Bala Peddigari
Chief Innovation Officer
Technology, Software and Services
Business Group, TCS
Co-Chair, ICT Committee, FTCCI
 FTCCI is uniquely positioned to collaborate
with policymakers, start-ups and ecosystem
partners to unlock the full potential of
digital transformation. The experience of the
traditional industry, clubbed with the agility
of the start-ups, can be a game changer.

Pankaj Diwan
Founder, Idealabs FutureTech Ventures
Co-Chair, ICT Committee, FTCCI

Digitization, decarbonization and automation will,

in my opinion, be the key pillars of transformation
for all industries. Affordable solutions are needed
to drive quick adoption and help in achieve the
objectives of Industry 4.0 transformation, especially
for SMEs. A lot of start-ups have emerged in this
burgeoning space over the last few years as more
industry owners wake up to this reality.

CV Anirudh Rao
Director, CV Infracon
Co-Chair, ICT Committee, FTCCI
 1 Introduction
Overview of accelerating growth and innovation
In today’s fast-paced business environment, innovation Despite these benefits, many businesses remain within their
serves as the driving force behind growth and prosperity established areas of expertise, excelling at core functions but
for enterprises. Recognizing this, a significant 84% of CEOs showing reluctance to embrace change. This hesitancy often
acknowledge the threat of digital disruption1, yet fewer than stems from a lack of expertise and a clear vision, which stand
half possess a formal strategy to navigate the digital future. as critical barriers to achieving the next level of innovation.
Innovation is not left to chance; it is a deliberate process
A prime example of successful innovation is the collaboration
aimed at creating new growth avenues and ensuring
between Publicis Sapient and Microsoft, which led to the
sustained success.
creation of, AGTB, the world’s first fully digital trade finance
A successful innovation strategy involves a balanced bank, leveraging Microsoft Azure technology. Another case
portfolio that combines incremental improvements with is the development of FacePass for Miral’s Yas Island, which
radical, disruptive changes. Companies that master introduced contactless customer experiences and set a new
innovation often outperform their peers, delivering superior standard for disruptive innovation in the hospitality and
returns to shareholders and offering tangible benefits entertainment industry.2
to customers, partners and employees. The innovation
Innovation is not optional; it is a necessity for growth. As
spectrum includes sustaining innovation, which enhances
the pace of change accelerates, businesses must embrace
existing products and services; evolutionary innovation,
innovation to remain competitive. By fostering a culture of
which enters adjacent markets to foster new growth; and
innovation, investing in technology, and engaging in strategic
disruptive innovation, which creates entirely new markets
collaborations, companies can secure their position in the
and business models, altering the competitive landscape.
market and drive future success.

The role of digital transformation in manufacturing and MSMEs3

Traction in digitalisation seen across MSME segments
Digitalization in MSME Sub-Segments % of digitalization across MSME industries
11% 55% 9% 45%
Manufacturing Services
71% 66%

35% 22%

Pre-Covid Post-Covid

12 Digital transformation: India’s journey to Industry 4.0 excellence

The manufacturing sector is a cornerstone of the Indian to meet changing customer demands efficiently. For MSMEs,
economy, spurring innovation, employment, and growth. digital tools like e-commerce platforms and CRM systems
It accounts for ~17% of India’s GDP, 60% of exports and open doors to global markets, enhance customer experiences
20% of capital investment, and it plays a crucial role in and create efficient supply chains. It has been observed that
job creation. Yet, technological advancements and global small businesses adopting digital technologies expect four
competition have intensified pressure, and the headroom times better revenues than other small businesses operating
for digital adoption in the sector promises future growth. in a similar business environment. Also, 72% of the small
Digital transformation has become essential for enhancing businesses have increased the usage of digital tools during
competitiveness, optimizing operations, and unlocking new COVID-19.6
opportunities for growth. By integrating technologies such
Despite its benefits, digital transformation poses challenges,
as the IoT, AI, machine learning, and advanced analytics,
especially for resource-constrained MSMEs. Concerns about
businesses can streamline processes, enhance quality,
costs, cybersecurity and skill gaps are common barriers. A
reduce time-to-market and offer personalized products.
strategic approach is crucial, starting with an assessment
MSMEs are a critical portion of India’s economy, driving of current digital maturity and a clear vision for the future.
significant breadth to trade, services and manufacturing Prioritizing investments, fostering a culture of innovation
sectors. A healthy MSME sector is critical for job creation and upskilling employees are key steps. Collaborating with
and also for the success of Make in India strategy. India has technology partners can also provide expertise, access to
around 63 million SMEs which have generated 11 crore cutting-edge tools, and best practices, accelerating the
jobs in the economy (22% of the jobs in India). MSMEs transformation journey.
contribute to around 30% to India’s GDP, making this
The following sections in this document indicate key trends
a critical component of the economy. The adoption of
which impact the adoption of digital technologies in India
technology and digital is quite low in India. For example, a
with a specific focus on manufacturing and MSME sector.
survey by India SME Forum indicates that 70% of the MSMEs
lack awareness of digital tools.
Digital transformation has significantly impacted
manufacturing through Industry 4.0, the fourth industrial
revolution. This era is marked by the fusion of physical,
digital, and biological technologies. Smart factories with
connected devices enable real-time communication, self-
optimization, and greater flexibility, allowing manufacturers

1
Accelerating-Growth-Through-Innovation-2.pdf
2
Accelerating-Growth-Through-Innovation-2.pdf
3
7500.pdf
4
IBEF – Tech based solutions for Indian MSME Landscape - https://www.ibef.org/blogs/tech-based-solutions-to-empower-the-indian-msme-landscape
5
MSMEs and Digital Technology: New pillars of the Indian Economy - https://www.crn.in/columns/msmes-and-digital-technology-new-pillars-of-the-indian-economy/
6
Digital Safety Net Helps Small Businesses Survive During COVID-19 - https://connectedcouncil.org/digital-safety-net-helps-small-businesses-survive-during-covid-19/

13
 Customer-centric growth in the
2 digital era: A paradigm shift
Key trends in driving digital growth Key strategies for success
To take full advantage of this level-playing field, businesses
1. Removing barriers for a fairer digital should focus on the following strategies:
marketing space a. Microtargeting and niche audiences
Instead of trying to appeal to broad demographics,
Digital marketing has traditionally been dominated by large businesses should identify and target niche audiences
enterprises with substantial budgets and resources. However, that align closely with their offerings. By leveraging
recent advancements in technology and the proliferation advanced targeting capabilities provided by digital
of accessible digital tools have democratized the marketing platforms, even small businesses can achieve high
landscape, enabling smaller businesses to compete on a more engagement rates and conversion metrics.
level-playing field. This shift is driven by several factors:
b. Content-driven marketing
■ Sachet-sized advertising platforms: Social media Content remains king in the digital age. High-quality,
platforms such as Facebook, YouTube, Instagram, relevant content—whether it is blog posts, videos,
and LinkedIn offer sachet-sized and pay as you use or social media updates—can help establish thought
advertising solutions that allow small businesses to reach leadership, build trust and foster long-term relationships
targeted audiences without breaking the bank. This with customers. Businesses should invest in creating
enables firms to make small investments in marketing valuable content tailored to their audience’s needs
and visibility through focused targeting, which was and preferences.
difficult in the era of billboards, newspaper ads
and signages. With the advent of Generative AI (GenAI), content
creation has become more accessible and efficient than
■ Automation tools: Marketing automation platforms such
ever before. 40% of Generative AI (GenAI) solutions will
as HubSpot, Mailchimp, and Marketo provide scalable
be multimodal (text, image, audio and video) by 2027,
solutions for managing campaigns, nurturing leads,
up from 1% in 2023, according to Gartner, Inc.7
and analyzing performance. These tools are easy to
implement, intuitive to adopt and have less upfront Tools such as GPT-powered platforms can generate
investments, which enables manufacturing and MSMEs engaging articles, social media captions, email
to adopt, experiment and scale basis their appetite campaigns, and even video scripts within minutes,
for investment. saving businesses significant time and resources. For
■ Data accessibility: The availability of data analytics tools example, a small e-commerce brand could use GenAI
(e.g., Google Analytics, SEMrush) empowers businesses to create personalized product descriptions at scale
of all sizes to make informed decisions based on real- or draft SEO-optimized blog posts that resonate with
time insights. its target audience. By automating repetitive tasks,
marketers can focus on strategy and creativity, ensuring
that the final output aligns perfectly with their goals
while maintaining authenticity.

7
Gartner Predicts 40% of Generative AI Solutions Will Be Multimodal By 2027
8
IBEF – Tech based solutions for Indian MSME Landscape - https://www.ibef.org/blogs/tech-based-solutions-to-empower-the-indian-msme-landscape
9
https://softlinkglobal.com/how-saas-can-help-the-indian-logistics-msme-sector/#:~:text=Correspondingly%2C%20India’s%20logistics%20sector%20is,to%20start%20
and%20scale%20up

14 Digital transformation: India’s journey to Industry 4.0 excellence

c. Agile campaign management Key strategies for success
The ability to quickly adapt and iterate marketing
Businesses aiming to enhance experience and convenience
campaigns based on performance data is crucial. Small
should consider the following approaches:
businesses should adopt agile methodologies, using
A/B testing and continuous optimization to refine their a. Seamless user journeys
strategies and maximize ROI. Mapping out the entire customer journey—from
discovery to purchase and post-purchase support—is
essential. Identifying pain points and eliminating
2. Growth of experience and convenience barriers can create smooth, enjoyable interactions at
every stage.
Consumer expectations have shifted dramatically over A major example of this is the Unified Payments Interface
the past decade. Today’s customers prioritize seamless (UPI), which has transformed digital transactions in India. By
experiences and unparalleled convenience when interacting enabling instant, secure, and hassle-free payments, UPI has
with brands. From intuitive user interfaces to frictionless significantly improved the checkout experience for both large
checkout processes, every touchpoint matters. Companies e-commerce platforms and small businesses. For instance:
that excel in delivering exceptional experiences and
convenience are seeing significant gains in customer loyalty ■ E-commerce integration: Platforms like Flipkart and
and market share. Amazon India have integrated UPI-based payment
options such as Google Pay, PhonePe, and BHIM,
Drivers of change allowing customers to complete purchases with just a
Several factors contribute to the growing emphasis on few clicks without entering cumbersome card details or
experience and convenience: net banking credentials.

■ Mobile-first mindset: With mobile devices accounting ■ Grocery retail transformation: Reliance JioMart’s
for most of the online traffic, businesses must ensure adoption of UPI has streamlined payments for grocery
their websites and apps are optimized for mobile deliveries, helping first-time digital shoppers
users. Especially for MSMEs, the rise of Indian start- onboard seamlessly.
ups has helped drive adoption across CRM, customer ■ Support for small businesses: Kirana stores widely
services, credit assessment, accounting products, social adopted UPI QR codes during the pandemic, enabling
commerce platforms and Cloud service providers, which contactless payments and enhancing
are providing India and MSME specific offerings.8 customer convenience.
■ Omnichannel integration: Customers expect consistent By eliminating payment friction, UPI has boosted conversion
experiences across multiple channels, including physical rates and customer satisfaction, making it a model for
stores, e-commerce platforms, social media and seamless digital transactions across industries.
customer service portals.
■ Instant gratification: Fast shipping, easy returns and b. Personalized recommendations
instant access to information are now considered AI-powered recommendation engines have redefined
standard practices rather than differentiators. With the customer engagement by offering tailored products and
rise of Indian logistics as a service player, these services content suggestions. Companies like Netflix and Amazon
can be enabled for firms across sectors and specifically use advanced algorithms to analyze user behavior,
for the MSME sector.9 driving satisfaction and retention.

15
 Beyond these giants, the rise of open-source solutions has ■ Fairer revenue distribution with lower commission fees
made personalization accessible to businesses of all sizes.
■ Greater control over branding and customer relationships
Platforms like Odoo, Magento, and Drupal provide flexible,
cost-effective tools for implementing ■ Enhanced supply chain transparency to improve
recommendation systems: operational efficiency
■ Retail customization: Magento’s open-source Across sectors, ONDC is driving innovation, enhancing supply
eCommerce platform allows retailers to integrate AI- chain transparency, and enabling a more equitable digital
driven product recommendations based on browsing ecosystem that prioritizes collaboration over monopolization.
behavior and purchase history, creating a more relevant
shopping experience.
b. Pay-as-a-service model
■ Content personalization: Drupal’s modular framework
Today, most digital platforms offer Pay-as-a-service and
enables content-heavy websites to deliver personalized freemium models, allowing businesses to experiment with
content streams to users. technology before committing to full-scale adoption. This
These open-source ecosystems reduce costs, encourage model is widely used across industries, including:
innovation, and empower even small businesses to compete
■ Streaming services and hyperscalers that provide
with industry leaders in delivering hyper-personalized
consumption-based pricing
experiences.
■ E-commerce and SaaS platforms offering tiered services
c. Investment in technology
Adopting emerging can redefine customer engagement ■ Backend functional platforms that charge based
and set brands apart. Innovations such as augmented on usage
reality (AR), virtual try-ons, and AI-powered chatbots
For MSMEs, freemium models provide a means of
are transforming how customers interact with products
experimenting with the technology. Freemium models offer
and services:
basic versions of products or services for free while charging
■ AR and virtual try-ons: Brands like Lenskart and Nykaa for premium features. Many of these models fit to the
leverage AR to allow customers to try on glasses or requirement of MSMEs.
makeup virtually, reducing purchase hesitation.
■ AI chatbots: Businesses integrate conversational AI to c. Direct-to-Consumer (DTC)
provide instant support, enhancing service efficiency By bypassing intermediaries and selling directly to
and customer satisfaction. consumers, brands can maintain greater control over
pricing, branding and customer relationships. DTC
pioneers like Warby Parker and Casper have disrupted
3. New business models for customers industries once dominated by established players. With
the raise of e-commerce and quick commerce models
The rise of digital technologies has led to innovative in India, DTC has now become one of the key consumer
business models that cater directly to evolving consumer expectations. Increasingly, manufacturing companies
demands. Companies are moving beyond traditional are focusing on DTC to drive profitable growth by
commerce paradigms by adopting approaches that offer disintermediating their channels and monetizing the
flexibility, accessibility, and enhanced customer experiences. strength of their brands.

Emerging models shaping the digital economy The DTC model has significantly empowered MSMEs by
enabling direct customer interactions, which provide
a. Raise of multi-entity digital platforms unfiltered feedback to refine products and services. For
Multi-entity digital platforms, such as the ONDC, are example, a local artisanal pickle brand can use customer
transforming how businesses operate by fostering reviews to improve recipes or packaging, ensuring a better
inclusivity and reducing dependency on centralized market fit. Additionally, the rise of Logistics as a Service
e-commerce giants. ONDC’s open architecture enables (LaaS) players like Delhivery and Shadowfax has made it
seamless interoperability between buyers, sellers and easier for MSMEs to deliver products directly to customers’
service providers, democratizing access to digital doorsteps, even in remote areas. This eliminates the need
commerce for businesses of all sizes. for costly warehousing or logistics setups, allowing small
For MSMEs, this model eliminates entry barriers, allowing businesses to focus on quality and innovation. By combining
them to compete on a level-playing field with established direct feedback with efficient delivery systems, MSMEs can
brands. By providing access to a wider customer base enhance customer satisfaction, build trust and strengthen
without the need for significant investments in proprietary their brand reputation, driving sustainable growth while
platforms, ONDC empowers small businesses to scale maintaining control over pricing and customer relationships.
efficiently. Additionally, the decentralized nature of such
platforms ensures:

16 Digital transformation: India’s journey to Industry 4.0 excellence

Key strategies for success Understanding market dynamics
1 India’s consumer base is diverse, with varying
To implement successful new business models, companies
cultural nuances and regional preferences. To
should:
achieve customer-centric growth, businesses must
■ Focus on value proposition: Clearly articulate the unique offer localized and customized solutions tailored
benefits of your offering to justify subscription fees or to specific regions and segments. Understanding
premium upgrades and Generative AI (GenAI) makes these dynamics is crucial in creating products and
this seamless while driving traffic through SEO-driven services that resonate with customers.
content. For example, a fitness app can use GenAI
to create blogs on “benefits of personalized workout
plans,” optimized with keywords like “custom fitness Leveraging digital transformation
solutions,” enhancing visibility and educating customers
2 Digital tools are vital for reaching wider audiences
about its unique advantages. Similarly, SEO empowers and enhancing customer experiences. By adopting
MSMEs to compete effectively despite limited budgets. technologies for marketing, sales and service
A Mumbai-based bakery boosted online orders by delivery, businesses can gather valuable data
targeting long-tail keywords like “best homemade cakes to personalize interactions. This builds stronger
in Mumbai,” while a Kerala-based spice seller ranked relationships and ensures convenience
higher using tags like “authentic organic spices online.” for customers.
By combining GenAI for consistent, high-quality content
creation with strategic tagging, meta descriptions
and structured data, businesses can improve search
rankings, attract targeted audiences, and build trust.
3 Building trust and loyalty
Trust is paramount in India’s market. Businesses
This dual approach drives disproportionate traffic, should focus on transparency, quality and
boosts conversions, and fosters long-term customer reliability to foster loyalty. Satisfied customers
loyalty without significant ad spend. not only repeat purchases but also become brand
advocates through word-of-mouth, amplifying the
■ Build strong communities: This includes engaging
business’s reputation.
customers through exclusive content, events, and
loyalty programs to create a sense of belonging.
The rise of influencers on social media has amplified
community-driven sales, especially for traditional and 4 Innovation in offerings
Innovation extends beyond technology to
MSME brands. For example, Ayurveda-based product
include product design and service delivery.
lines like Patanjali and Forest Essentials have thrived
Companies should continuously adapt by
by collaborating with influencers who resonate with
diversifying product lines, offering customization,
India’s cultural heritage. These influencers share
or exploring new models like subscriptions or
authentic stories about Ayurvedic ingredients, fostering
e-commerce. Meeting evolving customer needs
trust among health-conscious consumers. Similarly,
ensures sustained relevance.
micro-influencers are helping rural artisans showcase
handmade goods, creating emotional connections with
buyers. Such collaborations build loyal communities
while preserving traditional values. 5 Access to finance and resources
Investing in customer-centric initiatives often
■ Iterate based on feedback: Continuously gather and requires capital. While access to finance remains a
analyze customer feedback to refine your model challenge for many MSMEs, government schemes
and address unmet needs. For instance, Zomato has and financial incentives can provide support.
iteratively improved its app features based on AI- Utilizing these resources enables businesses to
summarized user complaints about delivery times. By adopt new technologies and improve operations.
automating feedback analysis, companies save time
and ensure iterative improvements align closely with
customer expectations, enhancing satisfaction Regulatory compliance
and retention.
6 Adhering to regulations—taxation, labor laws,
environmental standards is critical. Compliance
avoids legal issues and enhances credibility,
What this means for traditional
reinforcing trust among customers.
and MSME companies

Customer-centric growth represents a strategic shift where Collaboration and partnerships

businesses prioritize customer needs and preferences. For
7 Partnerships with larger corporations or
India’s diverse and rapidly evolving market, this approach international entities open doors to new markets,
is essential for traditional businesses and Micro, Small, and technologies and expertise. Such collaborations
Medium Enterprises (MSMEs) to remain competitive amid empower MSMEs to enhance their offerings and
digital advancements and changing consumer expectations. deliver superior value to customers.

17
 Cross reads from early adopters Flipkart:
across sectors Flipkart, the e-commerce giant of India, understood the need
for a platform that catered to a price-sensitive and digitally
evolving consumer base. Their customer-centric
E-commerce and retail approach includes:

Amazon: ■ Value for money: Flipkart offers competitive pricing and

Renowned for its customer obsession, frequent sales, attracting price-conscious shoppers.
Amazon has consistently leveraged customer feedback
■ Cash on delivery: They implemented cash on delivery
to innovate and improve. From its early days, the
(COD) as a payment option, fostering trust and
company has focused on creating a seamless shopping
convenience for customers with limited access to online
experience, evidenced by features like one-click ordering
payment methods.
and personalized recommendations, which were directly
influenced by understanding and responding to customer ■ Local language support: Flipkart offers an interface and
behaviors and preferences. customer support in multiple Indian languages, making
the platform accessible to a wider audience.
Nykaa: ■ Delivery network: They invested in building a robust
Nykaa India’s leading beauty retailer, disrupted the market nationwide delivery network, ensuring efficient and
by understanding the needs of a tech-savvy, brand- timely delivery of products.
conscious audience. Their customer-centric
approach includes:

■ Digital-first focus: Nykaa created a user- Technology and consumer electronics

friendly e-commerce platform with personalized
recommendations and virtual try-on tools. Apple:
Apple’s approach to product development, prioritizing
■ Content and education: They offer informative intuitive design and user experience, underscores
content like tutorials and reviews, empowering its customer-centric ethos. The company’s continual
customers to make informed decisions. innovations, driven by keen attention to customer feedback
■ Omni-channel strategy: Nykaa operates physical and market trends, have solidified its reputation for
stores alongside their online platform, offering a products that customers love and remain loyal to.
seamless customer experience.
■ Localization: They cater to diverse regional
preferences by stocking a wide range of Indian and Financial services and payments
international brands.
Paytm:
Paytm pioneered digital payments in India, focusing on
Bigbasket.com: financial inclusion and ease of use. Their customer-centric
BigBasket revolutionized grocery shopping in India by approach includes:
offering convenience and choice to busy consumers. Their
■ Simple and secure platform: Paytm developed a user-
customer-centric strategy includes:
friendly mobile app with local language support to
■ Solving pain points: They tackled the challenges of overcome language barriers.
limited selection and unreliable delivery in traditional ■ Widespread acceptance: They partnered with various
grocery shopping. businesses to ensure wide acceptance of Paytm as a
■ Extensive product range: BigBasket offers a wide payment method.
variety of fresh produce, groceries and household ■ Focus on rural markets: Paytm recognized the potential
items, all in one place. in rural India and developed solutions for users with
■ Delivery convenience: They offer flexible delivery slots limited internet access.
and ensure timely and efficient delivery across cities. ■ Financial services integration: They offer a range
■ Focus on freshness: BigBasket prioritizes sourcing and of financial services like bill payments and money
delivery of fresh produce, building trust transfers, making the app a one-stop solution.
with customers.

18 Digital transformation: India’s journey to Industry 4.0 excellence

Services industry
Zappos:
This online shoe and clothing retailer is a paragon of
customer-centric transformation, making customer service
its number one priority. Zappos empowers its employees
to go the extra mile to make customers happy, resulting
in legendary service that not only resolves issues but also
creates delightful and memorable customer experiences.

Urban Company:
Urban Company offers a variety of on-demand services like
beauty treatments, home repairs and fitness classes. Their
customer-centric approach includes:

■ Quality and reliability: Urban Company ensures a high

standard of service by rigorously vetting and training
service professionals.
■ Convenience and flexibility: Customers can book
appointments easily through the app and choose
flexible scheduling options.
■ Transparent pricing: Urban Company provides
transparent pricing upfront, avoiding hidden costs and
building trust.
■ Wide range of services: They offer a diverse range of
services to cater to various needs and preferences
within the on-demand space.

19
 Digital manufacturing:
Powering industrial innovation
3 with smart technologies
Key trends in cost optimization
Primary focus of Gen AI Initiatives
1 Automation as a cost enabler
Customer Experience/Retention 38%

Automation has emerged as one of the most powerful tools

Revenue Growth 26%
for cost optimization across industries. By replacing manual
processes with automated systems, businesses can reduce
labor costs, minimize human error and increase Cost Optimization 17%

operational efficiency.
Business Continuity 7%

Key applications of automation None of the above or not applicable

12%
(eg: vendor or investor)
a. Industrial automation
0% 10% 20% 30% 40%
In manufacturing, industrial robots perform tasks such as
welding, assembly and packaging. Collaborative robots
(cobots) work alongside humans to enhance safety and c. Lights-out-manufacturing
efficiency. For instance:
A revolutionary application of automation allows
■ Automotive manufacturers use robotic arms to factories to operate autonomously without human
assemble vehicles with precision and consistency. intervention, running 24/7 to maximize productivity
■ Food processing plants employ automated sorting and while minimizing labor expenses. According to a Gartner
packaging systems to ensure hygiene and compliance study, by 2025, 60% of manufacturers will have more
with quality standards. than two completely lights-out processes in at least one
of their facilities.10

b. GenAI For example,

Generative AI (GenAI) is increasingly being adopted across ■ Unilever has implemented ‘lights-out production’
various aspects of manufacturing, transforming how – 24/7 manufacturing with minimal operator
products are designed, produced and optimized. intervention. They no longer need operators to carry
For instance: out routine work has resulted in an almost doubling
of labor productivity, freeing up the team’s time to
■ In automotive manufacturing, GenAI can generate spend on more value-adding activities.11
lightweight vehicle components that meet safety
standards while minimizing material usage.
■ Electronics manufacturers leverage GenAI-powered
vision systems to identify microscopic flaws in circuit
boards, ensuring higher product quality.

20 Digital transformation: India’s journey to Industry 4.0 excellence

 2 Data-driven manufacturing ■ A pharmaceutical company monitors humidity levels
during production to ensure product quality.
Data-driven manufacturing leverages real-time data
collection, analytics and connectivity to optimize
production processes, reduce waste and lower costs. The b. AI-powered quality control
integration of sensors, IoT devices and cloud computing AI-powered vision systems inspect products for defects at
enables manufacturers to gain unprecedented visibility into high speeds, ensuring consistent quality. For instance:
their operations and make informed decisions. ■ Electronics manufacturers use computer vision to
detect microscopic flaws in circuit boards.
Drivers of data-driven manufacturing
■ Textile mills employ image recognition to identify
■ Industry 4.0 technologies: The convergence of IoT, fabric imperfections.
AI, big data and machine learning has transformed
traditional factories into smart factories.
■ Real-time monitoring: Sensors embedded in machinery c. Energy management
and equipment provide continuous feedback on
performance metrics, enabling proactive interventions. To enhance energy management, manufacturers use
sensors embedded in machinery to track key parameters
■ Process optimization using Digital Twin: Digital Twin
allows manufacturers to simulate, analyze and optimize such as energy consumption, temperature, and vibration.
workflows in real-time. By testing scenarios and By monitoring energy usage patterns, manufacturers
identifying inefficiencies in the virtual environment, can identify inefficiencies and optimize energy-intensive
companies can fine-tune production processes, reduce processes. For instance, Tata Steel has implemented
waste and enhance overall efficiency. advanced energy monitoring systems across its plants to
track energy usage in real time.
Key applications of data-driven manufacturing

a. Condition monitoring

Sensors track parameters such as temperature, vibration

and pressure to detect anomalies early. For example:
■ A steel plant uses condition monitoring to prevent
overheating in furnaces, avoiding costly repairs
and downtime.

10
Lights-Out Production Will Be a Reality by 2025
11
Two Unilever sites named most digitally advanced factories | Unilever

21
 Predictive maintenance for downtime Enhancing yield with
3 4
reduction Digital Twins

Unplanned downtime is a major contributor to operational Digital twins are virtual replicas of physical assets, processes
costs in manufacturing and other asset-intensive industries. or systems. They simulate real-world conditions to test
Predictive maintenance uses data analytics and machine scenarios, optimize performance, and identify opportunities
learning to anticipate equipment failures before they occur, for improvement. In manufacturing, Digital Twins are
enabling timely interventions that minimize disruptions and particularly valuable for enhancing yield—the percentage
repair expenses. of usable output relative to input materials. According to
Gartner, 13% of organizations implementing IoT projects
Key applications of predictive maintenance already use Digital Twins, while 62% are either in the process
a. Rotating equipmen of establishing Digital Twin use or plan to do so.12

Motors, pumps and compressors benefit greatly from

Key applications of Digital Twins
predictive maintenance. For example:
a. What-if analysis
■ An oil refinery uses vibration analysis to monitor pump
bearings, preventing catastrophic failures. ■ Digital Twins allow manufacturers to run simulations
to understand the impact of different variables on
■ A wind farm employs acoustic sensors to detect blade production outcomes. For example:
imbalances, optimizing turbine performance.
■ A semiconductor factory simulates wafer fabrication
processes to fine-tune recipes and improves chip yields.

b. HVAC systems ■ A beverage company tests bottle filling rates to

eliminate spillage and underfilling.
Commercial buildings use predictive maintenance to
optimize heating, ventilation and air conditioning systems.
For instance:
b. Process optimization
■ Temperature sensors detect cooling inefficiencies,
prompting filter replacements or refrigerant top-ups. ■ Manufacturers use Digital Twins to model entire
production lines and test changes virtually. For example:
■ Vibration sensors flag motor wear in fans, enabling pre-
emptive replacements. ■ A cement plant uses a Digital Twin to optimize kiln
temperatures, reducing clinker formation and improving
cement quality.
c. Fleet management
■ A chemical plant adjusts reaction parameters in its twin
Logistics companies apply predictive maintenance to to increase product purity and yield.
vehicle fleets. For example:

■ Telematics systems monitor engine diagnostics, tire

pressure and fuel consumption to schedule servicing.
■ Predictive algorithms alert drivers to potential brake
issues, averting accidents.

12
Gartner: digital twins beginning to enter the mainstream
13
(6) Gartner predicts IoT market to grow to $991 billion by 2028 | LinkedIn
14
First collaborative robots in India - Bajaj auto
15
Digital Twin Technology in System Design - GeeksforGeeks
16
Honeywell OT Cybersecurity Solutions: Helps Protect What Matters

22 Digital transformation: India’s journey to Industry 4.0 excellence

Trends supporting digitalization E. Additive manufacturing (3D Printing)
in manufacturing Additive manufacturing allows manufacturers to produce
complex parts quickly and cost-effectively. It also supports
sustainable practices by minimizing material waste.
Aerospace companies like Boeing use 3D printing to
Digitization has become a cornerstone of modern business
create lightweight components for aircraft, improving fuel
transformation, reshaping industries across the globe.
efficiency, shorter lead times, greater design flexibility and
Especially, the manufacturing sector is leveraging digital
reduced inventory costs.
technologies to enhance efficiency, improve customer
experiences and drive innovation.
Manufacturing: Industry 4.0 and smart factories F. Digital Twins

■ Manufacturing is at the forefront of the fourth industrial Digital Twins simulate entire production lines or individual
revolution (Industry 4.0), characterized by the machines, enabling manufacturers to test changes virtually
integration of IoT, AI, robotics and big data analytics. before implementing them in the physical environment. For
These technologies are driving operational efficiencies, example, Tesla uses Digital Twins to model its production
reducing downtime, and enabling mass customization. lines and vehicle designs. This allows the company to test
new configurations virtually, reducing development time
and improving product quality.15
Key trends supporting digitalization in
manufacturing G. Cybersecurity for manufacturing systems

A. Internet of Things (IoT) and Connected Devices As manufacturing becomes more connected, robust
cybersecurity measures are essential to protect sensitive
IoT-enabled sensors embedded in machinery collect real- data and prevent disruptions. For example, Honeywell
time data on performance metrics such as temperature, developed advanced cybersecurity solutions to safeguard
vibration and energy consumption. Gartner predicts the industrial control systems, ensuring uninterrupted
IoT market will nearly double, soaring from US$546 billion operations for its clients in critical sectors like oil and gas.16
in 2022 to US$991 billion by 202813. This data is analyzed
to optimize production processes and predict maintenance
needs. For example, Siemens uses IoT to monitor equipment H. Sustainability and green manufacturing
health in its factories, achieving up to 30% reductions in
Digitization supports sustainability by optimizing resource
unplanned downtime.
usage, reducing waste, and promoting eco-friendly
practices. For instance, Adidas partnered with Carbon Inc.
B. Industrial data lake to use 3D printing technology for its Futurecraft sneakers,
reducing material waste and enabling localized production
As manufacturing becomes increasingly data-driven, to cut carbon emissions.17
the ability to collect, store and analyze vast amounts
of information is critical. For instance, an automotive
manufacturer uses an industrial data lake to aggregate data I. Augmented reality (AR) and virtual reality (VR)
from assembly lines, robotic systems and supplier networks. AR and VR are transforming training, remote assistance,
By applying AI algorithms to this data, the company can and design visualization in manufacturing. For example,
identify inefficiencies in production workflows, and Volkswagen uses AR glasses to guide technicians during
reduce downtime. complex repairs. The glasses overlay step-by-step
instructions onto machinery, reducing errors and speeding
C. Artificial Intelligence (AI) and Machine up maintenance tasks.18
Learning (ML)
AI and ML are used for predictive maintenance, quality
control and process optimization by analyzing vast datasets.
For instance, General Electric (GE) uses AI-powered
predictive maintenance to monitor jet engine performance.
This has reduced unplanned downtime and extended the
lifespan of critical components.

D. Robotics
Robotics, particularly collaborative robots (cobots) and
autonomous systems, are becoming integral to modern
manufacturing. These technologies handle repetitive,
dangerous, or highly precise tasks, freeing human workers
for more strategic roles. For example, Universal Robots have
implemented collaborative robots at Bajaj Auto Ltd and
have enabled Bajaj to improve its production capabilities
and evolve its multi-model offerings.14

23
 Cybersecurity: Building
4 resilience and ensuring privacy
In today’s digital environment, cyber disasters are not Market drivers for cyber resilience
just a possibility; they are inevitable. As the global
landscape shifts and new technologies emerge and
evolve, organizations are becoming more deeply CXOs today are re-writing the organizational technology
strategy to embed cyber resilience, with an aim to
integrated with technologies, like Machine Learning,
building resilience-by-design, rather than an after-
Artificial Intelligence, Blockchain, quantum computing thought. Digital transformation and global changes in
and the Internet of things (IoT), among others. In this the workplace have introduced various digital layers
light, the impact of a major cyber-attack on businesses within organizations. Over 20 billion devices of various
is compounded many times over. However, what types from IoT devices, connected vehicles, drones
characterizes an organization’s strength is its ability to to fitness trackers are connected to the internet,
plan, prepare and test its capability to continue providing with millions more being connected daily. The attack
services to customers, recover from breaches and emerge surface is increasing at an alarming rate and with it, the
spiraling number of security flaws and vulnerabilities.
stronger as a result.
The estimated annual economic cost of cyber-crime is
Cyber warfare is an ever-present threat with far-reaching reaching over US$1 trillion, with an average of 150+
consequences for businesses, governments and society. days being the time to spot a sophisticated cyber-attack.
Attacks take various forms, from ransomware crippling This leads to increased cyber threats at various levels.
critical infrastructure to sophisticated operations Below are some examples:
designed to destabilize entire organizations. The loss of At the employee level: The increasing number of
sensitive data is often just the beginning; threat actors employees working from home leads to growing
frequently aim to disrupt operations, erode stakeholder cybersecurity concerns as the vastness of the attack
confidence and undermine societal trust. surface increases.
■ At data or organizational level: This includes protecting
data, which is now being accessed from a multitude
of different locations or stored across multiple data
Cybersecurity and cyber resilience centers, various public clouds or SaaS applications
spread across the world.
Cybersecurity and cyber resilience are inherently ■ At the supply chain level: Supply chain cyberattacks,
interconnected, with cybersecurity focusing on including those targeting software providers, pose
safeguarding systems and data and detecting threats, significant risks to organizations. Attackers exploit
while cyber resilience ensures an organization’s ability to vulnerabilities in third-party vendors or software
recover and adapt in the aftermath of an attack. While updates to breach systems and disrupt operations.
cybersecurity aims to prevent breaches, cyber resilience A single compromised link can lead to widespread
ensures business continuity by enabling rapid recovery consequences, emphasizing the need for strong
and minimizing operational disruption. Together, these cybersecurity across multiple partners.
strategies form a comprehensive approach that not
■ Regulatory changes: Compliance requirements for
only defends against cyber threats but also ensures
data are increasing globally with regulations like GDPR,
organizations can swiftly restore operations and maintain
DORA and India’s DPDP Act, 2023. Penalties for
long-term security and continuity.
non-compliance can be substantial, with GDPR fines
reaching millions of dollars.

24 Digital transformation: India’s journey to Industry 4.0 excellence

■ Emerging technologies: Emerging technologies are ■ Rapid recovery and continuity: Minimize operational
amplifying the need for stronger cyber resilience. AI downtime and financial impact by implementing a
and ML bring new threats like AI-driven malware and structured recovery framework. This includes secure,
ML-enhanced phishing, with insiders exploiting them to immutable vaulted backups, automated failover
bypass security. The advent of IoT introduces countless systems, and rigorously tested response and cyber
attack points, where a single compromised device can recovery strategies to ensure seamless functionality
spread threats across a network. Quantum computing with minimal disruption.
poses future risks to current encryption methods, while
■ Adapt and evolve: With the cyber threat landscape
deepfakes facilitate disinformation campaigns, damaging
constantly changing, organizations must adopt
reputations and finances. As these technologies evolve,
an agile, intelligence-driven security approach.
they highlight the urgent need for robust cyber
Continuous threat monitoring, real-time analytics, and
resilience strategies.
iterative improvements in protection, detection, and
It is crucial that organizations understand these risks, recovery frameworks are crucial to staying resilient
protect their data and avoid penalties, while maintaining against emerging and sophisticated cyber risks.
customer trust — because once trust is lost, it takes years
Having the agility and the strength to withstand an attack
to regain.
and quickly bounce back to regular operations and as far
as possible, continuing normal operations during an attack
is the essence of cyber resilience.
Cyber resilience: A four-pillar approach

The concept of cyber resilience is gaining popularity

and is still growing. Organizations must recognize that
resilience is more than just responding to a breach; it
is about proactive planning and implementing a multi-
layered defense strategy enabling cyber response
and recovery.
“
Cyber resilience is more

“
than recovery; it is ensuring
your operations continue
seamlessly, even amidst
a cyberattack
Pradeep Eledath
Partner,
Technology Consulting,
Broadly, cyber resilience can be split into four major
EY India
components — anticipating, withstanding, responding /
recovering and learning/adapting from cyber threats.
■ Anticipate threats: Adopt a proactive approach
by thinking like an attacker rather than a defender.
Shift from a reactive stance to a strategic, forward-
looking posture by identifying vulnerabilities,
predicting attack vectors, and implementing
preemptive measures to stay ahead of evolving
cyber threats.
■ Withstanding attacks: Develop ability to endure and
sustain operations amid cyber threats. This requires
a multi-layered defense strategy, integrating robust
security frameworks, redundancy and restoration
measures, and well-orchestrated incident response
protocols to mitigate operational disruptions and
safeguard critical assets.

25
 Key takeaways for cyber resilience
Cyber resilience is a critical component for organizations to effectively manage and recover from cyberattacks while
maintaining business continuity. A well-defined and proactive incident response plan enables organizations to quickly
detect, contain and mitigate the impact of cyber threats, preventing further damage and disruption. Coupled with this, a
comprehensive and effective cyber recovery strategy, underpinned by secure, up-to-date cyber backups and automated
restoration processes, ensures rapid resumption of essential services with minimal downtime.
Post-incident analysis plays a vital role in strengthening resilience, providing valuable insights that refine response
protocols and recovery procedures for future incidents. Furthermore, organizations must invest in building a resilient
workforce, equipped with the knowledge and skills to handle cyber crises effectively through ongoing training,
simulations and awareness programs. By integrating these response and recovery strategies into their broader
cybersecurity framework, organizations not only protect themselves against evolving cyber threats but also enhance
their ability to adapt and thrive in an increasingly complex digital environment, ensuring long-term security and
operational resilience.

India’s full-fledged privacy Law (DPDPA, Key definitions

2023): Challenges and the road ahead ■ Personal data means any data about an individual who
is identifiable by or in relation to such data.
■ Data fiduciary means any person who, alone or in
conjunction with other persons, determines the purpose
Background and means of processing of personal data.
■ Significant data fiduciary means any data fiduciary
The Digital Personal Data Protection Act, 2023, was or class of data fiduciaries as may be notified by the
approved by the President of India on 11 August 2023, and central government.
published in the official Gazette, thereby making it an Act.
The effective implementation of the Act depended on the
publication of the Rules by the MeitY. On 3 January 2025,
MeitY released the draft DPDP Rules in the Gazette of India, Key implications of the act (examples)
inviting public consultation until 18 February 2025.
We believe it is essential organizations understand the Notice: Shall be clear, itemized, in simple language and
developments that can enable and transform their business should include:
operations and data management practices. The published ■ Purpose of processing
Rules provide the necessary details and implementation ■ Manner for accessing rights
guidelines to make the Act operational in practice. It
includes 22 rules and 7 schedules, which encompass various ■ Manner to make a complaint to the Board
provisions of the Act, including Privacy Notice, Consent ■ Notice to be provided in English or have an option for
Manager, Verifiable Parental Consent, Data Retention any language specified in the Eighth Schedule of the
Timelines, Data Breach, Security Safeguards, and several Indian Constitution.
other regulatory and compliance requirements. Children’s data:
■ T
 he data fiduciary shall obtain verifiable parental
consent before processing any personal data related
to children .
Key aspects of the Act
■ Behavioral monitoring of children or targeted
advertising directed at children is prohibited.
Applicability of the Act
■ The Act is applicable to processing of digital personal Data principal rights
data within the territory of India collected online or ■ Rights
 to access
collected offline and later digitized.
■ Right
 to correction and erasure
■ Further, applicable to processing outside territory of
India, if it involves providing goods or services to the ■ Rights
 of grievance redressal
Data Principals within the territory of India. ■ Right
 to nominate

26 Digital transformation: India’s journey to Industry 4.0 excellence

Transfer of personal data outside India: ■ Exemptions
 from certain obligations for processing
personal data of child
■ The
 central government to notify such countries or
territories outside India to which a Data Fiduciary may ■ Additional
 obligations for Significant Data Fiduciaries
not transfer personal data. (e.g., DPIA, audit)
■ Exemptions
 are available such as legal right or claim,
processing by court and tribunal, etc. ■ What do the seven schedules clarify? Four Schedules
outline various requirements to guide the Data
Grounds for processing Personal Data: Fiduciaries in taking appropriate action for achieving
compliance, while the remaining three pertain to the
■ Consent
 from a Data Principal shall be free, specific and operation of the Board. These include:
informed, unconditional and unambiguous with a clear
affirmative action. ■ Conditions
 of Registration of Consent Manager with
the Board
Legitimate uses:
■ Obligations
 of Consent Manager
■ Data
 Principal has voluntarily provided her
personal data. ■ Elaborative
 Technical and Organizational Measures

■ Performance
 of any law or in the interest of sovereignty ■ Classification
 of data fiduciaries for clarifying data
integrity of India or security. retention periods

■ To
 issue any subsidy, benefit, service, certificate, license ■ Class
 of data fiduciaries and purposes that are
or permit. exempted from the conditions of processing
children’s data
■ Compliance
 with any legal judgement, decree, order.
■ Responding
 to a medical emergency involving a threat to
the life.
■ In
 case of an epidemic, outbreak of disease, or any other Key nuances of the 2025 Rules
threat to public health.
■ For
 safety in case of any disaster, or any breakdown of Below are the key nuances of the Rules that every business
public order. must understand to ensure compliance and protect personal
■ For
 the purposes of employment or those related to data of the Data Principals:
safeguarding the employer from loss or liability. ■ Notice and consent: Data Fiduciaries need to assess
Penalties of non-compliance (examples): if their privacy notices and consent banners are
in alignment with the DPDP Rules and provide all
■ Non-compliance
 of the provisions by Data Fiduciaries is
up to INR250 crore. necessary information to the Data Principals.

■ Breach
 in observance of duty of Data Principal is ■ Verifiable parental consent: Data Fiduciaries shall
up to INR10,000. ensure a system is in place to obtain verifiable consent
■ Breach
 in not giving notice of personal breach is of the parents or legal guardian while processing
up to INR200 crore. personal data of children or person with disability.

■ Breach
 in observance of additional obligation in relation ■ Data Principal rights: Data Fiduciaries must establish
to children is up to INR200 crores. clear procedures, communication channels, and
■ Twelve
 Rules are directly applicable to Data Fiduciaries systems to handle Data Principals’ rights requests and
and mandate their compliance while the remaining ensure an effective grievance redressal system.
seven focus on the establishment and operation of Data
■ Consent Manager: Data Fiduciaries need to ensure
Protection Board. Additionally, one is for state, and its
instrumentalities and two other provisions. that the Consent Manager being appointed meets the
conditions of the Board and follows the obligations set
What do the 22 rules clarify? by the Rules.
■ F
 urther clarification on the notice to be provided to ■ Security safeguards: The Rules have provided
Data Principals
reasonable security safeguards to be implemented by
■ Registration
 and obligations of Consent Manager the Data Fiduciaries for the protection of personal data
■ Reasonable
 security safeguards: Technical and and preventing personal data breaches.
organizational measures ■ Personal Data breach: Data Fiduciaries need to inform
■ Personal
 data retention timelines as per class of affected Data Principals and the Board without delay
Data Fiduciaries and provide a detailed report to the Board within 72
■ Timelines
 for intimation of Personal Data breach to the hours, which includes broad facts, circumstances,
Board: 72 hours remedial measures, findings, etc.
■ Verifiable
 consent for processing of personal data of ■ Data retention timelines: Data Fiduciaries are now
child or of a person with disability who has a required to ascertain a time on the data erasure of the
lawful guardian personal data processed by them depending on the
class of Data Fiduciary they fit in as specified by the

27
 Rules( specific implications mentioned for ecommerce, ■ Journalistic exemption: The Rules do not provide any
gaming, social media companies). exemptions for journalists and media organizations
■ Processor due diligence: Data Fiduciaries must exercise in relation to complying with the Act’s obligations,
greater due diligence when outsourcing tasks to third particularly in balancing these obligations with the
parties and establish comprehensive data processing freedom of expression and the right to information in the
agreements with such processors, explicitly outlining the public interest.
processors’ obligations. ■ Exemptions for start-ups: The Rules do not specify
■ Significant Data Fiduciaries: Significant Data Fiduciaries the threshold for volume, nature of personal data and
must conduct Data Protection Impact Assessment, class of Data Fiduciaries, including Start-ups who are
annual audits, ensure algorithmic software protects data exempted from specific obligations relating to notice,
rights, and comply with data transfer restrictions DPIA, retention timeline and Data Principal Rights as per
outside India. the Act.
■ Restriction on special category of Personal Data: The
The unknowns: Rules have not specified the categories of personal data
and definition of traffic data on which restriction on
■ Significant Data Fiduciaries: The Rules have not cross-border data transfer by Significant Data Fiduciaries
specified the specific of Data Fiduciaries that will shall apply.
be considered as Significant Data Fiduciaries. The
Significant Data Fiduciaries will be notified by the central ■ Notification of data breach to Data Principals: The
government based on an assessment of relevant factors. Rules mention that as part of data breach notification
to the Data Protection Board within 72 hours, details
■ Consent Manager— Internal vs. External: The rules do on notification to data principals shall also be provided.
not clarify whether the Data Fiduciaries are permitted However, there is no clarity if it is mandatory to report
to appoint an in-house Consent Manager and if allowed, every data breach to the data principal and whether such
would that need to be registered with the Board, and intimation needs to be provided to each data principal
whether such an appointment would constitute a conflict before it is reported to the Board.
of interest. Furthermore, rules do not elaborate if and
how organizations can continue using existing consent
management mechanisms adopted proactively or for The journey to compliance: 10 steps every organization
compliance with global data protection regulations. must adhere to
■ Exemptions for children’s data processing: The Rules ■ Data privacy assessment: Assess the current data
outline five categories of Data Fiduciaries and list privacy posture, working practices and documentation
certain purposes of data processing that are exempt against the requirement of the DPDP Act and Rules
from certain obligations for processing children’s
■ Data discovery and mapping: Identify the Personal Data
data. However, the rules do not specify whether this
touch points and conduct data discovery and
exemption applies to all other Data Fiduciaries that do
mapping activities
not offer child-directed or lucrative* products
and services. ■ RoPA and data flow diagram: Document personal
data processing activities and its flow across various
■ Retrospective consent: The Rules have not
processes, systems, applications, third parties, etc.
provided clarity on what consent obtained prior to
commencement of the Act will be acceptable as valid ■ Consent and notice management: Prepare consents,
consent i.e., whether implied consent with a fresh notice cookie banners, cookie policies and privacy notices to be
would suffice, or should it be an explicit valid consent for implemented across touchpoints, where personal data
specific purposes along with a fresh notice. is collected
■ Timeline for Data Principal Rights and grievance ■ Privacy impact assessment: Identify data privacy
redressal: The Rules have not prescribed any time- risks by performing privacy impact assessments
period for Data Fiduciaries to address the rights of for processing activities and define controls to be
Data Principals. Additionally, the Rules have given implemented for mitigation
Data Fiduciaries the option to specify the time for their
■ Third-party risk management: For third parties
grievance redressal system.
processing personal data, ensure organizational and
■ Requirements for cross-border data transfer: The Rules technical security measures are implemented through
have not specified any list of countries with restriction inclusion within contracts and strong
on transfer of personal data along with instruments governance practices
to be put in place for such cross-border data transfer.
■ Technical safeguards: Identify and implement the
Any such requirements shall be specified by the central
required technical safeguards to ensure protection of
government by general or special order.
personal data from data breaches

28 Digital transformation: India’s journey to Industry 4.0 excellence

■ Data protection office setup: Setup a data protection
office by identifying the right team accountable and
responsible for ensuring compliance within
the organization
■ Implementation and automation: Implement the
controls required to achieve compliance and identify
opportunities for automation to bring efficiency in
managing compliance
■ Monitoring and sustenance: Implement a periodic
monitoring program to assess compliance at various
intervals to sustain what has been implemented

29
 Generative AI: Data-driven
5 insights for the future

GenAI in India: New vectors of disruption This will rapidly begin to augment and in some
cases replace the current app-based point and
click model. Over time, one can even imagine an
India’s GenAI landscape is rapidly evolving, LLM dynamically generating the UI based on the
characterized by unique market dynamics and context of the transaction.
a burgeoning ecosystem of innovation. Unlike
developed markets, India’s GenAI trajectory is This is already beginning to happen. More than
shaped by its vast and diverse population, a one-third of Google searches in India are voice-
young and tech-savvy workforce, and specific based, a stark contrast to just 5% in developed
socio-economic challenges. In this chapter, we markets. This growing preference for voice
explore five key vectors driving GenAI disruption interaction is evident in initiatives like the
in India, highlighting both the tailored adoption of AskDisha chatbot by CoRover, which supports
global solutions and the emergence of indigenous ticket bookings on the IRCTC app through voice,
products and solutions designed to meet chat, and point-and-click interfaces. Similarly, the
local needs. National Payments Corporation of India (NPCI)
has pioneered solutions such as Hello! UPI, which
enables transactions via simple voice commands.

01 Chat, voice, regional languages

augment digital interfaces
Feature phone users and those in low-connectivity
areas can use UPI 123PAY through voice prompts,
missed call services, and callback mechanisms, all
Using mobile apps can be hard work. Screens are
without an active internet connection.
small, the navigation even for simple transactions
can become complex and it is not easy to The new interfaces also have the potential to
personalize the experience. For the less digitally transform accessibility for underserved sections of
savvy and those more comfortable in regional India, particularly in semi-urban and rural areas.
languages, apps and by extension a large part of There is a need for affordable solutions in regional
the digital economy are largely out of reach. languages, intuitive interfaces and services
designed for specific needs. GenAI is emerging as
GenAI is driving a dramatic change in digital
a transformative force, enabling innovations that
interfaces. One can see the emergence of a new UI
drive financial inclusion, healthcare access, and
— led by AI assistants, activated by voice, extended
educational outreach through localized,
into regional languages and augmented by chat.
cost-effective solutions.

30 Digital transformation: India’s journey to Industry 4.0 excellence

In education, AI-powered platforms will enable personalized tutoring in regional languages, offering
adaptive learning experiences tailored to individual progress and needs. In healthcare, GenAI will address
resource shortages by enabling remote diagnostics, analyzing longitudinal health data, and delivering
personalized care recommendations. These advancements promise to redefine accessibility, empowering
communities and creating a more inclusive digital ecosystem across India.

India’s consumer landscape, unique characteristics and market dynamics

India 1 India 2 India 3

Comprises the top 10%-15% of Encompasses approximately The largest segment, with
households and approximately 300 million individuals from approximately 900 million
100 million people. This smaller cities and semi-urban people, is predominantly rural,
segment is affluent, urban, areas. These consumers have lower-income, and less digitally
and digitally savvy, driving moderate purchasing power, are literate, communicating
a significant portion of the price-sensitive yet aspirational, mainly in regional languages
digital economy and consuming and seek and focusing on affordable,
premium products value-driven services in essential services.
and services. education, healthcare and
finance.

31
 How business strategies could differ for India 1 and India 3
Industry Digital model India 1 strategy India 3 strategy
Personalized investment management, AI-based micro-lending, regional
AI-driven wealth advisory, predictive language support in financial apps,
Fintech analytics for portfolio performance voice-based banking interfaces

Predictive risk assessment, Affordable micro-insurance through

Insurtech personalized insurance policies, AI-based risk assessment, simplified
Financial automated claims processing AI chatbots for policy inquiries
services Credit scoring
AI-driven credit scoring models using Credit scoring for the unbanked using
alternative data (social, transaction local data (e.g., mobile transaction
history) patterns), low-cost loans accessible
via mobile

Personalized content curation, AI- Regional language content

driven recommendation engines, recommendations, AI for local news
targeted advertising based on behavior curation, audio/voice-based access to
Digital media analysis content

Entertainment AI-generated media content Regionalized AI-driven video

Media (e.g., news articles, video recommendations, low-data
recommendations), immersive AR/ streaming options, automated
VR experiences dubbing or subtitles

AI-driven diagnostics, predictive health AI-based mobile health diagnostics,

offline AI health consultations,
analytics, telemedicine with AI-driven
regional language support for
triage
healthcare apps
Healthtech
AI-driven virtual consultations with Mobile-based telemedicine with
Telemedicine basic AI for symptom checks, local
specialists, medical imaging analysis
language support for rural health
Healthcare workers
Pharmaceuticals
AI-led drug discovery, personalized Low-cost AI solutions for public
health issues, predictive analytics for
medicine, genetic analysis for tailored
vaccine distribution in
treatments
rural areas

AI-driven personalized shopping AI-driven local language shopping

experiences, dynamic pricing, targeted apps, voice shopping, inventory
product recommendations optimization for local vendors
E-commerce
AI-based demand forecasting, Simplified AI tools for small
Supply chain retailers, inventory management
real-time supply chain tracking, and
for local shop owners, predictive
Retail and logistics optimization
demand analytics
E-commerce Payments
AI-powered fraud detection, seamless AI-based digital payments using
local authentication methods,
digital payments, biometric payments
voice-activated transactions in local
languages

Personalized learning paths, AI-driven Localized, AI-driven learning content

in regional languages, basic mobile
tutoring, content recommendations
AI tutoring, voice-activated education
based on learning patterns
Edtech platforms

AI-based proctoring, adaptive testing, Low-cost, AI-based grading systems

Assessments for large groups, offline AI tools for
automated grading
Education grading and assessments
Skill training AI-powered skill training for local
AI-driven upskilling and reskilling
workforce in regional language,
programs with personalized learning
mobile-based skill assessments and
tracks
recommendations

32 Digital transformation: India’s journey to Industry 4.0 excellence

02 Agents enable the transformation
of knowledge work
systems analyze extensive data to generate
personalized content, enhancing engagement
and relevance.
In customer support, AI-driven chatbots and
The advent of AI Agents — autonomous
virtual assistants efficiently handle routine
LLM-powered software capable of understanding
inquiries, providing 24/7 support and prompt
context, accessing a toolkit of resources skillfully,
resolutions. AI tools today promise to manage a
making decisions, and executing actions iteratively
spectrum of customer interactions, from account
towards achievement of a goal — and agentic
balances and transaction histories to more complex
orchestration promises to further enhance
financial advice, thereby enhancing customer
advancements. The technical aspects of agents is
satisfaction and operational efficiency.
discussed in detail in the previous section.
By automating routine tasks, AI Agents will enable
India’s significant role in the global knowledge
professionals to focus on strategic, creative, and
economy is evident through its extensive workforce
complex aspects of their work, thereby enhancing
in sectors like information technology, finance
productivity and fostering innovation. For India,
and customer service. The rapid integration of AI
with its extensive knowledge workforce, embracing
Agents into these fields is reshaping traditional
AI Agents and agentic architectures is crucial to
ways of working, presenting both opportunities and
maintaining competitiveness and harnessing the
challenges for Indian professionals. Most notably,
full potential of its human capital. The impact of AI
Indian knowledge workers have leaned in, with 92%
on human effort reduction and elimination extends
of them utilizing AI in their workplaces, meaningfully
beyond knowledge work, as detailed in the chapter
surpassing the global average of 75%, according
‘Transforming work with GenAI’.
to the 2024 Work Trend Index by Microsoft and
LinkedIn.
In software development, AI-powered code editors
such as Cursor can comprehend code context, 03 LLMs are not all you need:
Toward compound AI systems
suggest bug fixes, and implement related changes
across entire files. Features like inline chat enable It is becoming increasingly clear that LLMs have
developers to direct the AI for modifications ranging significant limitations. They are expensive to use,
from minor edits to extensive codebase overhauls. hallucinate and often miss out on key context that
This evolution allows programmers to focus more is critical for enterprises as they seek to build
on system architecture and logic, as AI manages intelligent systems.
repetitive tasks.
Enterprises will increasingly rely on hybrid
The legal sector is experiencing a transformation architectures, where multiple AI models — ranging
through AI in contract drafting and document review. from small, task-specific models on edge devices
Agentic tools like Type integrate with legal databases to large foundational models in the cloud — are
and precedent libraries, expediting the drafting orchestrated to work together. These models will
process. These AI solutions enhance accuracy operate at different levels of the enterprise stack,
by suggesting pertinent clauses and ensuring balancing cost, latency, and performance needs.
compliance with regulatory standards. For example, lightweight models might handle
Financial analysts benefit from AI systems that quick, edge-based tasks, while more complex
automate report generation, document processing, models, fine-tuned to enterprise data, will reside in
compliance monitoring, and anomaly detection. AI cloud environments.
streamlines processes such as invoice management In February 2024, the Berkeley AI Research (BAIR)
by extracting and integrating data into ERP systems, Lab introduced the concept of compound AI
reducing manual errors. systems, which integrate LLMs with traditional
Content creators leverage GenAI tools capable of
producing drafts, performing grammar and style
checks, and offering SEO optimization suggestions.
These platforms enable writers and editors to focus
on creative ideation and storytelling. AI-powered

33
 How GenAI models amplify overall system capabilities

Construction Recommendation
Financial Industry
project engines in online Education
services 4.0 + GenAI
management commerce
Advanced project In e-commerce, Loan applicants Adaptive testing GenAI combines
management images — such as interact with GenAI- has evolved traditional ML
software now those of a living powered chatbots with GenAI, models with
incorporates drone room — are analyzed to provide detailed extending beyond diverse inputs
footage to assess using multi-modal information and multiple-choice like workers’
construction sites. vision models. The answer follow-up to include long- logs and product
GenAI processes interpretations questions. The form subjective manuals. This
this visual data, inform classical collected data answers. This fusion enhances
providing insights ML-based is processed by advancement predictive
that integrate recommendation traditional ML allows for more maintenance
with traditional AI engines, suggesting models, refining comprehensive strategies, leading
models to enhance optimal décor credit decision- assessments, to more informed
project oversight options from making processes tailoring question decisions on the
and decision- catalogs. This and improving difficulty based factory floor
making. integration accuracy in risk on previous and reducing
improves the assessment. responses and downtime.
relevance and The ensemble providing a deeper
personalization of significantly understanding
recommendations. reduces time to of student
decision. capabilities.

AI/ML techniques, classical programming, and all of these through traditional AI and GenAI to
external tools like internet search APIs. This deliver personalized recommendations for each
approach marks a big shift from relying solely doctor, including tailored product suggestions,
on monolithic models to employing multifaceted comparisons to regional peers, and relevant
systems that leverage the strengths of various disease trends.
components.
The evolution of Compound AI systems signifies
GenAI exemplifies this paradigm by enhancing a transformative approach in AI, where the
existing systems across diverse industries. Rather integration of GenAI with traditional methods
than serving as standalone solutions, GenAI models leads to more robust, efficient, and intelligent
are increasingly embedded within traditional AI applications across various sectors. As this trend
and ML processes, creating synergistic effects that continues, we anticipate the development of
amplify overall system capabilities. innovative products that harness the combined
strengths of these technologies, driving significant
Compound AI systems are already prevalent today.
advancements in their respective fields.
A leading Indian pharmaceutical company relies
on its field sales force to engage doctors and
share product updates. Leveraging their extensive
datasets such as visit logs, doctor feedback,
prescription patterns, and local disease insights,
which is a mix of quantitative and qualitative
data. The revamped sales app now leverages

34 Digital transformation: India’s journey to Industry 4.0 excellence

 04 The falling cost of AI Technological advancements like quantization,
which optimizes AI models for CPU efficiency,
are further reducing hardware costs. Combined
The cost of implementing AI solutions has with affordable cloud services, these innovations
plummeted, making them increasingly accessible to are empowering businesses to scale AI initiatives
enterprises. OpenAI’s GPT API costs, for example, and push the boundaries of innovation, driving
have dropped nearly 80% in two years, while unprecedented growth in AI applications.
open-source releases like Meta’s Llama are
India’s traditionally low labor costs have led some
unlocking new capabilities. India-specific
to question the cost versus quality trade-off in
fine-tuned versions of these models enable
deploying LLMs to augment human effort in the
affordable customization. Although GPU supply
Indian market. However, the rapidly decreasing
remains tight, alternatives are emerging, allowing
costs associated with AI deployment are reshaping
AI inference to run without high-end GPUs.
this perspective.
Open-source models such as Meta’s Llama series,
In August 2024, founder of DeepLearning AI and
Mistral, Google’s Gemini, Microsoft’s Phi, and
educator Andrew Ng noted, “Let’s say you build an
Alibaba’s Qwen are providing powerful tools
application to assist a human worker, and it uses
at a fraction of the cost of proprietary models.
100 tokens per second continuously:
Innovations like prompt caching and batch
At $4 per million tokens, you’d be spending only
processing further enhance affordability for
$1.44 (~INR120) per hour – which is significantly
LLM utilization.
lower than the minimum wage in the U.S. and
Cloud providers are also driving cost reductions many other countries.” With Sarvam AI’s offer of
with pricing based on Tensor Processing Units INR1 per minute, this cost drops further to half as
(TPUs), delivering faster and cheaper AI solutions. much (INR60 per hour), making LLM-led offerings
Improved GPU access has enabled organizations to extremely price competitive in the Indian context.
fine-tune and deploy open-source models, reducing
The convergence of declining AI deployment costs
reliance on heavy infrastructure. Hybrid strategies,
and a deep pool of tech talent capable of building
combining on-premise solutions for sensitive data
AI applications presents a compelling opportunity
with cloud-based APIs for scalability, are proving to
for widespread AI adoption. As AI becomes more
be cost-effective to expand AI deployments.
affordable, even for small and medium-sized
enterprises, it has the potential to drive innovation,
enhance productivity, and contribute to economic
growth across various sectors.

Token cost of GPT-4 level models over time

Cost for 2 million tokens (input + output) decreased from
US$180 to US$0.75 in two years, becoming 240x cheaper

250

200 gpt-4-32k
$/million tokens

150

gpt-4
100
gpt-4-turbo
50 gpt-4o gpt-4o-mini

0
4/1/23 7/1/23 10/1/23 1/1/24 4/1/24 7/1/24
Source: Elad Gil on X

35
 05 The evolution of an Indic AI
ecosystem
The global AI community has also expressed keen
interest in Indic languages. For example,
Abu Dhabi-based G42 introduced Nanda, a Hindi
LLM trained on 2.13 trillion tokens, aiming to
A lot has been said about India being the use case empower over half a billion Hindi speakers with
and data capital of the world. With more than GenAI capabilities. Similarly, BharatGen, the first
700 million connected consumers and the lowest government-funded multimodal LLM initiative,
data rates in the world, India will play home to focuses on creating efficient and inclusive AI
many sunrise industries that will seek to infuse AI tailored to Indian needs. Tech Mahindra’s Project
at scale across their business models. There is also Indus further advances the development of Indic
now a significant focus on integrating AI into India foundational models, beginning with Hindi and
Stack to buttress its already strong digital public its over 37 dialects, bridging linguistic gaps for
infrastructure. Will India see an Indic AI stack with enterprises. TWO.ai, another notable player,
tools that compete with global offerings and is has introduced SUTRA, a multilingual AI engine
relevant in an enterprise context? supporting over 50 languages, including Hindi and
Gujarati. SUTRA is designed to power immersive
The race to build Indic LLMs and agents AI experiences that extend beyond text and voice,
addressing India’s linguistic diversity effectively.
One significant area of focus has been the
linguistic diversity of India — there has been a AI4Bharat, a research lab at IIT Madras, has
mushrooming of Indic LLMs that leverage been instrumental in advancing Indian language
open-source models fine-tuned with Indian technology. Their contributions include extensive
language datasets. A key initiative in this space open-source datasets like IndicCorp v2 and tools
is Bhashini, a government-led AI project aimed at that underpin the growing Indic LLM ecosystem.
creating an open-source Indic language dataset to Despite these advancements, challenges persist.
expand internet and digital service accessibility in The lack of robust datasets across India’s diverse
Indian languages. By facilitating content creation languages affects the training and performance
in languages like Hindi, Tamil and Bengali, Bhashini of these models. Data often requires significant
is democratizing the benefits of AI for India’s cleaning and processing to ensure usability, while
multilingual population. concerns about responsible data use, privacy, and
ethics remain pressing. Initiatives such as Project
Vaani, a collaboration between IISc and Google

36 Digital transformation: India’s journey to Industry 4.0 excellence

to collect Indic speech datasets, are critical in GenAI start-ups in India surged 3.6 times from
addressing these gaps. over 66 in the first half of 2023 to more than
240 by mid-2024, according to Nasscom’s
The development of AI Agents tailored to Indian
“India’s Generative AI Start-up Landscape 2024”
contexts represents another promising area.
report. These start-ups have cumulatively
These agents not only address linguistic diversity
attracted over US$750 million in funding, with
but are fine-tuned with domain-specific datasets,
75% generating revenue in the first half of 2024
enhancing their utility in sectors like BFSI,
compared to just 22% in the same period the
healthcare, and legal technology. Sarvam AI leads
previous year. The ecosystem now includes 17
the way with its GenAI platform featuring
native GenAI language models and a significant
Sarvam Agents — voice-enabled, multilingual
increase in start-ups offering GenAI assistants,
solutions designed for Indian enterprises. Their
placing India sixth globally in GenAI start-up
open-source models, such as Shuka 1.0
ecosystems among major economies.
(an open-source AudioLM), and APIs supporting
10 Indic languages, mark significant milestones.
Sarvam AI’s cost-effective pricing model of Towards a sovereign AI cloud
INR1 per minute for AI-driven customer
interactions ensures accessibility for businesses In parallel, the development of digital infrastructure
of all sizes. Similarly, Kogo.ai has developed a in India has gained momentum. Leading
platform enabling companies to build AI agents corporations such as Reliance, Tata Group, Tech
that can converse in Indic languages. Starting with Mahindra, and Wipro have partnered with Nvidia
Hindi, Urdu and English, Kogo.ai plans to expand to procure advanced GPU infrastructure. Mid-sized
its offerings to additional languages, providing players like Yotta Data Services, E2E Networks,
versatile solutions for enterprises and Sify are also providing cloud GPU resources to
seeking multilingual AI capabilities. enable the hosting of LLMs. Moreover, the Ministry
Benchmarks play a crucial role in measuring of Electronics and Information Technology (MeitY)
advancements in LLMs and Indic LLMs are no is actively working to empanel partners capable of
different. IndicGenBench, introduced in 2024, is a delivering up to 10,000 GPUs, thus empowering
comprehensive benchmark designed to assess the start-ups, researchers, and academicians to
performance of LLMs across 29 Indic languages. contribute to AI innovation.
It includes tasks like cross-lingual summarization, The development of an Indic AI ecosystem reflects
machine translation, and question answering, the potential for India to leverage its unique
providing multi-way parallel evaluation data linguistic and cultural diversity in shaping AI
for under-represented Indic languages. Such innovations. Initiatives like Bhashini, BharatGen,
benchmarks are essential for driving innovation and and the commitment to purchase 10,000 GPUs,
ensuring the models meet the diverse needs along with the rise of GenAI start-ups, demonstrate
of India’s population. significant early progress. However, addressing
These developments collectively represent a challenges such as data quality, infrastructure
growing ecosystem of Indic LLMs and agents gaps, and ethical considerations will be critical for
designed to cater to India’s linguistic and cultural sustained growth.
diversity. From addressing challenges in data Despite the hurdles, the strides made so far
quality to building sophisticated AI Agents and underscore a strong foundation for further
creating robust benchmarks, the Indic AI landscape development. Collaborative efforts among
exemplifies the transformative potential of AI to government, industry, and academia are setting the
make technology more inclusive and impactful for a stage for a comprehensive AI ecosystem tailored
multilingual society. to India’s needs. While there is still much work
ahead, the momentum and focus evident today are
A burgeoning GenAI start-up ecosystem encouraging indicators that India is well-positioned
to create an AI ecosystem that is inclusive,
impactful, and globally relevant.
India’s burgeoning GenAI start-up ecosystem has
also contributed to this momentum. The number of

37
 Large funding deals in the GenAI in India

Target Target company Deal value (US$

Bidder company
Company sector million)

Krutrim SI Designs Technology Matrix Partners 50

Industrial, Energy and

AiDash Lightrock 50
utility

Decision Point Pvt Ltd

CPG Latent View Analytics 39.1
(70% stake)

NTT Venture Capital, Z47, and

Neysa Networks Pvt Ltd Technology 30
Nexus Venture Partners

Accel Partners, Elevation Capital, Y

Nanonets Technology 29
Combinator

Accel Partners, General Catalyst

Nurix AI Technology 27.5
Partners

Accel, Section 32, and Prosus

Ema Healthcare 25
Ventures

Matrix Partners India Investment

Neysa Networks Pvt Ltd Software 20
Holdings LLC

Aereo (Formerly Aarav 360 One Asset Management Ltd,

Unmanned Systems Pvt Industrials StartupXseed Ventures LLP, Navam 15
Ltd) Capital

Niqo Robotics Agriculture Bidra Innovation 13

Cloudphysician Healthcare Peak XV Partners 10.5

Khosla Ventures LLC, Y Combinator

Vahan Technologies India
Technology Inc, Gaingels LLC, Vijay Shekhar 10
Pvt Ltd
Sharma (Private Individual)

List is not exhaustive

38 Digital transformation: India’s journey to Industry 4.0 excellence

39
 Digital technology infusion in
the manufacturing sector: A
6 focus on MSMEs and start-ups
The Indian manufacturing sector is undergoing a significant Prominent digital technologies impacting
transformation with the adoption of digital technologies. MSME manufacturing
Industry 4.0—comprising Artificial Intelligence (AI), the
Internet of Things (IoT), Robotics, Cloud Computing, and Big
Data Analytics—is revolutionizing traditional manufacturing 1. IoT for smart manufacturing
processes, improving efficiency, reducing costs, and IoT is enabling MSMEs to transition to smart manufacturing,
enhancing product quality. The next phase, referred to as where connected devices and sensors provide real-time
Industry 5.0, focuses on embedding sustainable technology insights into machine performance, predictive maintenance,
in manufacturing processes and enhancing human-machine and inventory management. According to a NASSCOM
interaction. This evolution is already on the drawing boards report, IoT adoption in Indian manufacturing is projected to
of leading technology research and reach US$15 billion by 2025. Frugal innovation by Indian
development organizations. start-ups is helping small manufacturers implement IoT-
Manufacturing in India contributes around 15% of GDP, a based condition monitoring systems, reducing downtime
figure that has been on a downward trend in recent years. and improving efficiency.
This is significantly lower compared to Germany (20%)
and China (29%), highlighting a substantial opportunity 2. AI for predictive analytics and automation
for growth. Under the Atma Nirbhar Bharat mission,
the Government of India has set an ambitious target for AI is transforming manufacturing by enabling predictive
increasing the manufacturing sector’s contribution to 25% analytics, automated quality control, and supply chain
of GDP. Achieving this goal in today’s interconnected world optimization. As per an EY analysis, AI-driven predictive
requires a strong infusion of emerging technologies. maintenance can reduce machinery downtime by 20% to
30% and cut maintenance costs by 10% to 15%. Indian start-
This digital transformation is particularly crucial for Micro, ups are leveraging AI for industrial automation, helping
Small, and Medium Enterprises (MSMEs), which, according to MSMEs streamline operations and enhance product quality.
the Ministry of MSME, Government of India, constitute about
30% of the country’s GDP, 40% of manufacturing output, and
45% of exports. However, despite their pivotal role, MSMEs
often face challenges in adopting digital technologies.
Government initiatives aimed at fostering innovation have
emerged as key enablers in accelerating this transition.

40 Digital transformation: India’s journey to Industry 4.0 excellence

3. Cloud computing for cost-effective digitization The role of start-ups in driving innovation
Cloud computing enables MSMEs to digitize operations
without investing heavily in IT infrastructure. The Indian Start-ups play a critical role in democratizing access to
cloud computing market is expected to grow at a CAGR digital technologies for MSMEs by leveraging open-source
of 20% between 2023 and 2028. Many Indian companies technologies and digital public infrastructure (DPI). Some
now offer cloud-based ERP solutions, allowing MSMEs to ways in which start-ups enable MSMEs include:
manage inventory, financial transactions, and customer
relationships seamlessly. ■ Providing low-cost digital solutions: Start-ups offer
affordable IoT, AI, and cloud computing tools, making
digital adoption financially feasible.
4. 3D printing for rapid prototyping and cost reduction
■ Enhancing supply chain efficiency: Logistics start-ups
Additive manufacturing (3D printing) is revolutionizing use AI and data analytics to optimize supply chains,
product development by enabling rapid prototyping and reducing costs for small manufacturers.
reducing material wastage. The Indian 3D printing market
is projected to grow at 20% CAGR by 2028, driven by ■ Developing smart manufacturing platforms: Start-ups
sectors such as automotive, healthcare, and aerospace. The provide IoT-enabled platforms that help MSMEs digitize
declining costs of 3D printing technology and raw materials production and monitor real-time performance.
are making it more accessible to MSMEs, allowing them ■ Facilitating access to financing: Fintech start-ups are
to manufacture prototypes and customized products at a improving access to capital for MSMEs, especially for
fraction of traditional costs. working capital and micro-loans.

5. Robotics and automation for productivity

enhancement Government interventions to enable digital
The adoption of robotics in manufacturing is increasing transformation
rapidly, with robot deployment in India growing by 54%
in 2021 (as per the International Federation of Robotics).
To support MSMEs in adopting digital technologies, the
Robotics help MSMEs reduce manual errors, improve
Government of India has launched several initiatives that
precision, and increase production speed.
focus on digital infrastructure, financial assistance, and
capacity building on emerging technologies. Some of such
initiatives are mentioned below.
The Ministry of MSME, Government of India, runs schemes
like Digital MSME Scheme, which aims to promote cloud
computing, AI, and IoT adoption among MSMEs and
provides subsidies on adoption of cloud-based software
services. Similarly, MSME Competitive Lean Scheme (MCLS)
helps MSMEs implement Lean Manufacturing, Automation,
and Robotics. Financial Assistance and Credit Support for

41
 capital investment is also provided through Credit Guarantee Shaping the future: Digital transformation in
Fund Trust for Micro and Small Enterprises (CGTMSE) in India’s manufacturing sphere
the form of collateral-free loans for MSMEs. In addition,
the Ministry of Heavy Industries and Public Enterprises,
Government of India, has launched SAMARTH Udyog Bharat The infusion of digital technology is reshaping India’s
4.0, with an aim to promote Industry 4.0 adoption through manufacturing sector, with MSMEs at the heart of this
Smart Manufacturing Demonstration Centres (SMDCs). So transformation. The integration of IoT, AI, cloud computing,
far, five such centers have been established. robotics, and 3D printing is helping small manufacturers
enhance efficiency, improve product quality, and compete in
global markets.

Challenges and suggested solutions Start-ups are playing a vital role in making digital solutions
accessible and affordable for MSMEs, while government
interventions, along with initiatives like Make in India, are
Despite the immense potential, MSMEs face several driving large-scale adoption.
challenges in adopting digital technologies. These include:
As India aspires to become a $5 trillion economy, the
High implementation costs: Many small enterprises lack modernization of its manufacturing sector will be key. By
the capital to invest in advanced technologies such as AI fostering innovation, strengthening policy support, and
and robotics. The government can expand subsidies and addressing adoption challenges, MSMEs can emerge as
incentives for technology adoption, thereby reduce the cost global leaders in smart manufacturing, propelling India
of capital. Promoting shared infrastructure using pay-per- towards becoming a world-class industrial hub.
use models can also reduce costs.
1. Lack of a skilled workforce: Over 60% of MSMEs
lack employees trained in digital tools, limiting their
ability to implement new technologies. Government-
funded digital skilling programs should be expanded
in collaboration with industry leaders. Start-ups can
develop low-code/no-code platforms to reduce the skill
barrier for technology adoption.
2. Cybersecurity concerns: Increased digitalization
exposes MSMEs to cyber threats, necessitating
robust security measures. MSMEs should be provided
with cybersecurity awareness programs and easy-
to-implement security tools. Government schemes
can offer additional financial assistance for adopting
cybersecurity measures.
3. Limited Awareness and decision-making challenges:
Many MSMEs are unaware of the right digital
technologies for their needs and struggle with decision-
making. Industry associations and government
bodies can conduct regular outreach and awareness
campaigns. AI-driven recommendation platforms
can guide MSMEs on technology adoption based on
business needs.

42 Digital transformation: India’s journey to Industry 4.0 excellence

43
 7 The path forward

Key takeaways for industry leaders 3. Cybersecurity is non-negotiable

As businesses digitize, they become increasingly
vulnerable to cyber threats. Leaders must adopt a
In today’s rapidly evolving digital landscape, industry
proactive approach to cybersecurity by:
leaders must recognize that digital transformation is not
just a technological shift but a strategic imperative. To ■ Implementing Zero Trust architectures to minimize
remain competitive and future-ready, here are the critical unauthorized access
takeaways every leader should internalize:
■ Investing in advanced threat detection and response
1. Customer-centricity is the North Star tools powered by AI
Customers are at the heart of every successful business ■ Ensuring compliance with global regulations like GDPR
strategy. In the digital age, their expectations have shifted and CCPA
toward seamless, personalized, and convenient experiences.
■ A single breach can damage reputation, erode
Leaders must prioritize:
customer trust, and result in financial losses—making
■ Leveraging data analytics and AI to understand cybersecurity a top priority
customer behavior and preferences
■ Adopting omnichannel strategies to engage customers 4. Agility and innovation drive success
across touchpoints
The pace of change in technology and markets demands
■ Building trust through transparency, security, and agility. Leaders must foster a culture of experimentation
exceptional service and continuous improvement by:
■ Businesses that fail to meet these expectations risk ■ Encouraging teams to test new ideas through pilot
losing market share to more agile competitors projects and iterative development
■ Embracing emerging technologies like generative AI,
2. Data is the foundation of decision-making IoT, and blockchain to stay ahead of trends
Data has emerged as the most asset in driving growth and ■ Partnering with start-ups, tech providers, and
innovation. Industry leaders must: research institutions to co-create innovative solutions
■ Invest in robust data collection, storage, and ■ Agility ensures businesses can adapt quickly to
analysis systems disruptions and seize emerging opportunities
■ Use predictive analytics and AI to uncover actionable
insights and optimize operations 5. Collaboration accelerates transformation
■ Break down silos to ensure data flows seamlessly across No organization can achieve digital transformation alone.
departments, enabling informed decision-making Leaders must build ecosystems that support shared
growth by:
■ Organizations that harness the power of data will gain a
significant competitive edge ■ Engaging in public-private partnerships to develop
scalable digital infrastructure

44 Digital transformation: India’s journey to Industry 4.0 excellence

■ Participating in industry consortia to address common Future trends and emerging opportunities
challenges and drive standards
■ Mentoring MSMEs and start-ups to create inclusive,
As we stand on the brink of a new era of digital innovation,
resilient supply chains
transformative trends are set to redefine industries and
■ Collaboration amplifies impact and accelerates progress create unprecedented opportunities for businesses. These
for all stakeholders trends not only address current challenges but also pave the
way for sustainable growth, inclusivity, and resilience in an
increasingly interconnected world.
6. Sustainability is a strategic imperative
1. Generative AI and compound systems
Digital tools offer unprecedented opportunities to align
profitability with sustainability. Leaders should: Generative AI is poised to revolutionize industries by
enabling machines to create, simulate, and optimize
■ Use IoT and AI to monitor and reduce energy
complex processes. Beyond standalone Large Language
consumption, waste, and emissions
Models (LLMs), the integration of compound AI systems—
■ Adopt circular economy principles to design sustainable combining generative AI with robotics, IoT, and analytics—
products and processes will unlock new possibilities. For instance, AI-driven design
tools can accelerate product development, while virtual
■ Report on ESG (Environmental, Social, Governance)
agents will transform customer service and knowledge
metrics to demonstrate commitment to
work. The falling cost of AI technologies makes these
responsible practices
innovations accessible even to small businesses, levelling
■ Sustainability not only benefits the planet but also the playing field and fostering creativity.|
enhances brand reputation and attracts
conscious consumers
2. Localized digital solutions
The rise of Indic AI ecosystems and regional language
7. Leadership sets the tone
support represents a significant opportunity for inclusivity
Ultimately, the success of digital transformation hinges on and economic empowerment. By developing AI models
leadership. Industry leaders must: tailored to local languages, dialects, and cultural contexts,
businesses can tap into underserved markets and bridge the
■ Champion the vision and communicate its importance
digital divide. This trend is particularly relevant for MSMEs
to all levels of the organization
in emerging economies, where localized solutions can drive
■ Allocate resources strategically, balancing short-term financial inclusion and enhance user engagement.
wins with long-term investments
■ Foster a culture of lifelong learning to equip employees
3. Sustainability through digital tools
with the skills needed for the digital era
Sustainability is no longer optional—it is a business
■ Leaders who embrace this responsibility will inspire
imperative. Digital technologies like IoT, blockchain, and
their teams to embrace change and unlock the full
AI are becoming critical enablers of green initiatives. For
potential of digital transformation
example, smart sensors can monitor energy consumption

45
 and reduce waste, while blockchain ensures transparency in A call to action for emerging digital
supply chains. Companies that embed sustainability into their transformations
digital strategies will not only meet regulatory requirements,
but also appeal to environmentally conscious consumers
and investors. To navigate digital transformation effectively, adopting a
‘start small, scale fast’ approach is key. Begin with focused
4. Decentralized marketplaces pilots, assess their success, and quickly scale proven
solutions across the organization. This roadmap provides
Blockchain technology is giving rise to decentralized a clear, phased strategy to guide businesses from initial
marketplaces that eliminate intermediaries, reduce costs, assessment to sustained digital leadership.
and enhance trust. These platforms enable peer-to-peer
transactions, making it easier for MSMEs to access global
markets. Additionally, decentralized finance (DeFi) solutions Below is a phased approach tailored for industry leaders,
are democratizing access to capital, empowering smaller MSMEs and traditional companies:
players to scale their operations without traditional
Phase 1: Assess and strategize (0–6 Months)
banking constraints.
1. Conduct a digital readiness assessment:
5. Edge computing and 5G networks ■ Evaluate current digital maturity levels across
processes, technologies, and workforce skills
The proliferation of edge computing and 5G networks will
transform how data is processed and utilized. By enabling ■ Identify gaps and areas of opportunity
real-time insights at the source, these technologies will
enhance applications such as autonomous vehicles, remote
2. Define clear objectives:
healthcare, and smart manufacturing. For industries reliant
on speed and precision, edge computing offers a competitive ■ Align digital initiatives with overarching business goals
advantage, reducing latency and improving decision-making. (e.g., cost reduction, revenue growth,
customer satisfaction)
6. Human-AI collaboration ■ Set measurable KPIs to track progress
The future of work lies in collaboration between humans and
AI. As AI takes over repetitive and mundane tasks, human 3. Build leadership buy-in:
workers can focus on higher-value activities like strategy,
■ Ensure top management understands the importance
creativity, and problem-solving. This shift will lead to a more
of digital transformation and commits resources.
productive and engaged workforce, driving innovation across
sectors. Upskilling employees to work alongside AI will be ■ Appoint a Chief Digital Officer (CDO) or Transformation
crucial for organizations aiming to maximize this synergy. Leader to oversee the initiative.

7. Immersive experiences with AR/VR 4. Engage stakeholders:

Augmented reality (AR) and virtual reality (VR) are redefining ■ Involve employees, customers, and partners in the
customer experiences and operational efficiency. In retail, AR planning process to ensure buy-in and
allows customers to visualize products in real-world settings, address concerns.
while VR enhances training programs by simulating realistic
scenarios. For manufacturers, these technologies streamline
Phase 2: Pilot and Scale (6–18 Months)
design processes and improve maintenance workflows,
offering both cost savings and enhanced outcomes. 1. Start small with high-impact pilots:
■ Implement proof-of-concept projects in key areas like
8. Cybersecurity evolution automation, predictive maintenance, or
personalized marketing
As digital adoption grows, so does the sophistication of cyber
threats. Future trends in cybersecurity include AI-powered ■ Use these pilots to test solutions, gather feedback, and
threat detection, biometric authentication, and quantum refine strategies
encryption. Organizations must adopt proactive measures
like Zero Trust architectures and continuous monitoring to
2. Invest in core technologies:
safeguard their assets and maintain customer trust.
■ Deploy foundational tools such as cloud computing, IoT
sensors, and AI-powered analytics platforms
■ Strengthen cybersecurity measures with Zero Trust
frameworks and regular audit

46 Digital transformation: India’s journey to Industry 4.0 excellence

3. Upskill the workforce: Phase 4: Sustain and lead (Beyond 36 Months)
■ Provide training programs on digital tools, data literacy, 1. Embed digital DNA:
and emerging technologies
■ Make digital transformation a core part of the
■ Foster a culture of continuous learning and innovation organizational culture, ensuring it evolves alongside
market trends
4. Leverage partnerships: ■ Encourage experimentation and reward
innovative ideas
■ Collaborate with tech providers, start-ups, and industry
consortia to access expertise and shared resources
2. Stay ahead of trends:
Phase 3: Optimize and innovate (18–36 Months) ■ Keep abreast of emerging technologies and
industry disruptions
1. Scale successful initiatives:
■ Participate in global forums and collaborate with
■ Expand proven solutions across the organization,
thought leaders to shape the future of your sector
ensuring seamless integration with existing systems
■ Monitor performance metrics and adjust strategies
3. Measure and celebrate success:
as needed
■ Regularly review KPIs and celebrate milestones to
maintain momentum
2. Embrace advanced technologies:
■ Share success stories internally and externally to
■ Explore cutting-edge innovations like generative AI,
inspire others
Digital Twins, and blockchain to unlock new efficiencies
and revenue streams
4. Give back to the ecosystem:
■ Experiment with decentralized platforms and edge
computing for real-time insights ■ Mentor start-ups and MSMEs in your network
■ Contribute to building shared digital infrastructure and
3. Focus on customer experience: inclusive ecosystems
■ Use AI and analytics to deliver hyper-personalized
offerings and omnichannel engagement Digital transformation is a continuous journey, not
a destination. This roadmap provides a path from
■ Continuously gather customer feedback to refine
assessment to sustained leadership, turning challenges
products and services
into opportunities for growth, resilience, and innovation.
By embracing agility, leveraging emerging technologies,
4. Drive sustainability:
and fostering a digital-first culture, businesses can
■ Integrate green technologies and circular economy future-proof operations and drive sustainable, inclusive
principles into operations. progress. The journey starts today—one step at a time.
■ Report progress on ESG (Environmental, Social,
Governance) goals to build trust with stakeholders.

47
 Notes

48 Digital transformation: India’s journey to Industry 4.0 excellence

49
 Contributors
EY
Mr. Hemanth Kanakagiri
Mr. Anirban Mukherjee Senior Manager, Technology Consulting
Principal Partner, Risk Consulting [email protected]
[email protected]
Ms. Nanthini Palanisamy
Mr. Arun Nagarajan Senior Consultant, Technology Consulting
Principal Partner, Technology Consulting [email protected]
[email protected]

Mr. Vikas Aggarwal Design

Principal Partner, Technology Consulting
Sneha Arora
[email protected]

Mr. Shobhit Mathur Editorial

Principal Partner, Business Consulting
Shweta Sharma
[email protected]

Mr. Hari Balaji

Principal Partner, Technology Consulting
FTCCI
[email protected]
Mr. K Mohan Raidu
Managing Director, Informatics India
Mr. Mubin E Shaikh Chair, ICT Committee, FTCCI
Principal Partner, Technology Consulting
[email protected] Mr. Bala Peddigari
Chief Innovation Officer
Ms. Mini Gupta Technology, Software and Services
Partner, Technology Consulting Business Group, TCS
[email protected] Co-Chair, ICT Committee, FTCCI

Mr. Nilesh Shirke Mr. Pankaj Diwan

Partner, Technology Consulting Founder, Idealabs FutureTech Ventures
[email protected] Co-Chair, ICT Committee, FTCCI

Mr. Sharjeel Ahmed Mr. CV Anirudh Rao

Director, Technology Consulting Director, CV Infracon
[email protected] Co-Chair, ICT Committee, FTCCI

Mr. Manish Gupta

Mr. Sadagopa Raghavan
Member, ICT Committee, FTCCI
Thiruvengadathan
Principal Partner, Technology Consulting
Ms.Sheetal Srikanth
[email protected]
Head of Strategy - Smartail, Bharath
Cloud
Mr. Sayantan Bose ICT Commitee, FTCCI
Director, Markets & Business
Development Mr. Lalith Sharma
[email protected] Director - Strategic Relations, Proarch
50 Digital transformation: India’s journey to Industry 4.0 excellence Member, ICT Committee, FTCCI
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